Zynga (ZNGA, Financial) develops social games that work stand-alone on mobile phone platforms and on the Internet through social networking websites such as Facebook (FB, Financial). Although the company has been performing terribly ever since it went public, it is tipped to turn around thanks to its new mobile initiative. Zynga’s increased focus on mobile gaming and reducing dependence on old hits like Farmville point to the fact that the company’s stock may have finally bottomed, which is why I believe this is the right entry point for opportunistic investors.
While some investors may be worried about the departure of the CEO Don Mattrick and arrival of ex-CEO Mark Pincus, I think Zynga is nicely positioned to gain traction in the mobile gaming market.
Revolutionizing mobile games
One of Zynga’s top games Empire & Allies contains virtually similar graphical quality and animation version of the PC game Command & Conquer: Red Alert 3. Clash of clans which was released more than two years ago is the only 2.5D graphical game by Zynga. When this game was released, smartphones were still having very poor single-core or dual-core SoCs with inefficient 3D graphics processor. Today’s more powerful mobile devices will be a plus point for Zynga to take advantage from advanced graphics gameplay like Empire & Allies.
Red Alert 2 was also very popular game, as it was very addictive because of numerous troops’ combination compared to Clash of Clans. It has 16 types of troops but only some of them are useful in wars like giants, dragons, wizards, wall bombers, archers and wizards.
How Zynga will benefit from mobile
Zynga’s traditional web business is hesitant; its mobile commercial is screening hopeful results. There was an increment in mobile bookings by 120% year over year and 14% quarter over quarter to compromise for 60% of the total bookings and decrement of web monthly active users by approximately 59% annually in the fourth quarter of FY 2014. Mobile monthly active users rose by 86% annually.
After the launching of iPhone 6 and 4GB RAM-fortified Android mobiles discloses that phones are contributing a lot towards new growth drivers for gaming hardware. These advanced smartphones and tablets contain PC-like graphics which force Zynga to put efforts to develop PC-like gaming for mobile devices.
Conclusion
It's been an unpleasant ride for Zynga, and this is presumably simply a respite from preceded with battles. Once considered so critical to online networking titan Facebook that the organization was specified in Facebook's S-1 IPO registration explanation as a potential danger component, with Facebook taking note of that 12% of its revenue in 2011 was from Zynga, Facebook has for the most part proceeded onward from Zynga as its received a commercial based plan of action. For investors searching for a long haul venture, I think Zynga is still a viable option as the company’s mobile strategy will pay off due to the increasing popularity of smartphone gaming.
