STEVE RUDDOCK: Let's start with how you got into the industry.
STEVEN SALZ: Yeah, it goes back to when I was younger and played a lot of video games, like lots of people my age. Then, I entered capital markets, working in investment banking research, covering stocks. I continued playing games and became interested in the in-game item marketplace around 2013–2015. It was popular, particularly with games like Counter-Strike and Dota, which are still popular in esports today.
These in-game items felt like equity, merging my professional life with personal interests. There was an emerging trend of skin marketplaces, where in-game items called skins were traded and used for gambling despite being illegal. I met Ryan (White) and Kevin (Wimer), who ran an in-game item marketplace (not a gambling site), and became involved with them, eventually co-founding Rivalry. We saw significant interest in using video game aesthetics and items for real-money gambling on eSports, coinciding with the emergence of platforms like Robinhood and cryptocurrency.
STEVE RUDDOCK: I've been around the industry for too long. Some of my earliest memories from G2E (Global Gaming Expo) in the mid-2010s were the fascination with millennials. There's a joke that casinos were so focused on millennials that they forgot other age demographics. You mentioned millennials and Gen Z. In recent years, the industry seems to focus more on Gen Z, skipping over millennials. Millennials have a big interest in video games and eSports. How do you see the differences between these two demographics?
STEVEN SALZ: The youngest millennials are just about to turn 30, and as a percentage of the cohort between 18 to 30, Gen Z is probably the larger chunk. Our focus on Gen Z is due to our acquisition channels that disproportionately target them. Millennials are still interested, but the nature of our product and its appeal aligns more with Gen Z. However, the millennial range is broad, with some in their late thirties or even early forties, making building a product for them slightly different.
STEVE RUDDOCK: I've always felt people age into different types of gaming and gambling. So, it's not about targeting Gen Z specifically, but they're currently the primary users of these games, while millennials are in their thirties with families. Do you agree?
STEVEN SALZ: Yes, I agree. Gaming and tech industries have cyclical, generational cycles, where companies emerge to cater to that generation's needs. Gen Z is just beginning to experience this phenomenon, and we're excited to be part of it.
STEVE RUDDOCK: Where do you draw the age lines for Gen Z?
STEVEN SALZ: I'd say, obviously, legal gambling age, so depending on the jurisdiction, 18 to 19, even up to 26, 27. Gen Z is basically a person born in the late nineties, though some say 95, 96 marks the start. In some cases, they could be in their late twenties or close to 30 now. Our sub-Gen Z launched in late 2018, but really ramped up in 2019. The average age of our customers then skewed towards early to mid-twenties, now probably mid-twenties. We've seen our average age increase over the years.
STEVE RUDDOCK: My oldest is probably, well, my youngest might be too. They're 15 and 17, so they're right on the cusp. Obviously, they don't gamble, but their consumption of social media and video is drastically different from mine. It's interesting to see, considering I'm not a Luddite with tech. They just communicate and consume content differently.
STEVEN SALZ: Absolutely. Watching younger people on their phones is mind-blowing. They move through platforms like Snapchat at astonishing speeds, which influences how we design our products. It's about retaining attention and pacing, especially on mobile platforms.
Our focus this year is on experiential elements. We've gone through exercises to create engaging experiences that keep users' attention. Think of mobile game designs that draw you in with movement, mini-experiences, and constant engagement. Creating a meta-game within the product is key to capturing and retaining attention, particularly for emerging demographics.
STEVE RUDDOCK: One of my theories is that younger people, with less disposable income, are drawn to microtransactions to keep them engaged. While a $100 bet on a game might be enough for older generations, younger players prefer smaller, more frequent bets. They'd rather spread $50 over multiple bets than place one or two large bets.
STEVEN SALZ: I've not thought about it in terms of wallet size, but younger players do prefer smaller, more frequent bets. The excitement lies in potentially winning big with minimal investment, a concept familiar to video game mechanics. It's a shift in behavioral expectations towards excitement and potential outcomes.
