Zynga Platform Could be a Cash Cow as New Deals Support Move

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Zynga

Zynga (NASDAQ:ZNGA) seems to have attracted quite a few big names in the gaming industry to its new gaming platform. It launched Zynga Platform only last week as an effort to reduce its dependence on Facebook. Along with its own offerings, it announced that the Zynga Platform would enable other game developers use its platform and API to host their own games, and extend the reach of their games using Zynga’s vast cross marketing potential. It also announced deals with Mob Science, Row Sham Bow and Sava Transmedia at launch. This week, it signed up some major gaming companies such as Konami, Playdemic and Rebellion, which will soon launch their games on Zynga Platform. [1]

Check out our complete analysis of Zynga

Zynga Platform Picking Up Steam

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Zynga Platform could turn into a major revenue driver for the company in the coming years. Though the platform currently uses Facebook Credits as the default mode of payment, as it gains enough scale, we expect it to move to its own payment infrastructure and capture a greater portion of online gaming spend, and this could boost its overall revenue significantly.

It will also generate revenue by hosting games for other publishers for a fee, and cross marketing them to its vast user base. Over time, the Zynga platform and Online Gambling offerings could account for a major portion of its revenue and overall value.

Zynga is the world’s largest social gaming company with more than 240 million monthly active users. It competes primarily with Electronic Arts (NASDAQ:EA), Playdom which was recently acquired by Disney (NYSE:DIS) and other independent social gaming studios.

We currently have a $13 Trefis price estimate for Zynga, which stands nearly 5% below its current market price. New games account for almost half of its total value.

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Notes:
  1. Zynga Welcomes New Platform Partners: Konami, Playdemic and Rebellion, Press Release []