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Zynga CEO – Online Gambling is Going to Be Mind Blowing

Zynga CEO Mark Pincus thinks online gambling is heading towards a period of mind blowing innovation. “The amount of innovation you’re going to see around gambling as an entertainment mechanic is going to be mind blowing,” he said.

2012 - The year of social gambling, thanks to Zynga?

Pincus was speaking at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco. “We’re definitely talking to all of the players that you would suspect. We have incredible respect and admiration for brands and groups like the Wynn… I would expect that you’ll see a lot of these players kind of figure out their go-to-market partnerships for sure before the end of this year.”

Zynga’s Texas HoldEm Poker is the most popular casino based Facebook game with over 33 million active users a month. Zynga is working on strategic partnerships with other casino giants – like Wynn – instead of going it alone.

According to Morningstar, Zynga’s March 6, 2012 price was $14.05 per share. Morningstar rates it with one star (out of five). Morningstar Zynga analyist Rick Summer thinks “success is far from certain”. The Morningstar analyst sees a few problems with Zynga’s business model –

• A massive slowdown of user growth
• Most games have short life cycles
• User loyalty is low as users are willing to try new games, hence no economic moat
• Only 1.6% of active monthly users actually pay for virtual goods.

2012 is going to be a fascinating year for online gambling and social networking. Will Zynga become a profitable company with a loyal customer base and a wide economic moat? We shall see.

OCA News Editor