STEVE RUDDOCK: Do you think this shift is generational, influenced by experiences like growing up during the financial crisis?
STEVEN SALZ: I'm sure there's some influence from that, but being on the internet for the last decade has shaped the psychology of our demographic differently. The pacing and microtransaction nature of online experiences has created a consumer psychology that craves excitement rather than focusing on beating the book on narrow odds. While it's possible they may mature into it in the future, currently we don't see much of that on a significant scale.
STEVE RUDDOCK: Tell me a bit about your games. I've seen your Cash & Dash game but haven't delved deeply into it. What's the flavor of your offerings?
STEVEN SALZ: Cash & Dash is our latest creation. While our marketing targets a specific demographic, our business is relatively diversified. About 50% of our wagers are in casinos, 30% in eSports betting, and 20% in sports betting. Cash & Dash is an original casino game that ties into our existing intellectual property. The main character is a chicken guy, a bank robber figure from our IP. The game involves navigating through a bank to reach the money with the multiplier increasing as you progress. You can “chicken out” at any point to cash out your winnings. It's more interactive than traditional slot machines, feeling more like a video game where players have agency.
STEVE RUDDOCK: So, the potential max payout is predetermined through the game's RNG (random number generator), and players make decisions throughout. There's no change to the actual payout.
STEVEN SALZ: Correct. We've found that younger players prefer perceived agency in their casino experiences. They want to feel engaged rather than passively watching. Our games are designed with content creators in mind, incorporating elements that encourage community engagement. This makes the gaming experience more interactive and enjoyable for players.
STEVE RUDDOCK: What's the average playthrough time of a game? Can players pause their character before making decisions?
STEVEN SALZ: Yes, players can take their time between decisions, pausing their character as needed. They can choose when to cash out or continue, with the multiplier increasing as they progress through the game. Adding more doors changes the odds and potential payouts, providing different levels of risk and reward for players.
The probability of encountering a booby trap door now is much lower. Yeah, that's the case. So, people tend to play a lot. We often see players engage in 40 to 50 sessions. We measure this more as play-throughs rather than simply tracking how long they spend on it. I'd be curious to know that, though. It's something I could probably find out. But we tend to look at it more in terms of how many times they complete the game. Did they burn out after one try and get annoyed? That's good to know. Or did they play it 40 times in one session? That's great.
STEVE RUDDOCK: Yeah, that was one of the big drawbacks of the skill-based slot-style games they were trying to do about five years ago. GameCo and Gamblit had a few different video game-style ones, but the time it took to play through always kind of threw off the casinos. Obviously, with what you're doing, it's a mobile app, but it seems like it would be almost perfect for next-gen slots, right? It would be something that could go into a land-based casino.
STEVEN SALZ: It's quick. Yeah. Like on that comment, that's because I remember speaking to the GameCo guys actually at the time. With our first game, Rushlane, which is still in play, it engaged a specific cohort and was an incredible marketing channel for us. However, the average play-through was like three to four minutes, minimum. So, when we first developed those games, the casino guys were adamant that it had to be seconds, not minutes. We had to adjust our approach accordingly.
We wanted to see how things would progress quickly. We realized to some extent that it was true, and we incorporated some of those insights into Cash & Dash. But what I want to emphasize is the long-term impact of Rivalry Rushlane as a low-cost customer acquisition vehicle. Rushlane is essentially an augmented reality Mario Kart set in a cyberpunk universe. When you enter the game, you see yourself as a participant in a marble race with your own username and can race alongside up to 30 other players. We have various maps and offer proportional payouts at the end. While it takes time to play, the entertainment value is exceptionally high. We organize special events on weekends where creators draw their audience to play with them on Rivalry. So, while it may not have the same return as a slot machine, it has proven to be a much more effective marketing, acquisition, and engagement tool.
