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Mar 10, 2015

UK's ZyngaPlusPoker closing: Has Predicted Social Gaming Boom failed?

By RTR Dennis

A few years ago, online gaming analysts predicted great things for social-gaming companies if they were to enter real-money iGaming markets. And Zynga became one of the first to test these waters when they entered into a deal with bwin.party in 2013, launching ZyngaPlusPoker and ZyngaPlusCasino just a year later in the UK. The hope on Zynga's part was that they'd quickly show success here, then move on to other regulated markets in Europe and the U.S. But unfortunately, the social gamemaker has failed to even complete the first leg of their plan.

"We are very sorry to announce that ZyngaPlusPoker and ZyngaPlusCasino will be closing shortly," the company stated in a recent email to players. "If you have a balance please log in to withdraw." So far, neither Zynga nor bwin.party have released a statement on the closings. But as you'll see below, there are some very good reasons for why this venture didn't work out.

Zynga fails to assess difficulty in converting play-money customers

With over 35 million faithful Zynga Poker players, it seemed logical to think that the company could monetize some of these hoards into real-money players. However, their first mistake was failing to consider just how big a stretch it is to convert play-money customers who crave a social gaming experience, into more-competitive players who are willing to improve to compete against fellow players.

Another problem here is that Zynga may not have realistically assessed their chances in the real-money market, with a good percentage of their customers being Facebook users who are under 18 years old. Many of these customers buy play-money chips in Zynga Poker with their parents' credit card, which, given the less-harmful view of social gaming, is seen as acceptable by many. But it's not only less-socially acceptable for minors to do this on real-money poker sites, but also illegal.

Is the social gaming boom over before it even started?

Any fantasies about Zynga being able to funnel millions of Facebook users towards ZyngaPlusPoker and ZyngaPokerCasino have ended for now. Additionally, it's not like Facebook has made a very strong effort to enter the real money market; their biggest venture so far is a UK bingo app that they launched in 2012.

The truth is that, just like regulated U.S. iGaming, the impact of social-gaming sites in the real-money market was overly romanticized without true justification. Now, this isn't to say that Facebook and Zynga will never make a mark in regulated markets. But if/when they do, it will certainly be more-gradual growth, rather than a second coming of the 2003-06 online poker boom.