3 Reasons Why Zynga's Focus on Mobile is a Good Thing

Chris Lau, Kapitall: Mobile gaming will be the key to reviving Zynga's fortunes.

When Zynga (ZNGA) releases  FarmVille 2: Country Escape, the sequel to its highly successful Facebook (FB) game FarmVille, it will attempt to capitalize on a growing platform: mobile. Zynga stock is still far from its $10 share price last reached in 2012. Will this move be good for the company?

Shift to mobile

In an ongoing effort to shift away from social gaming, Zynga will release Farmville 2 for tablet and smartphone devices. Farmville relied heavily on a partnership with Facebook.  

[Read more from Kapitall: Celebrate 25 Years of the World Wide Web with These Profitable Internet Stocks]

The game had 400 million users. It was successful – if user count matters. Farmville 2 matches the game play duration with smartphone user attention spans. Game progress may be achieved in a few minutes. There are two key differences between the two versions: the second version relies far less on the social aspect of play, and it also offers offline playability.

Words With Friends and Zynga Poker will also be refreshed.

Alternative investing ideas

Zynga’s reach towards mobile is alluring investors. The stock is up steadily from the low $2’s reached in late 2012. For contrast, Glu Mobile (GLUU) is up nearly 100% , compared to the 52% increase in shares of Zynga over the last year.

​Click on the interactive chart to view data over time. 

Zynga’s latest acquisition

Zynga’s $527 million acquisition of NaturalMotion in January could help the company broaden its product line. NaturalMotion made CSR Racing and Clumsy Ninja. NaturalMotion’s approach in focusing on entertaining users will be good for Zynga. Zynga is under pressure from shareholders to create hit titles. By emphasizing on making games that delight its users, Zynga’s slow and steady recovery should be sustainable.

 

1. Zynga, Inc. ( ZNGA): Develops, markets, and operates online social games as live services played on the Internet, social networking sites, and mobile platforms in the United States and internationally. Market cap at $5.00B, most recent closing price at $5.65. 

 

2. Facebook, Inc. ( FB):  Operates as a social networking company worldwide. It provides a set of development tools and application programming interfaces that enable developers to integrate with Facebook to create mobile and Web applications.Market cap at $180.93B, most recent closing price at $70.10.

 

3. Glu Mobile, Inc. ( GLUU): Engages in the design, marketing, and sale of casual and traditional mobile games worldwide. Market cap at $421.58M, most recent closing price at $5.21.

 

( List compiled by Chris Lau, a Kapitall Contributor. Financial information sourced from Zack's Investment Research.)

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