Social Casino: Genre Outlook 2020

you welcome everyone today we are talking social casino and joining us today to talk about this genre are arguably two of the best people in my opinion in the world to offer us their pity insights on what's happening in this category first we have Brett Nowak CEO of firm liquid and grit in my opinion the best mobile gaming market research report on the market and just so you guys know a big build-up tick bath we also are joined by Lloyd Melnick former executive having worked on social casino at Zynga and stars and currently loiterer at chumba casino currently right and also involved with murca yam on market boy thanks great and so I thought we could go ahead and dive right in and then we can kind of do intros in a bit but just kind of

starting in terms of the discussion I thought we could first start by asking about since it's so relevant and timely right now the impact of the corona virus pandemic on the categories so in terms of the current impact and potential impact as you know if we pretend to go into recessionary or a depression-era scenario what do you guys think is impact of coronavirus on social casino may be starting a few lloyd sure so what we've seen so far is initially it was a big influx and players probably you know driven by two things one is you know influx of people forced to play more games forced to stay at home and then also all the land-based casinos closing initially probably and translate one-to-one into revenue but you're seeing it's almost a lagging impact and you are seeing that effect so in the slot space I you know very roughly it's looking like about a 20 percent increase it's been bigger for some companies

especially kind of the bigger ones and the ones who have more of the real real life content that people would expect in a casino but it's actually been the impacts been used in poker world both in real money where you know so friends from Poker Stars and everything and in social you're seeing 50 on your percent growth there and you know my hypothesis is that you just have people looking for a social experience you can still play with your friends playing poker is a much more social sport than slot says but it's been incredible what it's done to the poker world online yeah and you're you're when you say growth that's downloads those numbers you're talking about right away well the 20% we're actually seeing that now go to go down into the bottom line into revenue initially it was downloads but now we're seeing it translated into Rev yeah and on our side we're seeing the same thing I mean the the forced isolation and the

impact to the real world slots casinos and everything have been somewhat tremendous for the social casino world and it's up in terms of downloads as lloyd mentioned and revenue in slots bingo and poker in our last report we actually just included some numbers on that seven percent in revenue quarter of quarter for slots seventeen percent for bingo and we saw seven and a half quarter of quarters revenue for poker but as lloyd alluded the revenue will be lagging of the downloads and the downloads are up tremendously so i i think those numbers the twenty percent let's see it's twenty eight and slots 30 in poker and eighteen in bingo in terms of court of over four downloads and that was only obviously half of the quarter impact because much of the isolation happens or later in the quarter so it it's it's actually been very very positive for the social casino

market and you guys think this is a longer-term boost to social casino if people kind of that normally wouldn't have played these games and would have gone to the casino but now they get used to it do you think they go back to the casino even after a coronavirus longer term or what are your longer term impact predictions so that's the million dollar question and you can make arguments either way so i said and what you know one argument is exactly way you've been saying is that we're going to be able to hold on to a lot of these players they've been laying Casino players now that you've seen what's available in the social casino world they're gonna stay playing on social casino it won't be at the levels it's now one thing I forgot to mention earlier is we saw a huge pop in revenue right after the stimulus checks came out that's a one-time thing yeah yeah it brought mixed feelings so but it really it's driven the revenue and that probably wouldn't show up in the quarterly numbers because that was

in April but that's really driven the revenue that's a one-time thing so you know a lot of these players are you know now exposed to social and in many ways social is a better experience in land-based we have a bigger variety of games you have I hate the word dama fication but I'll use it now because I can't think of anything well you have the meta game features you have all the all the things that the product managers have been able to put in that makes the makes the product more compelling and you don't have an atlanta-based to see you know progression all of those great things so in the one hand you know I think it permanently or long-term will lift us up the counter for so one that we really don't know is the macroeconomic impact you know we're looking at what 30 percent maybe even 30 plus percent unemployment you know if the entire economy contracts we're talking this is you know much more than kind of your typical economic downturn or recession where usually entertainment is counter cyclical if you

