E-Gaming Platform as a Viable Business Opportunity

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Table of Contents

Introduction
E-gaming website linked to a radio station
Potential for Growth
Conclusion
Reference List

Introduction

One of the fastest-growing developments in online E-commerce has been the creation of a variety of E-gaming platforms that puts a “technological twist” so to speak on an age-old business model. Basically, E-gaming is a form of online business characterized by consumers who play various games through the internet. While there are a variety of online gaming platforms to choose from, for the purposes of this report the specific industry category to be examined will be games that allow players to win money. Variations of this business model come in the form of online casinos, bingo, poker, and various forms of betting with the appeal of this particular business concept being subject to its overall convenience for consumers.

The fact is that government regulations, community restrictions as well as negative connotations attached to casinos, poker, bingo, and the general concept of betting have made it so that engaging in such activities requires consumers to either travel fairly long distances or engage in such activities in secret. It is due to these restrictions that a viable consumer market has been created and as such this has resulted in their needs being addressed by E-gaming platforms that allow them to indulge in their desire to gamble in an affordable and above all convenient fashion. Another factor that should be taken into consideration is the current trend in cooperative relationships between companies that provide particular services and social media platforms. As indicated by Geierhos (2011), companies as of late have realized the potential social media platforms have in being able to increase brand awareness and reach new markets which create the potential for higher revenue streams. Conversely, social media platforms have benefited from this relationship through increased revenue from company-sponsored advertisements and marketing campaigns. Evidence of this can be seen in the current social media giants; Facebook and YouTube, where company-sponsored advertisements make up the bulk of the revenue that these particular websites generate. Taking this growing interconnection into consideration, this report will analyze current key trends and solutions within the E-gaming market and how such a platform could be connected to a social media platform, in this case, a radio station, in order to generate awareness and as a result higher levels of revenue.

E-gaming website linked to a radio station

For the purpose of this report, the radio station that will be utilized in the analysis is the Planet Rock station which is based in the U.K. On average the station has well over 1,000,000 weekly listeners which have made it the number one commercial digital radio station within the region. Recent statistics examining the user demographics of the station reveal that its website, Planetrock.com, has well over 311,000 unique visitors per month which consists of 51,000 VIP members, 75,000 recipients of its online newsletter, and as of late, its iPhone application has reached 85,000 unique downloads. Of particular interest is the fact that its main audience group consists of adults aged 25 – 54 which ( ) indicates is the age range in which most individuals are likely to gamble or participate in some form of betting. With most of its listeners averaging 7.5 hours of station patronage each month, this is indicative of huge potential for cross-market cooperation and advertising.

As a social media platform, Planet Rock can be considered as having a wide influence over its user base and as such by leveraging its influence in such a way that it could promote an online E-gaming platform it is likely that such a platform could potentially draw thousands of potential consumers each month. There are two potential avenues of approach that can be utilized in this particular case: either Planet Rock develops its own E-gaming website and connects it directly to its own site or it acquires/ goes into partnership with an already well-established E-gaming website. One of the advantages of acquiring/going into a partnership with a website that has already been established is the fact that Planet Rock would already have an E-gaming platform on which to build. This can consist of games, experienced personnel, accounts as well as website development that have already been put into effect which drastically reduces the amount of time necessary to set up so to speak.

On the other hand, if the station were to venture into E-gaming through the development of its own proprietary platform it could do so utilizing games and themes specifically related to Planet Rock itself. It must also be noted that with 51,000 VIP members and 311,000 unique site visitors per month the Planet Rock website already has a substantial user base from which it could start off its own E-gaming platform and as such is indicative of an inherent advantage the site has. Promoting this particular E-gaming platform could consist of the various shows on the radioactively delving into topics related to E-gaming and gambling and mentioning that Planet Rock is in association with an E-gaming site or has developed its own gaming platform. Other potential avenues of approach could come in the form of special contests the station could hold that enable its listeners to gain free “credits” to use on the E-gaming site as well as various other site-related freebies that they could choose from. The only perceived problem with connecting an E-gaming platform with a popular radio station is the possible backlash from a variety of conservative community groups who are against the concept of gambling. Fortunately, with reports by the Gambling Commission on the gambling trends in the United Kingdom showing that the number of online gamblers in the United Kingdom had skyrocketed to about 3.5 million users in 2007 with several million more being added since then, this is indicative of the fact that it is acceptable to gain the ire of a few conservative groups when compared to the sheer amount of consumers that the E-gaming platform connected to Planet Rock could gain.

