Life after Facebook: Will Online Gambling Be the Future of Zynga?

      Life after Facebook: Will Online Gambling Be the Future of Zynga?

PR Newswire

NEW YORK, January 23, 2013

NEW YORK, January 23, 2013 /PRNewswire/ --

As the partnership between Facebook and Zynga turns grim, Zynga shifts its
gears and expands to include online gambling in its portfolio. Will turning
into a gambling company change the fate of company?

Zynga Inc. (NASDAQ: ZNGA) [Full Research Report]^[1] is now planning its next
steps after its partnership with social networking site Facebook Inc. (NASDAQ:
FB) [Free Research Report]^[^2^] fell through in the middle of 2012. Zynga's
shares dropped after Facebook revised its contract with Zynga, indicating that
Zynga is now subject to the same terms as other game developers in the social
network. Furthermore, after Zynga's CFO left for Facebook and after its
treasurer left for Twitter last year, it was announced last week that Zynga's
Director of Engineering Dali Kilani has left the company to serve as VP for
Engineering for iFeelGoods, a rewards start-up company. Amidst these
developments, Zynga now plans to move towards offering real-money gambling
apps aside from social games.

Zynga's most recent move is the launch of CoasterVille early in December.
However, CoasterVille has garnered only 1M Monthly Average Users (MAUs), as
compared to Zynga's more successful games like FarmVille2, with 10M MAUs.
While Zynga remains as the top social game developer,'s Candy Crush
Saga has also threatened FarmVille2's reign after briefly taking the top spot
in the MAU rankings.

It is for this reason that Zynga is now expanding its portfolio to include
gambling apps. It has recently signed a partnership with Bwin.Party Digital
Entertainment Plc. (BPTY) to offer real-money gambling games in the United
Kingdom. The company has also applied for a Preliminary Finding of Suitability
from the Nevada Gaming Control Board, the first step towards offering
real-money gambling games in that state. Will this move towards offering
real-money gambling games be Zynga's hope for future growth?

Zynga's shares rose 7 percent after Zynga announced that it was making steps
towards acquiring a gambling license in Nevada, signaling that this move is
met with approval. However, if Zynga truly wants to rise back up, it must earn
revenue not just from one state, but also from all over the country, something
that is not likely to be legal within the next five years, according to Doug
Creutz, a Cown & Co analyst. That is why the company is turning to other parts
of the globe where online gambling is legal, as it waits for the activity to
be legal nationwide.

Zynga's next steps are crucial as the company drifts further away from
Facebook. The company has assigned Sean Kelly, an experienced mobile game
developer, to lead the company's expansion from desktop to mobile. The company
has also hired Maytal Olsha, a former executive at 888 Holdings, a company
that runs real-money gambling sites in Europe and other regions where gambling
is legal. Lastly, the company has begun to develop games like Sports Casino
and Elite Slots, games that simulate online gambling. These are the concrete
steps the company is taking in order to move towards offering real-money
gambling games.

Zynga recent announcement of a repurchase program authorizing selling of up to
$200 million of its outstanding stock is a sign that the company believes its
shares are undervalued at current levels. However, those who are buying shares
are driven only by the belief that Zynga can turn things around. As the
company is scheduled to discuss its fourth quarter and full year 2012 results
on February 5, 2013, it is exciting to see what Zynga's plans are to climb out
of its predicament.

Reference Links:

^[1] The Full Research Report on Zynga Inc. - including full detailed
breakdown, analyst ratings and price targets - is available to download free
of charge at:

^[^2^]The Free Research Report on Facebook Inc. - including full detailed
breakdown, analyst ratings and price targets - is available to download free
of charge at:

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