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Trends in fast-changing social gaming

An entirely new gaming class which has developed lately is social gaming, which was born through social networking sites like Facebook.

Zynga is the world’s largest game developer on Facebook. Unlike traditional games that require players to own consoles or advanced computers and have a certain level of knowledge about games, social game platforms like Facebook and smartphones exist in almost every household, they’re quick to download, and players most often don’t have to buy the game.

Facebook gaming has opened up the gaming market to different age groups that did not play games before.

Social gaming includes a wide range of games that comprises the arcade social games (just games), the role playing games (which require familiarity and particular knowledge) and games of chance (such as Poker). Participation in the games does not require a cash deposit from the customer.

Social gaming is still in its infancy and still has not established clear conditions of taxation for companies providing it. The economic model that will make the games profitable for companies is not currently in existence. Most companies that are active in social gaming redeem the number of users-players who participate in these platforms.

By conservative estimates, the global gambling industry shows gross profit of around €300 billion. Of course, 95 per cent of revenue derives from offline games, since the penetration rate and the amounts that are played on the internet are lower.

Nevertheless, online media are growing rapidly. With regard to the existing trends and the strategy of companies, the dominant international trend is the transition from ‘.com’ to ‘.country’, namely adapting the platform and also the needs of each country because of different purchasing behaviour showing by each market and due to different legislation in each country.

The vision of a pan-European licence would be able to put uniform regulatory standards (taxation, product, international liquidity etc.) for all gaming companies operating in Europe, and it seems that it can be applied at the moment, as most countries apply different rules on the legal framework of their gaming market.

The vision of a pan-European gaming legal framework requires companies to invest significant funds to infrastructure and technology development. The gaming companies that have different platforms need to adapt to the requirements of the legislation of each country.

For this reason, in 2012 and 2013 the social gaming industry will be characterised by a tendency of mergers or consolidation of companies to meet the constantly changing regulatory environment in countries within and outside the EU.

Dr Tsiotsi is a lawyer specialising in information technology and telecommunications laws.

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