There’s no doubt that there will be a lot of profit to be made in online real-money casino gambling. It’s a $30 billion industry set to grow to $40 billion by 2015. While this is definitely nothing to sneeze at, the problem for most online casinos is that the cost of acquiring new players is very high, at about $200 per customer.
On the other hand, social and mobile freemium casino players are much less expensive to acquire, taking only about $1 or $2 to hook new players. Of course, the caveat is that since real money isn’t wagered in freemium casino games, these players also generate less revenue for the industry ($1.6 billion in 2012). In general, their lifetime value ranges from $10 to $78 per customer compared to about $1,600 for the average online casino gambler.
From a business perspective, the obvious solution then would be to try and convert freemium players into real-money gamblers. This would allow online casinos to reduce acquisition expenses, while boosting revenue. And that’s exactly what some pioneers have been trying to do.
The problem is that it hasn’t been working very well, and it probably won’t—with good reason. Continue Reading…