|Why Zynga looks well positioned|
Early in February, Zynga's stock price surged after a UBS analyst increased his rating on the stock, following the company's decision to purchase NaturalMotion.
Moreover, after CEO Don Mattrick announced the launch of pilot programs for Zynga's real-money poker game across various parts of the world by the end of this year, shares received another boost. As Zynga makes investments to grow and sustain its franchises, the stock should see solid growth in the future.
Driven by the company's strategic investments, Words With Friends and its Casino franchise are yielding impressive results. For example, in the previous quarter, bookings for Words With Friends grew 33% sequentially, which was the biggest in the game's five-year history. On the other hand, the Casino franchise achieved sequential booking growth for the first time in the last 18 months, indicating the fact that Zynga is indeed making the right moves.
Zynga has also introduced a new mobile slots game, and the company will continue to push more games on the mobile platform. Management expects 2014 to be a landmark year for its mobile growth, with new additions such as FarmVille, which it plans to introduce in the second quarter. With a rich history of more than 400 million people having played FarmVille on Facebook, Zynga is eager to take this success onto the mobile platform.
Zynga is also very confident about the racing game genre on mobiles. NaturalMotion has pioneered the racing experience on mobile devices with games such as CSR Racing and Clumsy Ninja.
CSR is among the top racing games on mobile in more than 20 countries. On the other hand, Clumsy Ninja achieved 10 million downloads in the first week of its launch and became the number one free game in the Apple App store.
Hence, the acquisition of NaturalMotion will help Zynga accelerate its growth in mobile gaming. Acquiring NaturalMotion will benefit Zynga in three ways. First, it will help it expand its creative pipeline; second, it will boost its growth in mobile, and third, it will bring next-generation technology and tools to Zynga.
Consequently, around 75% of all the games under development at Zynga can also be played on mobile. It anticipates its mobile bookings to surpass its web bookings going forward, and account for more than 50% of its bookings base.