Introduction to Betcade
It is very easy to see the appeal of the Betcade offering and why it made such a splash when the company made its formal debut at the most recent G2E conference in Las Vegas late in 2015. An app store for gambling products that directs consumers to exactly where they will find the gambling product for them is, as chief executive and founder David Chang suggests, is something the industry has been crying out for. Chang hopes Betcade will truly open up the possibilities of the Android eco-system to gambling, and points out that there are other examples of third-party stores that have already blazed a trail, not least Amazon. Now just comes the tricky business of negotiating a profit-share with the operators. The company is already talking to a number of tier one operators in the UK and has targeted a launch for the first quarter 2016.
Gamcrowd: Can you explain something of Betcade and how you yourself entered the industry?
DC: I’m a recent entrant into the gaming industry. Previously I was in the games business and I think that has provided me with a different perspective on how to solve some issues in our gaming industry. Betcade is a product of that. When I was at Gamblit Gaming, doing their mobile strategy, I noticed with most operators that the Android strategy isn’t quite there. If people want to access gaming content on an Android device today, the gaming industry says basically you have do it on a browser, which unfortunately is not how most people want to interact with entertainment content today. Everybody has a preference for apps.
So the ‘aha moment’ came to me when I figured out that as a single operator I wasn’t going to be able to solve the problem, but if I thought about it from an industry perspective, I might have a chance to solve this problem by solving it for the entire industry through the creation of a store. We seem to have hit on something where everybody seems to be having the same frustrations with the Android ecosystem. We have received enthusiastic and overwhelming responses about wanting to have content their content on our store.
Gamcrowd: This is a very current problem for operators isn’t is, struggling to get the games in front of the audience?
DC: Before I got into games, I was doing technology marketing and analytics, and part of the reason why I think the Betcade store is going to be successful is because the store aggregates the entire affinity group that is going to be interested, and from there the operator can say, ‘hey, come try our app’. Today there isn’t a central source for that, it is distributed all over the internet. Which is not so great. Even in the Apple app store, they don’t even promote these apps as they should. Even there it’s not great. So what we’re doing is concentrating this affinity group and then putting the content they are going to be interested in front and centre.
Gamcrowd: So effectively the reluctance of Apple and Google over gaming has created an opportunity for Betcade to fill?
DC: Exactly right. There’s a terrific opportunity. Gaming is a unique niche and you really need to be prepared to deal with the regulatory consequences, the heightened scrutiny around financial transactions, these type of things. We’ve seen other players in this space not being prepared and hence getting into trouble. I can see the reluctance from Apple and Google to jump into this space but what that does is create a terrific opportunity.
Gamcrowd: This is really about the hygiene factor isn’t it?
DC: Interestingly enough, one of the things we tried to figure out is that we had people saying when we launched ‘you should put social games up on the store’. Free-play games. A similar affinity group and a degree of crossover. But we decided not to do that because of that particular reason. It’s turned out to be the right decision. The feedback we’ve been getting from the casinos is that this is really refreshing. They don’t want their apps appearing next to underage content or regular games. Absolutely right; when you download the Betcade store you need to know what you are in for. You’re going to get into gambling content.
Gamcrowd: How long has Betcade been up and running?
DC: We announced our funding a little while ago, but we have been working on stuff since April.
Gamcrowd: What have been the biggest questions you have faced from investors?
DC: What’s interesting about us is that depending on the regulatory environment and the territory, a lot of regulators don’t see us as a regulatable entity. That’s not to say we’re not in the gaming industry, because we are. But are we a casino and do we warrant regulation? It’s the current opinion of the UK Gambling Commission that we’re not; they see us as an advertiser and maybe a payments service provider. But we are not a casino because we are not involved in the wager. So that has been a benefit to us because there are some investors that don’t want to touch the regulated industry directly. But because essentially we are a store and a technology platform, that has helped us with a lot of conversations.
Gamcrowd: You found it a fruitful conversation with investors about your model?
