Over the past few years, PlayStudios has brought innovation to the Casino genre through real-life rewards, multiplayer experiences, and more. At a time when the slots market in particular has been stagnant, PlayStudios is seeking growth by doubling down on what made the company previously successful, including launching a new game despite its top competitors mostly sitting still. This essay will explore PlayStudio’s evolving strategy, but to help set the scene let’s first take a look at the broader slots subgenre and what other notable companies in the space are looking to achieve.
The State of the Slots Subgenre
After experiencing higher growth than the rest of the market in the first quarter of 2020, the slot market, in terms of revenue, has more or less plateaued over the past couple years. Downloads noticeably dropped, impacted by Apple's new privacy rules, but revenue has not been significantly affected, pointing to healthy retention and monetization of the current userbase.
Though new contenders, such as Applovin, have tried to enter the market, competition is exceptionally high. Overall, the market is still dominated by big and consolidated studios with a fair amount of experience in slots. The only exception is SpinX Games, previously known as Bole Games, a Hong Kong-based studio that succeeded in the segment by copying best-in-class features from the subgenre’s best apps and bringing genre-mashup mini-games to live-op events. With apps that strongly resemble Playtika's, SpinX Games might also have been partly responsible for Playtika's drop in market share.
The focus for studios in 2021 has primarily been about improving their current games, mainly by drawing from what the slot industry knows works: Collectibles, Battle Passes, and sophisticated live-ops. Following this recipe, Aristocrat's Lightning Link and SpinX's Jackpot World have been among the few apps growing in slots. There was also a lack of new apps entering the subgenre; from the top slot players, only PlayStudios launched a new app in 2021.
When looking at the current state of the top five studios’ key games, we start to get a better picture of why there is so little change in the market. Almost all high-performing slot games feature high sophistication in their monetization, engagement, and progression systems. This set of features is shared between most of the top competitors either in their games or in their roadmaps, leaving almost no space for apparent improvements in the segment.
While there is a lack of opportunity for growth in monetization, engagement, and progression features, there is still some room for experimentation with social elements, both in social interaction and multiplayer experiences. So far only Playstudios has tried to differentiate in this aspect (more on this below), but it is still not clear how great the appetite is for it.
Given the currently stagnant state of the slots market, top players in the space are increasingly looking to new genres to help drive growth. For example, Aristocrat Technologies differentiated its portfolio through different acquisitions, and Casual and Midcore now represent 51% of its digital revenue. Huuuge Games is also slowly trying to differentiate itself through its Build-and-Buy strategy. The company acquired Traffic Puzzle in 2021, and new franchises now generate 12% of its revenue (Huuuge Games Q3 2021 earnings).
Playtika has shown the most significant growth in its non-casino portfolio. Despite the drop in IAP market share in slots, the company managed to still grow 8.9% between 2020 and 2021, primarily driven by apps outside of its Casino portfolio and M&A (like Reworks, which hit late in the year). The company, which has acquired six game studios since 2017, excels at the art of expanding into other genres — something others like PlayStudios should learn from. The company’s framework for differentiating its portfolio stems from acquiring Casual games companies with high-performing games and growing them by adding features that work in its slot portfolio. This strategy seems to be working, and acquired studios Supertreat and Wooga have seen their top apps become leaders in their respective segments.
A stagnant subgenre with key companies trying to grow elsewhere doesn’t sound like a friendly environment for growth opportunities. However, before jumping to that conclusion, let’s dig into PlayStudios — including how the company became successful and how it is approaching its strategy both similarly and differently compared to the other top players.
What about Playstudios?
To understand what is behind Playstudios' strategy, we first have to look back at what made the company one of the big players in the Slots subgenre.
My Vegas Slots was PlayStudios' first successful app, launched approximately a decade ago. It started with a partnership between PlayStudios and MGM Casino and featured a fidelity program with real-life rewards as its unique selling proposition. By playing the app, users would collect points and redeem them for discounts and bonuses in MGM hotels and casinos. The rewards program, now called PlayAWARDS, was then expanded to more casino partnerships and newer PlayStudios apps.
Innovation came again in 2016 with the launch of what became PlayStudios’ flagship game, POP! Slots, which focuses on a rich social and multiplayer experience from the beginning. It features avatars, an immersive casino experience, and multiplayer slots (co-op and PVP). Further updates brought features like WinZone, tournaments, outfits as rewards, which make the game the most social experience inside the slots subgenre.
PlayStudios' follow-up to its most successful title, MGM Live, came only in September 2021, with the game’s global launch. Despite the allusion to the partnership that started it, the app brings no disruption. MGM Live is only a more organized and succinct version of POP! Slots. It features only the last wave of slot machines released by the leading app and presents them as live events. It still doesn't feature collectibles and outfits as rewards, but the development team is building fast. From the time we started and ended this research, two new features have been added, and by the time you read this, collectibles might already be there. In terms of revenue, the game still amounts for a small percentage of PlayStudio’s total revenue (the orange in the chart below), but it is showing a positive early trend.
Although it might be unusual or surprising to release a new slots app in the current market, in PlayStudios' case, it almost makes sense. Taking into account PlayStudios' history and leading portfolio, we can point out two possible lines of thought that might be behind the launch of the app.
