Why People Spend Real Money In Social Casino Games

Lloyd Melnick

This article is from our series of guest posts from business leaders in the video game industry.

When I accepted my first job in the social casino (free to play slot machines) space, I did not understand fully (or believe) why anyone would pay to play a casino game (slots, poker, bingo, etc.) if they could not win money. After all, people gambled to win money, or so I thought. It was, however, difficult to argue with the data that showed social casino consistently the most profitable genre in social and mobile gaming. Moreover, I also did not fully understand why people would spend real money for a virtual good (i.e. a virtual tractor) and assumed the two must be related.

Those questions prompted me to do research before starting my position in the social casino, which led to my blog post Why would anyone buy a virtual good? . The post also included information that people gamble for three reasons – economic, symbolic and pleasure-seeking – and only one of them was tied to making money.

Recently, I came across an article, Segmenting slot machine players: a factor-cluster analysis by Sandy Chen, Stowe Shoemaker and Dina Marie Zemke, that provides even more insight into why people would spend money on a social casino game. While the research was about real money slots players, it shows their motivations are often non-financial; that is they are not playing to make money.

Chen, Shoemaker and Zemke segmented slots players into four clusters based on five sets of factors, and by looking at each cluster it provides a good understanding of the people who play and monetize on social slots products. The five factors are ego-driven, learning, relaxation, excitement and financial rewards. Based on how players ranked the various factors, the authors were able to create four distinct clusters that show different types of players. Below, I recap the four clusters, which you can then use to make your products and marketing better fit for your target customers.

The "excitement gambling seekers" cluster

Players who are excitement gambling seekers are playing for the stimulation. Their primary motivation is the strong sensations they experience while playing, the positive memories from winning moments and the thrill of winning or losing. Excitement seekers were the largest cluster of slots players (27.5%) in the research.

The key takeaway about this cluster is they are not playing to win or make money, they are playing for the same reason someone rides a roller coaster, excitement.

The "relaxation gambling seekers" cluster

These customers are playing slots to escape. Their key motivation is to release tension and because the game is fun. They will often credit slots as the best way to relax completely. This cluster is more interested in the experience of playing rather than focusing on winning. This is has more men than women (51.5% to 49.5% respectively). 25.5 percent of slots players make up this cluster.

The key takeaway with this cluster is that they are playing largely for the same reason someone goes to the cinema or reads a book, to relax and escape. As with the excitement cluster, they are not looking for financial rewards.

The "utilitarian gambling seekers" cluster

These are players who play as a means of socialization, communing with friends or as an escape from everyday boredom. It is referred to as utilitarian because the purpose is functional (utilitarian) and players gamble to satisfy experiential motives. About 20 percent of the players sampled fell into this cluster (which was also the oldest group).

These players place little value in some of the features many social casinos focus on. They do not care about themes or progressive jackpots. One of their most important considerations is the minimum bet of the slot machines.

Earlier this month, I wrote about Robert Thaler’s work on behavioral economics, including his theory regarding mental accounting. Mental accounting is a psychological theory of how limited cognition affects spending, saving, and other household behavior. In particular, people group their expenditures into different categories (housing, food, clothes, etc.), with each category corresponding to a separate mental account. Each account has its own budget and its own separate reference point, which results in restricted movement between the accounts. When integrated with the research of Chen, Shoemaker and Zemke, mental accounting explains how people have a set sum to spend on slots and will chose the purchase that allows them to optimize use of those funds.

Need More Help Finding a Good Publisher?

Our CEO has been doing this for over 20 years with clients like Starbreeze Studios, Paradox Games, Haemimont Studios, People Can Fly and many more. We even have a special program for indie developers.

Tell Me About the Program

The "multipurpose gambling seekers" cluster

The multi-purpose cluster, as its name suggests, play for several reasons. Players in this cluster play because slots are fun but also because there is a good chance to win and it is in their budget. These are players who think (fantasize) about what they will do with their winnings and want to make a lot of money. These players normally do not care about themes around games. About 27 percent of slots players are in the multipurpose cluster.

The takeaway with this cluster is that it combines a desire to win money with the entertainment value of playing. These are the players who might seek a real money alternative when it is available but play free to play (social) slots if they are in a location where they do not have access to real money.

How men and women differ

The most important takeaway from the above cluster analysis is that it was done with real money land based slots players, not social players. This is critical because even people gambling in the traditional sense are largely not gambling to make money but for excitement, relaxation, etc. Once their motivations are understood, it is obvious why people would spend to play slot machines where the real money opportunity does not exist. As the authors write, “American slot players were mainly motivated by hedonic and experiential motives…gambling is a type of recreation or entertainment in America.” Hence, why social casino is such a strong and growing genre.

Remember these are real money players

I highly encourage you to think heavily into whether or not you really need a publisher.  If you do, it's a big choice and you should not rush into any agreement.  Do your research, have a lawyer review your agreement, fully understand the terms and payment information, and research your partners.  You will end up with a much better experience.

Key Takeaways

  • Research shows that there are four types of slots players, with each group having different motivations.
  • Three of the four groups are driven by non-economic reasons (excitement, relaxation, fun, etc.) to play slots, thus they get the same satisfaction from social casino products that they get from playing real money slots.
  • Gambling is primarily recreation and entertainment in the US.

Additional Resources

Understanding LTV, the Most Important KPI In Gaming

With Lloyd Melnick

Effective Strategies For Working From Home

With Lloyd Melnick

3 Ways To Understand Your Game's Audience

With Chris Zukowski

About The Author

Lloyd is the GM of Chumba at VGW, where he leads the Chumba Casino team. Previously, he was Director of StarsPlay, the social gaming vertical for the Stars Group. He was also Sr Dir at Zynga's social casino (including Hit It Rich! slots, Zynga Poker and our mobile games), where he led VIP CRM efforts and arranged licensing deals. Lloyd has been a central part of the senior management team (CCO, GM and CGO) at three exits (Merscom/Playdom, Playdom/Disney and Spooky Cool/Zynga) worth over $700 million. You can read more of his insights at his website.