Zynga (ZNGA) recently launched a new free card battler game called War of the Fallen. The game is currently available on Apple’s (AAPL) App store and will be soon released on Google (GOOG) Play.
The story-based game has a unique map oriented progression system, where gamers play the role of a Shardbreaker. During the course of the game, they encounter other characters and to proceed further they need to build and customize their card decks.
More than 150 cards with 100+ unique skills are available at the gamer’s disposal, which is the primary attraction of the game. War of the Fallen introduces a new social feature Guild Force that unites a player with friends, thereby boosting the overall strength of their cards.
Zynga’s new game follows the success of Ayakashi: Ghost Guild, a card battler game launched in late 2012. The game is currently available in 8 languages, which reflects Zynga’s efforts to reach a larger audience.
Although the game is free to play, Zynga will be able to earn significant revenues through the sales of in-game items (also known as micro-transactions) and advertisement. However, Zynga is expected to face significant competition from Activision’s (ATVI) upcoming Hearthstone: Heroes of Warcraft.
We believe that Zynga is well positioned to grow in the near term based on its innovative product pipeline and dominant position in the social and mobile gaming sector. Moreover, Zynga’s entry into online real-money gambling will boost top-line growth over the long term.
However, we also note that barriers to entry are low in the social gaming market and this will attract new entrants, thereby further increasing competition for Zynga over the long term.
Additionally, the uncertainty over the online real money gambling license grant in the US considering legal hassles will remain an overhang on the stock going forward. Moreover, Zynga is also expected to face stiff competition from established casino operators such as International Game Technology and Bally Technologies in the near term.
Currently, Zynga has a Zacks Rank #3 (Hold).
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