- PlayAWARDS, PlayStudios’ cross-app reward program, incentivizes users to play more than one app from the company. In this scenario, adding new apps would logically benefit players. Taking into account how much this app draws from POP! Slots and how fast new features have been added, building MGM Live might have been a pretty easy way to create a new, highly profitable app. As the content and features are the same as POP! Slots, there is the problem of possible cannibalization of users, but making sure that the app offers the same LTV potential as POP! Slots could minimize the problem.
- PlayStudios has already implemented many best practices and features from the slots market into POP! Slots, and it has plans to follow a similar path for myVEGAS and KONAMI Slots:
As the leader in social experience in slot apps, PlayStudios knows that there might be further opportunities for growth there, and they are the best equipped to tackle it. POP! Slots is not a great place to experiment, because with every new update, the app gets more cumbersome. Over-experimenting with the company’s cash cow does not seem very safe either. MGM Live could serve as a space for further innovation in social features. Leagues, Clubs, and Chat are still highly expected features that have not been so far added to the main app. Moreover, it could become the best place to test new slots content before adding it to POP! Slots.
Both scenarios come with returns that are equivalent to their costs and risks. The first scenario will mostly only make PlayStudios' market share a little bigger, while the second one is no easy feat.
PlayStudios Beyond Slots?
As you read in our previous section, many casino companies are venturing out into different subgenres and genres altogether, and PlayStudios is no exception. Last year, the studio entered the bingo subgenre with the launch of My Vegas Bingo, which as you can see in both the charts above and below is a relatively small player (in the market and for PlayStudios).
The decision to launch the app came at a time of growth for the bingo segment. Still, as Playtika’s Bingo Blitz significantly outperforms other competitors, there seems to be less space for growth. In a segment where multiplayer experience is already the norm, PlayAWARDS comes as the biggest differentiator for the app.
Going beyond Casino, PlayStudios has also recently acquired the rights to the Tetris brand and took over the control of the Tetris mobile app game from N3TWORK. The app is still far from successful, and most of its revenue is probably coming from ads. Importantly, even though PlayStudios acquired the rights to the brand and the current app, it did not purchase the studio itself, so it seems like it plans to run the puzzle game, which is outside of its core competency, all by itself.
PlayStudios has big plans, and its real-life rewards system, PlayAWARDS, seems to be crucial to its long-term vision. PlayAWARDS is currently part of all PlayStudios’ Casino games and still works similarly to when it started - players collect points in the participating games and spend them on rewards from the partners' network. Although the partnerships have been expanded beyond MGM, most of the rewards are still related to casinos and hotels around the Las Vegas area. The company plans to expand its portfolio to new subgenres and use PlayAWARDS in its current and future games. PlayStudios knows that PlayAWARDS has been fundamental for the growth of its apps because the feature incentivizes users to stay within the PlayStudios portfolio.
As PlayStudios approaches other genres, PlayAWARDS could help the company both attract profitable users from Casino to its different segments as well as introduce non-slot users to its non-traditional casino games. Not many companies possess a cross-app program as strong as PlayAWARDS, and PlayStudios believes that this can be a key differentiator.
In a way, PlayStudios seems to be trying to replicate what Playtika has aced in its diversification strategy. Still, we see two significant challenges coming ahead if PlayStudios wants to increasingly succeed outside of Casino. Firstly, it hasn’t yet acquired a non-casino company. Playtika (among others) has shown that when entering new genres, acquiring a solid and proven product alongside its knowledgeable development team is often the safest way to guarantee success. In Playstudios' quarterly report, the company seems keen to pursue acquisitions, so despite a broader M&A slowdown and falling valuations, we very well may see some acquisitive action soon.
Finally, real-life rewards work with PlayStudios' current casino portfolio, and management clearly thinks that they can pull it off in other genres as well. However, PlayAWARDS, as it is now, can only satisfy the needs of PlayStudios' current userbase. Most of the rewards are still restricted to Casino, and from those almost all are restricted to the United States and Australia. If the company intends to deliver something enticing to players from other genres, there is a lot of partnership expansion that needs to happen first.
Conclusion
Despite the stagnation in the slots market, PlayStudios is still trying to grow its portfolio. Going against what most competitors are doing, it focused most of its efforts on the Casino market and went as far as launching a new slot app. With the launch of MGM Live, the company now has two different slot apps with multiplayer and social features, while other competitors have not yet entered the space. It is also trying to follow market trends, diversify its portfolio and slowly enter different genres. However, it is yet to acquire any companies that could help with doing so.
While the slot market is saturated, the launch of MGM Live could help the company pursue innovation within the segment. There is room for more social and multiplayer features inside Casino and in its main slot app, Pop! Slots. MGM Live can be a place for experimentation and another option for players with social motivations. There is a slight risk of cannibalization, which we think can be minimized, and a higher risk of social motivations within slot players being lower than expected.
PlayStudios believes that the PlayAWARDS system could eventually be a differentiator for its new non-slot games. While we believe that this can be an opportunity in the future, it is risky and not an easy win. In the short term, PlayStudios’ best shot is to use any know-how it brings from slots — namely, monetization and live ops — and its experience on successfully bringing multiplayer to no-skill games. Whatever the case, it will be exciting to watch where PlayStuddios goes from here.
A big thanks to Fernanda Gonzalez for writing this essay! If Naavik can be of help as you build or fund games, please reach out.