Potential for Growth

Customers and Social Experiences

In a documented interview, entrepreneurs Rob and Pablo, creators of “Snog”, a U.K. based chain of yogurt outlets, state the following regarding what it takes to become a successful entrepreneur “now we are in a recession and we see businesses that are successful I think the one thing you see that they all have is the experience which is the most important part in everything so we made sure that there was an experience”. The “experience” that Rob and Pablo refer to is not just the quality of the product itself but what customers feel when they enter into a particular establishment. In the case of Snog, all their outlets have a warm and friendly ambiance that is not only family-friendly but actually promotes, in their words, “a happy feeling” for customers. In the case of Apple Inc., it can be seen that all their stores, no matter what country they are present in, have a stylish and ergonomic design that looks “clean, modern and cutting edge” which has come to exemplify the experience of buying products at an Apple store. Based on the popularity of not only Snog but of Apple itself, it can be seen that by making their store into an “experience” rather than just a store; this helps to encourage buying behavior among their clientele and even repeat visits. As such, for any business that wants to increase their customer base, it is important to develop the experience, their venue provides so as to better appeal to consumers and create repeat business.

Based on the study of Lan-Ying, Huang, and Ying-Jiun (2011) which examined E-gaming and the attitudes of consumers in this particular industry it was seen that it wasn’t just the type of games available that caused consumer patronage but also the social “experience” inherent in the site itself. This took the form of a variety of systems that enables consumers to not only speak with each other but also compete against one another in attaining higher scores. From the perspective of Lan-Ying, Huang, and Ying-Jiun (2011 it was noted that online users of E-gaming platforms were also affected by the concept of marginal utility in that the more they utilized a particular game the less value they derived from playing it. The best way of resolving this issue was to introduce a social aspect into the games itself that created renewed interest and competition in playing it. Further evidence of this was noted by the study of Downing (2009) which examined the gaming and betting habits of individuals who frequented gambling and card-playing establishments. Their patronage of these particular businesses did not lie in just the potential to earn more money, rather it was also based on the social experience they derived from frequenting such establishments.

In the case of online E-gaming that focuses on a similar business model such as those seen in casinos, it is important to introduce social experiences and social interaction in the games they provide for their consumers since without such systems in place consumers will quickly derive their maximum marginal utility and the site will quickly lose consumer patronage. Taking this into consideration, online providers of web-based gambling systems in the U.K. such as evolutiongaming.com provide not only a social aspect to their services but actually created a live system wherein consumers can interact with dealers over the internet via a live webcam feed. This fulfills not only the social aspect demanded by consumers but also fulfills an inherent need for consumers to feel that the game is more “real” in the sense that they are not just playing against a computer system but rather against a live dealer in an actual casino. Based on the presented data it can be seen that an E-gaming business venture utilizing the popularity of Planet Rock will need to factor in what social systems it can put into effect in order to ensure continued consumer patronage.

One possible way of doing so would be to announce winners or high-ranking players on Planet Rock’s radio shows and even conduct weekly interviews of the top players so as to create a distinct “buzz” around the game itself. Popularizing highly ranked players and ensuring that they remain in the public eye creates an intense form of competition for users of the site and would even encourage other individuals to try out the games themselves in order to become popular as well. Not only that, by creating forums, live chat features, and a variety of site-based social media platforms a community could develop around the games of the site. A similar case was seen in the website worldpokertour.com wherein by popularizing players, connecting the game to social media (live broadcasted tournaments) and by placing various interactive means of socialization on the site this resulted in not only millions of dollars in revenue but greatly popularized the site itself.