know if people are unemployed they're not going to be able to purchase in a social casino game if this lasts long term then it could bring down everything and social casino will just not be strong enough to ride it out I think what you know the smart companies are doing now is looking at how you're gonna consolidate those gains so for example one of the companies I'm involved with we've refocused our entire VIP team in not necessarily managing the current VIPs but identifying these this new cohort of the IPS the one who effectively are probably the land-based casino players who are now looking for an alternative and treating them and giving them VIP treatment even though they haven't had time to reach true VIP levels so they know what it's like to be a VIP in a social casino we're rushing out some of the loyalty features I think we're not we're not unique in that you know I think the smartest smart social casino isn't going to do the same thing try to lock in as much of the gains as possible it is going to go back to you there's going to

be a new normal the question is does it do we lose all of the gains and everyone goes goes back to their old habits are we able to lock in some of them I think we're somewhere in between there and then the macro factor over that is just how bad the economic carnage is after this yeah my own hypothesis in terms of like what you're speaking to with respect to new normal and given the current potentially recessionary depression area types of scenarios is that you have to shift your game if you want to maximize revenue to higher conversion lower well behavior so lower are people and I think that's what's going to help some of these games increase revenue over time but that's just my own hypothesis well it's actually what we're seeing so our VIP revenue is relatively flat it's our what we call premium tiers and courtiers so it's the non VIP players in part just talking to our VIP team our VIPs have been hit hard by this a lot of them are kind of wealthy entrepreneurs or sole practitioner type businesses and

some of them have just been very vulnerable whereas the mass space you have a lot of people who can spend an extra twenty fifty hundred dollars so we're seeing exactly what you're predicting great so just kind of getting a higher level picture in terms of the category and does that actually want to jump in here because I actually disagree a little bit with some of your predictions I'm more bullish on the market so I'm gonna heat us up let's get this going yeah I mean I'm more bullish on it you know I so I think in the short term obviously we're seeing this spike I think we're gonna it's gonna decline a little bit as it has in the past when we've seen unexpected spikes right I wouldn't get new games come out that introduce new players to social gaming in general or new platforms or whatever it'll it'll flatten out a little bit which we're already seeing but it'll be a higher level higher baseline level I think it's going to sustain a bear the comments gonna sustain the six to

eighteen months because I just don't feel like people are gonna want to go back to the real money casinos they're not gonna want to travel if it's not force isolation it's gonna be some type of selective isolation or preferred isolation right I mean you're just talking about how many how many people over sixty are gonna want to be flying to Las Vegas for the next two years until we have a vaccine for this I mean not I can only imagine that that's gonna be massively decreased so you're gonna see those players sustained for again I think that's six to 18 months at the minimum then then you have that period for social casino games to do what as Lloyd mention is to just basically convince them that the social experience is a better experience which I think does happen we've interviewed whales from different games a social casino and that's been their take away from from playing and living in Las Vegas Vegas well and they don't even go

to any of the strip because they prefer now the mobile experience so I think that'll help sustain the revenue I also think that the recession will actually help social gaming and social casino and even mobile gaming we're already seeing that if you look at there was a New York Times article that just launched in terms of us spending increases in decreases the top two things that people increase their spending on were groceries so online grocery and gaming and they were basically neck-and-neck in terms of the most increased in spend so then there's good reason for it Gaming is I think if not the best one of the best of its put you know top three best entertainment sources per dollar in the world yeah so I think that people are gonna be want to be entertained

entertainment isn't something that is that people turn off or on I mean that in particularly in a recession when they're at home and or if they don't have a job they're gonna want to be distracted even more the stimulus checks will obviously help the short-term bumps or whatever and then if they're an unemployed the unemployment checks well you know sadly also help us well but the the the more expensive entertainment sources which are basically I mean anecdotally I can tell you that we spend much more on other sources than and even the streaming if you add up all the streaming ends up being a hundred dollars or a hundred and fifty dollars a gaming you can spend five ten fifteen twenty dollars a month on and get almost near endless amount of entertainment from an unbelievable experience from a game that that's higher or the same quality as a movie or any other source of entertainment so I'm I'm much more bullish than a lot of people out there I and I think that this is gonna be very

