Stephen Dunham, President and CEO of Play Globally, a developer of free-to-play games, explains how F2P can transform the way sportsbooks go about acquiring users.
As individual sportsbooks continue to battle for market supremacy in the $150bn American sports betting race, a new focus on efficient, economical, sustainable, and strategic user acquisition and retention is emerging. Free-to-play (F2P) games may not have the sex appeal of Vegas strip signage or $1,000 sportsbook bonus credits, but when it comes to efficiencies and sustainability F2P offers unique long-term value for sportsbooks that are aligned with several key factors.
User demographics alignment
One of the key factors for sportsbooks to efficiently monetize F2P games is having true alignment of their F2P user demographics and the demographics of the sportsbook itself. Free games such as chess, Spin-to-Win, or sudoku do not necessarily support the root interests of sportsbooks. Similarly, F2P games such as free video poker or free blackjack often offered by casinos may incentivize players to visit a property but do not necessarily capture the sports fan demographics. How do F2P games secure the ideal value for sportsbooks?
There are three critical factors that drive maximum F2P value for sportsbooks. The game must include wagering factors such as poker or slots, offer sports-oriented user interaction, and be inherently unique. A truly unique F2P game, whether by branding, celebrity endorsement, or a patent, is important as the game itself provides product-led user retention. Simply put, a user can’t find a particularly unique brand of F2P just anywhere. Therefore, a truly unique F2P secures long and deep user relationships for both the F2P game and an aligned sportsbook.
When a F2P blends all three of these critical factors, it can capture and retain sportsbook demographics for a fraction of the cost sportsbooks might otherwise pay. Industry experts have reported that a F2P user is commonly acquired for far less than $7. When the demographic profile of the F2P users aligns ideally with sports and betting and thus has a value of hundreds of dollars per user to a sportsbook, efficiencies are derived by leveraging the mirrored demographic.
F2P advantages for sportsbooks
F2P games are effectively a gateway strategy to recruit users who may have never considered betting on sports or racing. But F2P isn’t alone. In fact, there are a variety of creative new developments facilitating the transition of non-gamblers, or non-sportsbook gamblers, into the world of sports betting.
An example of such a segue creation was proudly displayed at the SBC Conference in New Jersey last year by one of the world’s top casino machine manufacturers. The new console features a standard Jacks or Better poker game embedded with live sports broadcasts and sports betting adjacent to the player’s video poker game. Surely equipped with players card functionality, the new apparatus provides free-to-watch sports content and encourages sports betting while the casino guest plays poker. Such innovations are specifically designed to help casinos efficiently grow and diversify their user base, particularly in the sports betting space.
Acquiring, understanding, and retaining new users is the lifeblood of every sportsbook. It’s no wonder that the cost of user acquisition for sportsbooks is typically between $300 and $800. As the frenzy to get new users intensifies, sportsbooks should naturally be searching for a more sustainable strategy. F2P games offer several distinct advantages.
First, the cost of user acquisition is substantially lower. When a sportsbook is willing to acquire 100 qualified users at a cost of $800 each, they will pay $80K for those 100 users, with questionable retention. However, if a F2P game targeting the same demographics pays the same $80,000 but in the form of bigger prizes with no financial risk to the users, a $7 per user acquisition cost generates 11,428 qualified users for the same expenditure. Such a strategy offers a distinct economic advantage for sportsbooks looking to maximize efficiency.
A second distinct advantage of a well-aligned F2P game is F2P’s ability to virally grow the user base with prizes that have a high intrinsic value to the players but little or no actual cost to the operator. How is this possible? A strong F2P game is able to incentivize large quantities of users through digitally synthesized intrinsically-rich electronic currency or prizes, similar to crypto, thereby generating incentives and value without substantial real money expense. Further, such value may then be converted into real-world value through merchandise marketplaces.
Asynchronous play and long-term strategy
Asynchronous play is another valuable strategy for acquiring and retaining new users in the off-season or when no games or races are live. Consider that the NFL plays 272 60-minute games during the regular season, or 272 hours of live play. There are 8,760 hours in a year, 97% of which do not include live NFL play, leaving a massive majority of user interaction potential untapped throughout the year. Leveraging F2P live and asynchronous games around the clock, and in the off-season, to engage and retain sports and gaming fans improves all aspects of the sportsbook/user relationship.
Finally, low F2P operational costs and border-less user acquisition/retention for jurisdictional strategic planning provide sportsbooks with the ability to economically invest in emerging sports betting markets. Once sports betting is legalized in an emerging jurisdiction, the sportsbook’s investment in an aligned F2P game makes market entry into newly legalized markets virtually instantaneous.
Times are changing – is it time to pivot?
It’s no secret that the major sportsbooks’ values in the US have adjusted substantially in the last six months, some by as much as -72%. With increasingly competitive market pressures, it could be crucial for sportsbooks to embrace a demographically-aligned F2P strategy to gain a strategic upper hand.
In January of this year, CNBC’s Jim Cramer stated: “Until we see fewer promotional deals and more M&A deals, these online sports gambling stocks… are very difficult to own.” He continued: “There’s tons of competition for market share and little in the way of profits. Too bad, because profits are what this market wants right now. That’s why every single one of these stocks has been obliterated.”
Not that Mad Money’s host is the final word in stock value reasoning, but surely in an increasingly competitive market like sports betting, sportsbooks must be looking for new ways to grow and retain their user base more economically.
The race is on for sportsbooks to adapt and pivot their strategies and time is of the essence now that 112 million Americans, over a third of the US population, can now legally bet on sports from the comfort of their home. With an integrated F2P strategy, sportsbooks can begin acquiring aligned users more efficiently. Further, they can acquire and retain those users in any jurisdiction at any time. Now, sportsbooks can plan for emerging markets, efficiently building their database of prospective users as part of their long-term strategy.
Are F2P games the end-all-be-all for user acquisition and retention for all sportsbooks? Of course not. However, when considering the massive budgets for celebrities, billboards, sponsorships, and player incentives, sportsbooks have a new high-value, lower-cost ally in their battle for user acquisition and retention.