Agility and Responsiveness to Market Situations

It is rather interesting to note that businesses don’t operate within a vacuum and as such have to deal with intense competitive environment forces on an almost daily basis. What must be understood is that there are three components to a market orientation that dictate how a company acts within a competitive environment, these are: customer orientation, competitor orientation, and inter-functional coordination. In the case of customer orientation, a company spends what resources it has in gathering data on the needs and behaviors of various consumers, the same can be said for competitor orientation however it focuses on competitors instead. On the other hand, either method has a distinct weakness. Focusing too much on consumer orientation can actually blind a company to changes in the market or may actually stifle innovation since the company focuses too much on consumer satisfaction rather than changing based on trends. Focusing too much on competitor orientation on the other hand results in too much time and capital being placed on competitive activities which results in companies at times neglecting their consumer bases and focusing too much on getting ahead of the competition. Taking this into consideration, E-gaming platforms such as the one that will be attached to Planet Rock needs to apply an interfunctional coordination strategy that enables the E-gaming platform to become not only customer-oriented but competitor-oriented as well. The company cannot afford to neglect its customers nor can it ignore changes to its competitive environment. As such what is necessary in this particular instance is to anticipate changes in the market (i.e. the popularity of new games such as Texas Hold Em’ Poker) and incorporate this into the company’s strategy while at the same time leveraging a certain degree of customer-oriented strategies (i.e. proper customer service) in order to not only provide great services to clients but increase the word of mouth popularity of the E-gaming platform itself. This will require a great deal of internal management agility and responsiveness however the reward will be an E-gaming business platform that can survive in the long term.

Free to Play and For Real Money Options

In order to entice users, various E-gaming sites actually offer free-to-play options wherein players can experiment with various games before they start playing for money. This can come in the form of games that give users free “credits” that they can use in practice games with other users. The reasoning behind this is quite simple, as users get better at playing particular games they become “hooked” so to speak, and as such continue to play the game more and more. As George Yee et al. (2005) describes it, “the behavior shown by players that have grown to enjoy playing practice gambling sessions online is actually quite similar to behavioral patterns seen in chronic gamblers”. Taking this into consideration, the more chances a company gives a consumer to play practice games for free the more likely they are to want to experience the real thing with real money. One way in which Planet Rock could take advantage of this is to offer free-to-play practice games on the E-gaming site that will be attached to it. By advertising through their various radio shows and indicating that people will be free to play particular games with those at the top of the leader board gaining prizes it is quite likely that not only will thousands of users sign up to play the free games but it is also likely that many among them will become addicted to the gameplay and subsequently wish to try the “for money” options that the E-gaming platform also provides. Not only that, but Planet Rock could also create monthly tournaments in a similar fashion to worldpokertour.com wherein thousands of players are invited to take part in the money pool for a chance to win a million pounds or more. Such a strategy has proven itself to be quite effective in terms of drumming up interest for the E-gaming platform on a site and as such due to the sheer amount of daily listeners the radio station has it will likely be able to drum up a great deal of interesting in the monthly tournaments thereby creating a significant prize pool that would entice users to try out the “for money” options that the new E-gaming platform has to offer.

E-Gaming, Churn Rates and the difference between High Value or High-Risk Customers

Churn rates refer to the number of customers retained versus the amount that leaves for other companies or just leaves all-together. In the case of E-gaming, this particular action is the result of three distinct factors, namely: maximization of marginal utility, better services and rates offered at another online E-gaming platform, and lastly, individuals that had no desire to become long term paying customers of the company in the first place. The maximization of marginal utility takes the form of players that have simply derived all the utility they could possibly have from the consumption of a particular product and as such no longer derive any pleasure from it. This means that players have in effect become bored with the games offered by a particular E-gaming platform. The reason behind this is quite simple; most games offered by a majority of E-gaming platforms today are basically 2-dimensional in that they lack sufficient breadth and depth to entice players for prolonged periods of time.

