In order to expand its global branded play experiences, toy maker Hasbro Inc. (HAS) will launch a new line of gaming products in the U.S. this month and later in 2012 in the U.K., Australia and Canada. The move is in collaboration with the world’s largest social game developer - Zynga, Inc. (ZNGA).
San Francisco-based Zynga presents an extensive line of games with around 306 million monthly active users. It has created some of the world’s most popular social game brands such as FarmVille, CityVille and Mafia Wars. The games have earned immense popularity on the social media website Facebook, Inc. (FB).
Earlier this year, Hasbro had inked an agreement with Zynga to develop and distribute product lines based on eight gaming brands at Zynga. As part of the deal, Hasbro launched the new board games bearing of Zynga’s four brands - Words with Friends, Draw Something, FarmVille, and CityVille. Hasbro's Monopoly game will get a CityVille edition and FarmVille characters will be integrated into a version of Hasbro’s Hungry Hungry Hippos. The rest of the branded gaming products from Zynga will come up by 2012 in the U.S.
Hasbro has been highly active on gaming deals this year. Another deal it sealed was with Volumique — a France-based innovator and provider of technologies. With the deal, Hasbro attained the rights to deploy Volumique’s proprietary technology in its new line of Hasbro zAPPed Games, based on iconic brands such as BATTLESHIP and MONOPOLY. This technology hit the market recently with the introduction of BATTLESHIP zAPPed.
Hasbro cut another deal with CBS Consumer Products, a unit of the CBS Corporation (CBS), to manufacture and globally market a variety of products based on the STAR TREK property beginning in 2013. Hasbro’s management believes that these strategic partnerships will widen its reach in the arena of social games and restructure its portfolio of gaming products.
We have noticed that the Games and Puzzles category performance has lacked luster in 2011. However, we think the deals mentioned earlier are a part of the multi-year plan Hasbro has chalked out to turnaround this category. Hasbro now seeks to stabilize the Games and Puzzles segment in 2012 and deliver growth in 2013 and beyond.
The company is expected to release its third-quarter 2012 results on October 22, 2012. The Zacks Consensus Estimate for the third quarter is currently pegged at $1.20 per share.
We currently have a long-term Neutral recommendation on the stock. However, it carries a short-term Zacks #4 Rank (Sell).
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