impactful not to mention introducing more and more people to gaming in general making mobile gaming just more part of our culture and less of this niche type of thing that we've thought it has so that's my ah let's go alright just taking a step back and just looking at the social casino category you know kind of higher level you know I think so there was this boost from coronavirus in the current situation but like before that could we talk about how was the category generally performing you know when we think about some of the news in the fairly recent past we've seen some moves such as huge diversifying from social casino similarly with platica for example when they acquired seriously so based on the interpretation of some of the moves that the bigger players were making and some of their actions it would seem that maybe social casino was

not as attractive as a category as before or could you guys help us understand how we should be interpreting some of that news and just the general performance of the category generally I mean look I can go loiter if you want to jump in I'm go first I just I just chatted for you go ahead I would say I think it's it's not as sexy as it used to be it's not the huge growth engine it was maybe four or five years ago which was driving all the M&A activity in the space but it was it's still growing yeah it's probably you know high single digits growth what I found most interesting and it's probably wondered reasons that you have seen the uses and the platy cos diversify out of it most of the growth has been coming out of better monetization of existing players you're not seeing the DA you the category growing in terms of users but you have

been seeing steady growth overall and growth from you know probably the sava your companies the the critique is the product madness you know I'll put a plug in for murca but a large a lot of that is they've been doing that with really good product management improving the features and everything much of the deu is been you know coming from you know if one company grows they're probably taking it from someone else it hasn't been that they've been able to grow to category and that's what's made it a little less sexy probably on the M&A front why people haven't been coming into it at the velocity they were you know and say 2015 2016 yeah I would agree with that and I mean I think it is sexy I would personally want to have a top grossing casino app right now I mean but it's it's less sexy because they're so consistent right and they're what McKinsey remember consulting firm create it would be like the cash cow right so they're a great thing to have in a company because they allow you to go out

there and invest in new and new things and diversify like you're seeing and what you're referencing because you have this stable revenue source that is not likely to go away anytime soon so you know it's a I think it's been this way for a while it's a difficult place to break into for obvious reasons not featuring it's there the difficult apps to create their niche e you have to have a very specific skill set to create them but if you do break in and win every couple years we do see a company break in like we have in the past two years and we did four years ago or five years ago with huge and we did before that with murca every couple years there is an new entrance into the market it's few and far between but when they do enter they obviously become huge winner so yeah it's it's a difficult place but it's it's it's kind of sexy in a in a slow-moving very steady and consistent way and so I thought we could just take

a quick break from the discussion to go over your backgrounds and intros and Lloyd maybe starting with you could you tell us a little bit about your your career yes so I've been in the gaming space that's like figuring it out today because it's been too many years to remember since 1993 so I've been in the gaming space from the old cd-rom days of packaged goods to the download games that you would see or see on a real networks or on big fish - when social gaming first started to take off and yeah it started a company in 93 we then sold that company when social gaming took off the played them for those of you who remember social gaming clayton was kind of the Zynga of MySpace for better or for worse it was acquired by Disney after that so I was at Disney awhile ended up going into social casino and there was a company social casino company I was acquired by Zynga work that helped startup Zynga already obviously was used in

social casino in the poker side I was one of the senior people over and hit a rich which became their big slots offering and is now kind of blossomed into that the whole thing of social casino space got it then moved over to run social at PokerStars as they were moving from real money into social and a year ago went over to vgw to run their chumba casino product which is a social casino with a sweepstakes offering so it's sort of like so out of mania meets Publishers Clearing House right and you also wrote this book that's embarrassing but yeah I'm not an analytics guy but I being in the social space you always have to understand analytics and numbers and you know I think everything in social cuz you know in in the gaming space comes down to increasing your lifetime value so that was kind of like the other title for that but it would have been a copyright

issue would have been lifetime value for dummies so Brett yeah I I haven't been in gaming as long as Lloyd but I've been in gaming for oh geez now it's gotta be 1314 years which is kind of incredible I I was in Seattle I worked for Pete Parsons for a little bit who is the CEO Bungie Studios and that sort of introduced me to gaming and then I went to business school at Dartmouth Business School talked and landed at at the time a relatively unknown company in San Francisco called Zynga as an intern and ended up actually staying there pre-ipo working there and then working there for almost two years had a great experience at Zynga and then moved onto smaller gaming company blue shell games to be their director of product I was a singer poker lead product manager of Revenue and then when I was at both those companies I felt like there wasn't a lot of support for product managers and we were doing a lot to cover the market