DC: Here’s the thing. This is where I think my perspective as an outsider has helped me. When I talk to people in gaming, and say I’m going to launch a third-party app store, they say how come no one’s ever thought of that before? Well, actually, they have; there are third-party app stores for games; Amazon is a third-party app store; there’s a bunch of third-party app stores out there but nothing has been specifically targeted for gaming. So with investors, I say I’m going to be a third-party app store for gaming, and they get it; it’s a very easy elevator pitch. There are very successful examples. So people understand that the business model works.
Gamcrowd: Is there anything in your elevator pitch about opening up in the US?
Initially we are going to be working in markets that are mature. The UK, and other European markets. But what I didn’t expect is that since we launched we have had regulators that have not considered online gambling as a viable industry for them reach out to us and ask whether or not we would be willing to work with them to create official stores. It’s interesting; if we can create a store for a regulator, they would have access to a lot of information. And it seems to me a couple of these territories on the verge of wanting to do this, but who have concerns about data and controls, but if you can create an official store for those type of territories, then we can unlock a couple of markets. It would be the same product, but operated on behalf of the regualtor. They like because they get all the registration information, they could enforce all responsible gaming controls, they could 100% enforce the content available. They would know how much money was being spent.
Gamcrowd: What do you see in terms of data?
DC: We would see the throughput in terms of revenue. We do ask people to register. We won’t know specifics about certain casinos because we don’t do the wager registration. A lot of the fine details we’re not going to know; but a lot of the macro details we’re going to know. We will be able to say how many millions of dollars have flowed through the Betcade store very month; the total number of active accounts, that kind of data.
Gamcrowd: What was the reception to Betcade at G2E?
It was frankly phenomenal. I thought the next thing I would have to do would be to spend a lot of time doing outreach, meeting a lot of online casinos, but at this point we are in discussions with the top ten operators in the UK and just about every operator in the US. It’s kind of amazing. People immediately grasped the value of what we are doing; the value it can unlock for the industry.
Gamcrowd: What is the economic model for a third-party app store?
DC: So our business model is predicated on the economic activity that we are going to create. Right now we are engaged with the industry to understand the pricing. I’m convinced we will create enough activity to make it profitable for us, but as an industry solution I want to ensure the pricing model is fair and works for the gaming industry in general. One thing I’m very cognisant of is that because we are not a general store, we want to create a tailored product for the industry, to figure out a pricing model that works for everybody. In other third-party stores, the revenue share is 30%. So we want to find out why that model doesn’t work for gaming, and figure out a model that works for everybody. We want to make sure the pricing is fair for everybody; not just for the top 10 who can work with scale, but also the smaller operators. I want to put together an industry plan. We want to be an industry solution, a platform. If we go out and do individual deals, it is very hard to keep pricing consistent.
Gamcrowd: What about the marketing? How does the Betcade model affect that area for the operators?
DC: This is the conversation we are having. When you talk about pricing, you want to involve their marketing people. At the end of the day, what we believe we are going to do with the store is aggregate this affinity group for people, so we are going to drive down their marketing costs. We are going to have editor’s choice, top ten lists, categories, all these things for visibility for casinos that isn’t available today. So when I open up Betcade, I will be able to see the content I want to get into. You’re not going to have to spend a lot of money. Part of the pricing conversation is to say we are providing a lot of value.
Gamcrowd: So Betcade could be seen as a replacement for other marketing efforts?
Absolutely. One of the things in the games business was to use a store to build up organic traffic. With this store we will be able to do that for them. We’re going to change their spend a little, change their mix. We’re trying to do this right. I think the wrong thing to do was to put out a product in a silo, and say ‘good luck people’. That wouldn’t fulfil our mission. I need to have these conversations. It’s a process I need to understand.
Gamcrowd: You’re going through a learning process?
Yes, it should carry on for the life of our business.
Gamcrowd: Where are you based?
LA, Silicon Valley, and the UK because that will be our first market.
Gamcrowd: And when do you launch? That’s the exciting part?
First quarter 2016. You don’t know you have a business until you see the proof of the pudding. Certainly we’ve had amazing conversations with people, and everyone has said they want to put their apps on our store, but until they are up, then we will be waiting to see.