Over time such games become mediocre in the eyes of users and as such in order to satisfy their desire for new content this results in the second factor mentioned, namely the transfer of consumers from one E-gaming platform to another based on better services and rates offered. Based on the study Caught in the net (2007) which examined consumers utilizing E-gaming platforms, it was noted that consumers basically transferred from one platform to another based on interest and the amount of interesting content on the site. Once their interest waned they would subsequently transfer and this actually triggered a response in the site that they left to incorporate new services and games which would result in consumers transferring back once they got bored with the site they transferred to. This back and forth transfer of consumers is one of the main reasons behind the churn rates seen in the industry today and as such prevents various E-gaming companies from developing a truly loyal user base.

The last factor mentioned are instances where an individual has no interest whatsoever in becoming a long-term paying customer of the company and instead takes advantage of the initial introductory offers. What must be understood is that E-gaming platforms that allow customers to make money from playing games gain profits from long term rather than short term customers. As such these companies usually have generous introductory offers in order to get users “hooked” so to speak in playing the games on the site resulting in more money generated over time through the user’s continuous spending. The inherent problem with this particular strategy is that some unscrupulous users attempt to take advantage of the bonuses for new users by creating multiple accounts. This actually results in a subsequent loss for the company due to the number of bonuses paid out.

One way in which companies have gotten around this issue has been to either implement IP address restrictions in their registration process or by placing bonuses with each deposit of money. What must be understood though is that most of the games available on E-gaming platforms are chance-related with the mechanics being in favor of the “house” (namely the company). While there is a certain degree of fairness the fact remains that E-gaming websites can afford to give bonuses with every deposit since the odds are in their favor. Evidence of this can be seen in U.K.-based gambling sites agree.cdn and 32red.com that offer varying bonus amounts per deposit.

Loyalty Schemes and Give Aways

One way of retaining customers in the E-gaming business is through loyalty schemes such as awarding points, credits, and giveaways to players. Loyalty schemes have been noted as being one of the best ways of attracting and retaining consumers in most businesses and as such are a valuable tool in any company’s corporate arsenal. As seen in the case example of Soder (2009 ), it was noted that consumers actually liked the notion of being able to receive loyalty points from patronizing a particular business. When such systems were introduced into particular businesses, especially in supermarkets and ice cream shops, what occurred was a great degree of consumer longevity in terms of the amount of time they stayed loyal to the business. Taking this into consideration the E-gaming platform that will be associated with Planet Rock could in effect give valuable prizes to the highest-ranking players in their leader boards thus encouraging more people to play the games on the site in order to win such prizes.

Using Other Social Media Platforms

Aside from associating an e-Gaming platform with Planet Rock what must also be done is to associate the site with other social media platforms. This can come in the form of accounts with Facebook, Twitter, and Google Plus wherein the company will try to develop an online presence resulting in greater awareness for the E-gaming platform. This will not only increase the popularity of the site but could also bring in new markets that the company never even thought of penetrating.

Conclusion

Based on the presented data it can be seen that not only is an E-gaming platform a viable business opportunity but the fact is that combining it with a social media platform such as Planet Rock this enables a far greater degree of visibility as well as a distinctly greater reach enabling it to fully penetrate the markets it wants to encompass. As such it is recommended that Planet Rock attempt to venture into the E-gaming industry due to the inherent advantages it has which would result in it being able to encompass a greater chunk of the online E-gaming market

Reference List

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Lan-Ying, Huang, and Hsieh Y. Predicting online game loyalty based on need gratification and experiential motives. Internet Research 21.5 (2011), pp. 581-598.

Sieroty, C, Panel Says Critical Mass Matters For Online Poker. Las Vegas Business Press (10712186) 28.20 (2011), p. 18.

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Winkler, Rolfe. Online profits from gambling look like they’re in the cards. Wall Street Journal – Eastern Edition, 2012, p. 8. MasterFILE Premier.

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