learn what's driving revenue learn what's happening on the platforms and whatnot and so based on that I decided to start my own company liquid and grit that supplies product managers product owners game designers VPS with monthly reports and tools to better manage their games and increase their revenue so that's kind of my short version of my gaming experience awesome so going back to the discussion so Brett you and I kind of worked together on a on a social casino project you know number of years back and at least at that time when I was in terms of the slots market at the time it seemed like if we were to categorize that market it would you would think about it as sort of land-based games which were the the slots games that were as similar to the you know land-based real-life games as possible the social focused games like the big fish casinos and then the kind of an emerging new category at the time RPG progression so there was murca

scatter slots I don't know if that category has expanded or not but in terms of slots since it's the biggest category within social casino can you guys help us understand how we should be kind of characterizing the various categories there is that still the sort of categorization or was that not the categorization what do you guys think I might I think it it's probably very subjective the way I'd probably look at it's not that different but instead of RPG I'd almost say linear or progression based slots so you have a game like yeah yeah the Game of Thrones title that recently came out Pharaoh's way was one or ones in the early days as well as scatter slots so you kind of yeah again it's more of a game then you have kind of a Lobby based which he could be either two ways kind of a locked lobby which was most most products being you know jackpot party or you know one of the aristocrat games where you you know open it up he saw me three or five slots

and you've progressed through that and then yet the open Lobby which kind of double down made famous I think when a few years ago you were probably right in the distinction between the ones that had a more of a real money feel and the ones that had more of a socially feel I think now most of the slots the quality has gone up where they're as good or better than what you see in the land-based or the real money world in Europe maybe the other category that's evolved yeah you've mentioned big fish and you know at the time and for years I always considered just an outlier was a product in and of itself because the slots were kind of awful compared to everyone else yet the ARP Dow and the performance was great in the you but now you have huge and you have some other companies so I would consider there was like truly social products that are by the way a casino they're almost like Facebook Facebook meet slots so now I guess to summarize kind of going back to what you're saying you saw the linear ones yeah yeah and

there's you still have ones doing really well you know scatter saw it's continues to but you know like Game of Thrones I think it's the big one of the biggest new products then you have kind of a Lobby based ones in it and I would say you have the the ones that are you know across between a social network and a slot that's not an official destination and I'm probably only person who would break them down that way I'm actually really interested to hear what brad has to say how he how he splits out the category I think that's a pretty good summary of the category I mean I you the land based content machines the slots games that's one the progression which you mentioned is more of that slot of mania type feel then we have the I mean RPG progression I mean Mirko would probably just be standing there by itself with that one game so that would be somewhat of a smaller sub-genre and then I the other that I

added were the real world prize games which was really kind of owned by plate studios and vgw is tapped into that in their own way as well and then probably a smaller subset of the real money gaming is the classic machines the classic sorry the classic apps which would be like the DG ends and the the rocket or pen slash pen international now owned apps would be sort of like the five the big five that I would probably categorize as yeah okay great so kind of maybe moving on a closely related category to social casino is real money gaming can you guys talk about maybe you know some thoughts in terms of how that category is doing and then more about the potential impact of real money gaming to social casino I think it's the latter that's probably the most interesting so real money gaming obviously it's it's legal in Europe it's regulated in Europe and

numbers-wise social justice you know had the market share or the growth in Europe that it has in the u.s. so you know correlation does not prove causality there could be a lot of different factors most of those social casino companies are American this slot mechanics play much better for an American audience so it might not be the case but yeah before coronavirus you already had several states opening up on a for online casino so you had New Jersey Nevada Delaware which were the original ones but now Pennsylvania and Michigan and that was actually a big change with Pennsylvania Michigan opening up because they've seen phenomenal growth on real money so just this week I think stars group and now so they have a 27% increase on their quarterly earnings and some of it was coronavirus driven but that was also negated to a degree by the loss from sports so a lot of that growth is from the US because their other markets are

