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Zynga (ZNGA) Foresees Bright Prospects in Cross-Play Gaming

·4 min read

Zynga ZNGA has been increasing its expansion into cross-platform games that include PC and console. In a recent Bloomberg report, Zynga chief executive officer, Frank Gibeau suggested that the company is likely to earn over $1 billion per year in revenues by leveraging the growth prospects in cross-play gaming, which enables players from different platforms or devices to play together at the same time.

The improved compatibility across multiple platforms allows gamers to access cloud data through different computers and smart devices.

Zynga’s push into cross-play gaming with the acquisition of videogame studio, Echtra Games in March is strengthening its ability to make role-play gaming (RPG) titles for the Nintendo Switch and next-generation videogame consoles. Echtra’s team helped to make popular titles in the Diablo, The Sims, and Torchlight franchises.

Echtra will bring both talent and proprietary technology that strengthens Zynga’s ability to produce cross-platform games. This will include games on next generation consoles produced by Microsoft and Sony, along with personal computers, and mobile devices.

Moreover, during a Nintendo NTDOY video presentation in February, Zynga announced Star Wars: Hunters, an action title set for launch on Nintendo Switch in 2021.

In Star Wars: Hunters, players will be able to become bounty hunters or imperial storm troopers and battle each other in settings inspired by iconic Star Wars locales. The game will be free to play, even on the Nintendo platform.

Zynga Inc. Price and Consensus

Zynga Inc. Price and Consensus
Zynga Inc. Price and Consensus

Zynga Inc. price-consensus-chart | Zynga Inc. Quote

Zynga’s Broad-Based Growth Strategy: A Key Catalyst

For years, Zynga has been known for developing mobile videogames. This Zacks Rank #3 (Hold) company also sees further growth in live services, advertising, and international expansion opportunities besides expansion into cross-play gaming. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zynga’s growth is primarily driven by strength in its diversified portfolio of live services. Also known as forever franchises — CSR Racing, Words With Friends, Zynga Poker, Empires & Puzzles, Merge Magic! and Merge Dragons! — are the key growth drivers for the company.

The company enjoys an advantage with its mobile-first strategy, as bigger rivals usually try to convert hit console games into a free-to-play mobile experience. Zynga sends its mobile users video ads when they are stuck in a game that earns them rewards. This in return fuels ad revenues for Zynga as its runs commercials between games.

In the first quarter of 2021, Advertising revenues (18.1% of total revenues) climbed 107.8% year over year to $123.2 million driven by the year-over-year addition of Rollic’s hyper-casual portfolio as well as strong advertising yields in the period.

Zynga acquired Peak for $1.85 billion in July 2020 and 80% of Rollic for $180 million in a deal that closed in October 2020.

So far in 2021, two of Rollic’s new hyper-casual titles —High Heels and Blob Runner 3D — each became the #1 top downloaded Android game and held the #1 and #2 top downloaded iPhone game positions, respectively in the United States.

Moreover, Zynga introduced Fast & Furious: Hobbs & Shaw in partnership with Universal Games and Digital Platforms. Such key partnerships and continued featuring of exclusive content from automotive brands made CSR2 a popular and engaging racing game.

Further, the rollout of Harry Potter: Puzzles & Spells in South Korea bodes well for the company’s international expansion plans.

However, growing popularity of Activision Blizzard’s ATVI Call of Duty and World of Warcraft franchises and Electronic Arts’ EA Apex Legends and Star Wars among gamers is a major concern for Zynga’s competitive position.

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Activision Blizzard, Inc (ATVI) : Free Stock Analysis Report

Zynga Inc. (ZNGA) : Free Stock Analysis Report

Electronic Arts Inc. (EA) : Free Stock Analysis Report

Nintendo Co. (NTDOY) : Free Stock Analysis Report

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