MGM Resorts Plans To Launch A Social Gaming Website

+60.00%
Upside
29.25
Market
46.80
Trefis
MGM: MGM Resorts logo
MGM
MGM Resorts

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]

Relevant Articles
  1. What’s Happening With MGM Resorts Stock?
  2. Will Caesars Entertainment Stock Stage A Quick Recovery?
  3. Why Is The Market Rewarding MGM Resorts Stock?
  4. Buy The Dip In MGM Resorts Stock?
  5. Will Market Forces Continue To Weigh On Scientific Games Stock?
  6. Are Odds In Favor Of MGM Resorts?

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.

See our full analysis for MGM

Understand How a Company’s Products Impact its Stock Price at Trefis

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 []