really flat real many gaming is a very mature market in Europe which you know so they're seeing you know states like Michigan and Pennsylvania really pick up the slack for what they're losing everywhere else and that's only two states but between Michigan and New Jersey Pennsylvania talking 3 to 13 largest states that has to cut into social casino revenue at some point you know these are you know the the biggest VIPs in social casino or once you spend time at land-based casinos it's probably why we're seeing this strong growth now due to coronavirus and the casinos being closed will those people continue to migrate over and learn how great social casino it when they have a real money option real money companies are literally spending hundreds of billions of dollars on user acquisition you know even if the even if we're able to keep the LTVs as they are in social you know it might become unaffordable to acquire players so I I see it as a potentially big

impact and then kind of going to that first you know comment about how coronavirus impacts it well you know every state is going to be spending a ton to spend it's wet I mean we already see with the stimulus package to see to get see its way out of this recession I think that's just how the government is planning on reacting we're already seeing that across the world if governments are spending at the levels that they're spending they're going to be looking for revenue and Gaming is a use revenue source already for New Jersey Pennsylvania is getting addicted to it and the European countries are so does that mean the New Jersey I mean the New York's the California start opening it up you get a much broader acceptance of real money gaming in the US and then it does become a true competitor social the good news for social operators is you look at draftkings and FanDuel when real money opened up those are the top one and two sports betting companies now because they have the brand recognition so does that mean critique aristocrat you know all of the social

companies are then going to be able to either form partnerships with or get acquired by real money companies because of the crossover in their player base it's probably a bigger opportunity than is a negative but I think it is going to be a huge impact on the social casino world in the next 2 3 4 years right yeah I don't know about I don't know if I want a couple two things one is I think that I I'm not as worried about the real money gaming impact and social I mean just because if you if you look back at sort of like Black Friday for example in the u.s. when poker was made illegal I mean that wasn't like a massive growth opportunity for zynga poker or social poker in general so you didn't see them just like jump over to social and at this point it's been long enough that if you're a social player you're probably still gonna be a social player even if I mean you're not you haven't been sitting around for five years waiting for real money to come back you've probably figured out some

way to be you know a lot of pretend like you're in some other country and your gambling already and I I generally just don't feel like those those players are overlapping with the social that was already established I actually think it's more I'm not as concerned about that obviously the competition that you $1 is gonna be is gonna be something that would be a negative I think the biggest positive for me is is where our society draws the line in the sand as to what is appropriate for online gaming and without having real money gaming in u.s. the next the next thing in line was honestly social to see no or you know pretty pretty much next right and the reintroduction of real money gaming has basically drawn that moved that line in the sand further away from social casino and in that way I think it's actually

de-risk social casino tremendously and that I think that's a positive right because these these Black Swan events can be positive and negative and I'm I'm often writing about this these concerns one being platform concerns the other that's been really fairly scary or important for social casino has been government concerns we've seen stuff in Washington we've seen we've seen stuff just in gaming in general loot boxes and Europe and Beyond and that rhetoric that voice of government basically or of society switches and goes back and forth and the introduction of real money gaming kind of like moves it away from from social gaming so in that way I think it's very positive great so maybe we can now talk trends in Brett I know you track features but whether it's from like a feature perspective like newer trends from features or bigger like macro trends

you'd be interesting to see what your thoughts are in terms of where the market is headed and then what do you guys think are like the key basis of competition moving into the future well we already hit on the growth in the market and the you know that being obviously a trend in terms of the new entrants then there as I mentioned before there's every couple years despite what all the analysts say and how difficult it is every couple years there's a new company that jumps into space and and grows pretty massively I mean we're seeing it now with bowl games I mean they've entered the market and they've now two apps in the top 25 grossing and they're crushing it they're growing massively quarter-over-quarter we saw it a couple years ago with huge we saw with rocket games we saw him with murca we saw it you know so we've seen it happen and it doesn't happen as maybe often because we don't have again you're on featuring by Apple so you don't have that like shooting star moment where

