Zynga Looks to Ante Up for Online Gambling
Social games developer Zynga announced on Friday that it was in talks with potential partners to offer real money online poker and casino games, hoping to create a new revenue stream to soothe anxious investors questioning its long-term growth prospects.
Engaging in Online Gambling Would Change the Way Zynga Operates
Moving into online gambling would mark a significant departure from the company's normal business model, which sees it pull in money by selling advertisements as well as giving users the chance to spend real money on virtual currency that can only be used in its games.
Its Zynga Poker game has 7 million daily users and 30 million or so monthly users, which is light years ahead of PokerStars -- the world's largest online poker site for real money play -- which sees a peak of 50,000-60,000 users active on the site on a typical day.
The comparison, though, is a bit unfair as Zynga Poker is free to play with only a tiny fraction generating revenue for Zynga while many of PokerStars players are real money players generating significan revenue day after day.
Zynga's annoucement was a dramatic about-face from its position just a few months ago that it had no interest in dabbling with online gambling for real money, and possibly spurred on by its struggling share price since its recent IPO, which is off nearly 15% from its opening price.
While the company is marginally profitable some analysts fear that its growth prospects are limited, with a saturation point possibly reached for its popular games such as CityVille, FarmVille, and CastleVille. Competition from competitors is also increasing with Zynga's stranglehold on the social games market slipping a bit.
Zynga hasn't released the names of potential partners, with some analysts also not ruling out that the company may use some of its IPO warchest to buy itself into the online gambling space instead via an acquisition.
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