MGM Resorts Plans To Launch A Social Gaming Website

by Trefis Team
+14.80%
Upside
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Trefis
MGM
MGM Resorts International
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Casino veteran MGM Resorts International (NYSE:MGM) is working on launching a social gaming website in order to grab share of the growing social gaming market. According to Lazard Capital, the social gaming industry will be worth $9 billion by 2015. [1] With the increasing prevalence of social media, people are spending more time on social networking websites to stay connected. Approximately 41% of the U.S. Internet users access social networking sites to play games. [1]

The new game will have a Las Vegas casino theme and will be on similar lines of Zynga’s (NASDAQ:ZNGA) popular online game FarmVille. This move could help MGM establish a relationship with this niche customer segment. While it will be launched as a free gaming website, MGM’s chairman James Murren asserted a possibility of monetizing it at a later stage when online casino applications gain legal status. [2]

Speculation about MGM planning to enter the social gaming space started last year. (See our previous post: MGM’s Social Gaming Push Could be an Engaging Marketing Tool) According to reports, the social gaming website is expected to be launched in the next three months. [3]

We consider this move as a strategy by MGM to promote its brand and acquire customers, and it has the potential to become a revenue stream in the future if and when online gambling becomes legal in the U.S.

We have a Trefis price estimate of $11.10 for MGM, about 5% above the current market price.

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Notes:
  1. See: How Large is the Online and Mobile Games Market?, Gamesbrief [] []
  2. See: Zynga’s popular online game FarmVille, SunHerald []
  3. See: MGM Resorts to Release Social Gaming Site, Casinospy []
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