people just come out of nowhere but you do have you do have new entrants come in I think your question of how do they approach this market was the follow-up and I think well we've seen in the market of people who've been successful is they've been very positionally focused meaning they've targeted a certain app or apps and gone after them directly huge casino did that with big fish a w did that II it's double down we're seeing bull do that against lotto mania and other played TK apps so I mean it's as Lloyd mentioned earlier it's it's a bit of a red ocean strategy where if you're gonna enter the market like you better be ready to go and take some players from somebody else and that's and that's I think that's actually just generally the mindset that you probably should have if you're entering mobile gaming in any genre but in casino I think it's it's even a little bit more appropriate Brett so just to follow up on that we're talking

like specific product trends it isn't so much that there are new features or new your kind of product strategy but it's looking at existing games and doing what they're already doing a little bit better with a new product is that good is that the right way to think about it if you're entering the market that's what you're I mean there there's there's actually a lot more innovation product innovation and casino had people in the outside world to think I mean we I I actually didn't think that until we started covering puzzle and RPG and and I actually think that casino is right up there if not ahead of those other genres in terms of innovation it actually has been really surprising I thought wow you know RPGs super innovative as all these like amazing mechanics and puzzles all this casino does a lot and I might be biased because I been casino longer but I really don't think so I mean they actually have the ability to innovate I think even more and I was on seeing a poker experience

this because you have such a consistent revenue source it actually allows you to spend more time with ideas that are somewhat like out there whereas these other genres are much more of a Content cadence and they're just so much more resources focused on like getting out the next the next whatever it is that they gotta get out for content whereas in casino it's pretty established with the content and it's on machines or words poker or it's a bingo you know a new bingo so I think in terms of your answering your question we've categorized or like two approaches that we've seen one being the focused approach this is for the red Ocean Strategy focus meeting like you're gonna take an existing app that's out there and you're gonna give a simplified version of it we saw this with poker heat relative to zynga poker um that's a great example of it um the other is what we call the +1 which is you take an existing app and you tweak one thing but you offer a lot of what they have and we're seeing that with bowl games against likes not mania

as much as some people might want to thank ball games is an innovative when you do go look at their machines and their content they're not just fast following the slot of mania and other apps in there they're they're doing a lot of the same things but they are definitely freaking them iterating on them and changing things to see what players like in addition to what they're already getting so those are the really the red ocean strategies that we see be successful in the market ok what now I agree with I mean I think because it is so much of a red ocean it's driving some of the these features and some of the some of these innovations that Brett mentioned because it's the only way you can grow and as we were saying earlier the market is growing it's growing because they are getting better at monetization but they're getting better monetization by putting in better features it's really the only way to grow but the market is big enough that it justifies the investment it's bringing in a lot in the top product talent and it is it's an arms race with

some very well-armed companies my only other thing here is you know we're talking a lot about red ocean and I think it is it is a red ocean but this is where I know Brett will disagree but you do have products like a coin master that takes some casino mechanics and almost create maybe it's a totally different category and I do think that's going to continue also I think you know underlying gaming mechanics drive a lot a they're very good at monetization and B they just they've been around over a hundred years yeah they they hit on things that are very important in the people so taking the core of social casino mechanics slot mechanics or a poker mechanic it lends itself to creating another really compelling game game game game type like again like a coin master and you know I think coin master now will probably be the number two social casino if it's classified in that category I would

classify it there others wouldn't but even if it's not I think you're going to see more game mechanics borrowed from social casino and may be merged with RPG or other gaming categories you know to create great new products do you count them as social casino products do you not count them it doesn't really matter but you are going to see new products coming out that generate a ton of revenue that are based on social casino mechanics in my opinion yeah I would actually agree with alloyed and I think that's what's what's so hard about being an analyst this market is that most of the significant growth is driven by things that are completely unexpected and the the co vid 19 being a clear example of that and then the next game like coin master or whatever it is is going to be the next example of that that's going to be nearly impossible to predict Mirko did that with their games I mean no one would have predicted well

