DoubleDown & IGT: Case Study
DoubleDown Casino is barely three years old, has only 80 employees, and yet is taking the social gaming market by storm.
This little-social-casino-that-could has over 14 million daily users and was recently sold to International Gaming Technology (IGT) for $500 million. All those users – and all that cash – is just icing on a cake that includes a ton of big time deals with land-based casinos and mobile app distributors.
There’s no question that DoubleDown is going to be a dominant player in the fast-growing social casino market for the foreseeable future, but how did they do it? Let’s take a closer look at how DoubleDown seemingly materialized out of thin air to become a social gaming contender.
A Brief History of Social Gaming & Casinos
Social casino gaming has been around in one form or another almost as long as the World Wide Web itself. For many years, sites like Yahoo! Games incorporated basic chat and other social features into poker, backgammon and other games, but it took Facebook to really mature the market.
In 2007, the modern social gaming era was launched with the release of Zynga’s Texas Hold ‘Em on the mega-social network.
Zynga’s products offered a lot more than chat functionality and had a built-in social network – Facebook - that guaranteed quick growth. A seemingly never ending supply of players, and their friends, kept social poker rooms lively; while serious players and even a few whales kept the money flowing in.
For years, Texas Hold ‘Em was the most popular Facebook app and helped build a massive market for social gambling.
By 2012, Zynga’s dominance had waned considerably, but social gaming remained big business. Last year social gaming rang up $8.2 billion in revenue worldwide. Some sources suggest that in a couple of year, that number could go as high as $14.6 billion.
That same year, Facebook threw some additional fuel on the social fire when they announced that they’d be offering real money social gambling apps in countries with legal online gambling.
Facebook’s announcement set off a flurry of activity as traditional igaming companies began snapping up social casinos in hopes of cashing in on the next big thing.
After all, social casinos offer the best of both worlds; all the cash turnover of real-money gambling, without all the regulatory headaches. RMG social casinos simply expand the player base and revenue potential.
Though they didn’t know it at the time, but Facebook’s big announcement would have a big impact on the employees of a small, but thriving, Seattle based company called DoubleDown Interactive.
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The DoubleDown/IGT Story
DoubleDown Interactive was founded in 2009 by Greg Enell and Cooper DuBois with the idea that they could deliver social friendly gambling from a single app. This was a major departure from the way Zynga and other social players worked and gave DoubleDown a big advantage in a very competitive market.
Because Zynga had already cornered the Facebook poker market, DoubleDown’s focused on building a blackjack app. With a $1 million start up fund and an experienced team of gaming developers, the Seattle team came up with a game and began promoting it via Facebook ads.
By the end of launch day, DoubleDown’s blackjack app had already earned back its initial marketing costs. Before it had been on Facebook for a full month it was earning as much as $.35 per day/active user. That’s an amazing number in an industry where making two or three cents considered pretty good.
While DoubleDown has no doubt pulled a lot of disgruntled players from Zynga – which is hardly the most popular company in the world – their success is largely the result of good planning.
DoubleDown’s full casino suite model allows them to keep players in their ecosystem by offering everything they need in one place as DoubleDown CEO Glenn Wolcott described in an interview with VentureBeat.com:
Probably one of the reasons we monetize better than others is that…if we had, say, one game — if we were just poker, for instance — if you wanted to give us $3 dollars to get 150,000 chips, you could only use them for the one game. With ours, you can use them on a bunch of different games.
Wolcott is quick to point out that he doesn’t really think of DoubleDown as a casino company, but more of an entertainment company. He looks at it this way:
The question isn’t, how big is the casino-style market on Facebook? The question is, how big is the entertainment market?
It’s a unique approach to the social casino business, but that doesn’t mean DoubleDown doesn’t understand the casino business. Their business model, and that of every social gaming shop, is built on the same ups and downs as their land-based counterparts. Wolcott is quick to point out that creating a sense of loss is part of the casino experience.
Even casual players need to feel like they’ve got something at stake when they’re at the (virtual) tables.
With a rapidly growing user base, established revenue and a bright future, DoubleDown was primed for every tech entrepreneur’s dream come true; acquisition.