STEVE RUDDOCK: It seems like you've also addressed the need for agency without making the game too skillful that it becomes difficult to play. Some skill-based games, like Deal or No Deal Poker, had complex instructions that could lead to costly mistakes. Some of the GameCo games had similar issues with lengthy instructions at the beginning, almost requiring a one-minute lead-in time just to learn to play.
STEVEN SALZ: Yeah, exactly. That's why Aviator has been so successful. It's intuitive, fast-paced, and gives players a sense of involvement and choice without being overly complicated. Finding that sweet spot is crucial for these games.
STEVE RUDDOCK: I'd like to shift the discussion to marketing.
STEVEN SALZ: Yeah, I was thinking about some of the things I've seen about the recent MGM ads and their use of celebrities. It got me thinking about our marketing approach, where we utilize influencers who could be seen as celebrities in internet culture. However, we try to do it in a way that doesn't feel like Jamie Foxx is just telling you to use MGM or whatever product he's endorsing. It feels like outdated Mad Men-era marketing that doesn't resonate anymore. So, your insights on that MGM ad really resonated with me.
STEVE RUDDOCK: Yeah, I mentioned the difference between Michael Jordan selling sneakers, where there's a clear connection, and having someone like Tom Brady endorsing a betting platform on my Substack. It's not as convincing because everyone knows he's being paid for it.
STEVEN SALZ: The Michael Jordan example is interesting and something I've been delving into lately, albeit in a more philosophical and casual manner. Essentially, it relates to a philosophical concept called “mimetic desire” by Rene Girard, which influential figures like Peter Thiel base their investment strategies on. It suggests that human behavior is often a reflection of the desires of others. So, the success of the Air Jordan brand wasn't just about the quality of the shoes; it was about the desire to emulate Michael Jordan.
Most of the time, influencers are selling you something they themselves wear, have, or use. Take MrBeast, for example. He's a big name on YouTube and has his own brand, like Feastables. He sells his branded chocolate and has the desire to start a chocolate bar company, aiming to have his products available at Target or other big retailers. Then there are products like Prime drinks, endorsed by influencers like Logan Paul and KSI. These products become incredibly popular because your favorite influencers and creators desire them, and their fans follow suit. It's like a ripple effect where everyone wants what their idols have, creating a cycle of desire. It's akin to the Venus effect: you like someone, then your friend does, and suddenly you desire that person even more. This is the typical cycle we see. Influencer marketing, when done right, taps into this desire and works well, especially with Gen Z, as they aspire to emulate their favorite influencers who flaunt luxury items like cars, watches, and branded drinks. So, the missing link in traditional marketing is this organic connection, where you're unsure if celebrities like Tom Brady genuinely use or desire the products they endorse; they're simply spokespersons.
STEVE RUDDOCK: Absolutely. It's always been the case, even when I was younger. I couldn't afford Callaway golf clubs, so I settled for buying a Callaway hat or a golf ball. Similarly, with Prime energy drinks, people may not be able to replicate Logan Paul's stunts, but they can certainly enjoy the same drink. It's that tangential connection that drives purchases.
STEVEN SALZ: Exactly. Fans of Max Verstappen in Formula One may never drive like him, but they can buy a Red Bull hat and emulate his style. It's about mimicking and copying the behaviors of influencers that resonate with us. This deep connection leads to a strong desire for the same products. Contrast this with traditional celebrity endorsements, where the mystique of Hollywood used to hold value. Nowadays, influencers are more relatable and engaging, thanks to their daily interactions with fans on social media. This authenticity is crucial, as today's generation can easily spot inauthentic marketing. If it feels forced or fake, it won't resonate. That's why successful marketing needs to be genuinely organic and engaging.
STEVE RUDDOCK: Absolutely. It's fascinating how mainstream gambling hasn't fully tapped into social media and influencer marketing. As someone in the martial arts industry, I see this disconnect even in my niche. There's a lot of untapped potential in leveraging influencers to reach new audiences.
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