no one but Merkel would have predicted that their games would have work so I do agree I was just kind of giving the examples I think the red the red ocean strategies are probably safer bets but I mean there is opportunity to grow the market and use the mechanics that are so proven and and implement them in a different way and I will call out to I mean we're just fine and focusing on slots I mean the bingo market has had very strong growth late lately and we're seeing like new entrants come in with tons of new innovations that are about new game releases lloyd you'd mentioned Game of Thrones by Zynga could you talk about some of the more notable recent launches and how they've been doing actually I probably defer to Bret because Dayna Thrones is the one that I'm very aware of and it's been doing very well yeah but it has been you know except for the couple of exceptions that Brad mentioned earlier it has been a

relatively stable business you know the top ten you know you might have one change every two years okay yeah I mean the the like is exactly I mean every two years there's a new entrant but it it takes two years in social games so it's a little bit actually I don't even know I mean if you look at puzzle I'm trying to think of what we've seen impose will be the new like the new company in that market but ball games being the newest in social casino I mean they've come out with two games that are now top 25 cash frenzy and lots of slots they have a just tremendous production team I mean they're out of China and they're cranking out content and features and events I mean just unbelievable output of content and that's again they're they're competing on the +1 strategy I mean they're they're getting heavily influenced by what's already out there and then tweaking things but they have a just an amazing output and so they're

growing massively in the market got it so final question in terms of like if we were to speculate a bit in terms of the social casino category do you guys have any specific predictions for whether it's the rest of Twenty twenty or twenty twenty-one what what happens from from here on out and also maybe if you have any controversial or or surprising predictions I'd love to hear you know what would you guys think I think there's enough data and I'm sorry there's enough data in history that it's probably won't be that surprising you're gonna see growth I think because of covet as we were talking at the beginning it's gonna be it's gonna it's gonna spike it's gonna there's going to be a new normal is it going to be you know so instead of seeing that single-digit growth you'll probably see something in the teens and I do agree

with Brett it will sustain you know what probably won't sustain at the level it's at now but it'll as I said probably end up and maybe end up in the teens I can't I'm not going to try to predict the macroeconomic factors yeah yeah we were just saying someone will come out of the blue and there will be another relative top ten you know who wasn't there before you know but just one in the next couple years I don't think I'd be surprised if you see more than one or two big M&A transactions the space does seem to have been cooled off you you know again I'd be surprised it might be someone who tries to move in as we said earlier you have kind of different parts of the social casino space just maybe someone who's doesn't have one of the progression slots wants to acquire one of the companies that is strong in that area to round out their portfolio especially if they can't grow but you'll you'll see you know it's like bro was

saying earlier it's not it's exciting in that it's not exciting it's it's good strong consistent growth which you know even before the last few months was something you know most CEOs would get excited about you're gonna continue to see it it's a good category it's going to continue to grow it's going to continue to grow well actually because of monetization but now we are going to see a spike in new users from from the virus and I think that will sustain but you know it is a red ocean so you're not going to see any fundamental changes in terms of product in terms of user activity in the next couple of years in my opinion great yeah I would agree with with what Lloyd said I mean a couple may be controversial things I think the the companies in social casino are going to continue to do very well just because they have this cash cow and they are fairly very innovative companies I mean I would put play teacup there as one of the most innovative mobile gaming companies in the world and they're not gonna sit

around and not figure out how to grow I mean you already team their M&A and they also have divisions that are experimenting in other genres it's so I think they're well positioned to grow because they can afford to take the shots because they have the venue and profit coming in from this one genre whereas other companies that are aren't as stable in terms of revenue are gonna have a harder time branching out what you're seeing that and other genres as well I think the other thing that is maybe controversial is I've much more bullish than most people on mobile gaming market even in a very deep recession I don't I think it's dangerous having been in mobile gaming for a long time I think it's really dangerous to to apply too much logic to human behavior and I think that's what a lot of analysts are doing when they say Oh mobile gaming revenue is gonna go down because people are gonna have as much money that is just like - just like the way too logical of a statement right

