Zynga's playing a new game, and this time, it's hoping to cash in by letting gamers cash out.
Alongside its third-quarter earnings report yesterday, Zynga announced an interesting but not altogether surprising partnership with bwin.party, one of the largest online real-money gaming operators, to bring users in the U.K. a host of games they will be able to play using (and potentially winning) cold, hard, real cash.
Zynga joins competitors in the space such as Big Fish, which in August announced it would start letting U.K. players cash out on casino games. It's worth nothing that Zynga's old ball and chain, Facebook, also announced in August it would partner with Gamesys, a U.K.-based online gambling operator, to let 18+ players of its Bingo Friendzy app play for cash.
Through the bwin.party partnership, Zynga says its real-money games service across the pond will bring 180 online casino games, including slots, roulette, and blackjack, to the U.K.—where online gambling is legal, unlike in the United States—in the first half of 2013. The company says to also expect a real-money version of Poker, as well as a FarmVille-branded slots game.
"Partnering with an established leader like bwin.party is a strategic and prudent way for us to enter a key RMG market while giving local players the real money games they've been asking us for," Zynga's corporate and business development EVP Barry Cottle said in a statement.
Zynga CEO Mark Pincus has made it known for a while that the social games company would eventually move into the real-money space. In August, the Wall Street Journal reported Zynga was investing in lobbying efforts in Washington, D.C., and California to bring real-money gambling stateside.
Zynga's signaled interest in the real-money games space makes sense for its bottom line. According to bwin.party, the global online casino market is expected to reach $8 billion by 2015, while a BI Intelligence report pegs the social gaming market at $5 billion in the same period. When you're raking in more revenue per individual user, versus the pennies-on-the-dollar monthly returns from massively popular social games such as Words With Friends, it's helpful not to have to depend on revenue streams such as advertiser spending, which Zynga reported was down 24% in the last quarter. (Though some industry experts say similar deals tend to drive little revenue for the brand—in this case, Zynga—after both the operator and the affiliates through which it distributes the branded games claim their respective shares.)
The tradeoff is that although each real-money game will be more niche focused—and thus reaching a smaller core group of users than a Words With Friends—they will each drive higher average revenue per user.
"We need to do a better job segmenting our audience and bringing more games to them that may be for somewhat narrower parts of the audience, but that achieve higher [average revenue per user]," Pincus said on the post-earnings conference call yesterday.
Although the news of the partnership prompted some, including investors, to throw Zynga a bone for making a significant first step toward better monetizing its portfolio, the conspicuous lack of details offered up by Zynga execs during the post-earnings call left more to be desired by others.
"The deal, to be blunt, is not at all interesting. It's a traditional, plain-vanilla, run-of-the-mill branding deal with bwin.party," says Chris Griffin, CEO of Betable, whose platform allows developers to bake a real-money component into their games without having to obtain their own appropriate gaming licenses.
Zynga execs repeatedly declined to share more information about the financial breakdown of the deal during yesterday's call, but a bwin.party rep confirmed the Zynga-branded casino games portfolio "will include both slots that we develop in-house as well as those we license from other developers." The FarmVille-branded casino slots, for example, are being created within bwin.party's Games Studio, which runs on a two-week release cycle for new slot games.
Griffin said the deal's provisions involve little more than Zynga slapping a prominent brand such as FarmVille on a generic casino game created, operated, and distributed to an affiliate network by bwin.party. That's a very different concept than Zynga adding real-money support to games it produces in-house, he says, which stifles the company's ability to play to its strengths: creating and marketing compelling games.
"These are not Zynga games," Griffin says. "These are basically bwin.party games wearing Zynga clothing."
Ed note: We have reached out to Zynga and bwin.party for comment and will update this post when we hear back.
(Ed. Note: An earlier version of this story featured an image of a character from a game not made by Zynga. We apologize for the brain lapse.)
[Image: Flickr user Tobym]