Analyst: Zynga’s internet gambling chances a long shot |
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Analyst: Zynga’s internet gambling chances a long shot
Has the big red dog of social gaming peaked?
Arvind Bhatia, interactive entertainment analyst with Sterne Agee, said Zynga will need to convert an increasingly larger percentage of users into payers in order to make any significant growth in 2012.
Zynga’s active users in the fourth quarter were down 6 percent, at 51 million, according to Appdata. Bhatia noted that the decline in active users comes at a time when Zynga is adding new titles.
“In fact, currently, Zynga appears to be generating less traffic versus a year ago despite having twice as many titles since then,” Bhatia said in a note to investors.
Zynga’s stock was trading at $8.66 a share, down 6 percent, Wednesday afternoon.
San Francisco-based Zynga, which went public in December, has a game development studio in Seattle.
Meanwhile, Bhatia called any online gambling opportunities “a long shot.” Zynga recently launched a Zynga Poker game and is planning more Las Vegas-style social games on Facebook.
Nevada-based IGT recently said it planned to buy Seattle game studio Double Down Interactive -- a developer of casino-style online social games on Facebook -- in a deal worth as much as $500 million. The deal comes at a time when states are pushing to legalize online gambling. The Double Down deal has raised questions about what role social games on Facebook might play if the federal government does open up online gambling in the U.S.
Here is Bhatia’s take on Zynga’s gambling opportunities:
Recently, there has been speculation of a potential long-term opportunity that (Zynga) may have in online gambling, if it is legalized in the US. Recall, Zynga has a Facebook game, Zynga Poker, that draws close to 7M daily active users. In addition, the company has announced Zynga Casino and Zynga Bingo. First, it is not clear how soon, if ever, online gambling may be legalized in the US. In addition, we are not sure if Zynga has any big advantages in online gambling compared to established players. As such, the notion that Zynga could benefit from this is highly speculative, in our opinion.
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