like those dots are just there those are not dots that human beings make I mean it was just be honest we're not as logically acting as we all pretend like we are and I think that the recession the stimulus the isolation the fear of going out and interacting with other people and and the quality of mobile gaming the quality entertainment source per dollar mobile gaming will make revenue downloads engagement all go up I mean revenue will fall revenue is kind of the easy part right like downloads is the hard part that that's the hard part once we have people playing like figuring out how to monetize them is completely within our control but I so I'm very bullish on the mobile gaming market at this point I think that's controversial I've seen some articles being posted I've hesitated to be like responding to them like I've got I've written paragraphs being like are you you know are you you know I mean at the

end of the day we have to understand that iPhone is a is a Game Boy for adults I mean over 70% of the revenue going into that thing is I ap purchased in a mobile game it's a Game Boy you know and now we have some revenue from streaming which is as I mentioned way more expensive than mobile gaming entertainment and then you have some other stuff you have some like little stuff that means that it's a it's a it's a game boy for for people who are sitting at home isolated now they're also getting introduced to how if Vivat is to keep their kids entertained as you saw my kid come out and asked for my phone because he wants to play clash or roblox or whatever he wants to play that's just gonna increase engagement revenue purchases acceptance of mobile gaming and so yeah I mean I think my most controversial is just I'm Way more bullish on what's gonna happen in mobile gaming in the next one to three years honestly I just I see this being is just tremendously positive so yeah I will say

that to your point about kids i I've anecdotally seen a lot more like parents let their kids play games because they're sick and tired of trying to take care of them but not only that I mean the alternative is YouTube or Netflix where they just sit there staring at it as opposed to my son is a huge clash player as am i and he's talking about trading cards what cars are powerful yeah I mean he's he's understanding the concepts of it he understands clans teams what events how Daman it's how to how to basically optimize how much he's gonna spend on different things he doesn't you know and then as a as a parent I'm buying a $4.99 battle pass once at once a month and I get and I don't even need to do that right I mean and then we're having conversations back and forth about it as opposed to him watching some russian girl open up packages of toys for like three hours on

YouTube I mean right I mean what are the other or paying $20 a month for Disney Plus or buying a movie that's gonna last two hours okay you know and then of course he's gonna go outside and play and all that stuff but yeah it's just such a good entertainment source I mean that's the thing that I don't think we're giving ourselves enough props I mean we've created a really amazing entertainment source like unbelievable that you can actually do for free if you want for for all this time I mean that's kind of incredible I don't think we give ourselves enough credit we're always saying well you know games just games that but like there's no other entertainment source out there that's giving as high quality entertainment for next to nothing I mean that's pretty amazing alright guys and with that I think that's basically it for today but maybe in conclusion if you guys have any message for the audience and it'd be great if you could let folks know how to contact you maybe starting with you Lloyd well I think the message is for

everyone to stay safe that's the most important thing right now and you know keep your spirits up this yeah this is gonna be ending it's already you already see it kind of winding down in some place there's more important than the game industry more important than anything else is just you know everything will be you know better in the future in terms of gaming and if anyone's interested in reaching out to me my email is melnik mal and I see K dot Lloyd Olo ID at gmail.com and I have a blog Lloyd Melnick comm more than happy yeah there's anything that's missing you feel free to put comments and even suggestions what I should be writing about and thank you Joe for the opportunity to be on your podcast no problem right yeah I agree with Lloyd as always or not as always but in this case again and that you know stay it be healthy and stay stay safe is obviously most important and secondly I think this is a great opportunity for mobile gaming

companies to take advantage typically growth in gaming is driven by the somewhat chaotic unexpected events so one of my messages would be not to just sit around and wait for the dust to settle but to capitalize on what is going on and then I want to also say you know the mobile gaming has a bright long-term future and that everyone should be responsible and how they act and produce games and think about the player in the long term the longevity of the relationship we have with the players and the opportunity that we've had to create games as a profession is one that's amazing and we should really try to protect that and to do what's right for the you know for players and at this point for human beings is all of human beings because so many people are playing games and then yeah if you want to reach me you can email me at Bret Novak at quint great calm or you can on LinkedIn

connect with me it's spelled and OWA k the last name or come or you know visit liquid and great calm and check us out but i'm love to hear from other people and always happy to talk about games alright awesome well thanks so much guys and that's a wrap for today alright i thank you [Applause] [Music] [Music] you