Zynga Makes a Shrewd Jump Onto the ‘Game of Thrones’ Bandwagon

The licensning deal could mark an important shift in strategy

   

A social game based on the hit series Game of Thrones?

No-brainer.

The hit HBO show has hordes of loyal fans and has cleanly hit the mainstream, and the show lends itself to numerous opportunities for an immersing online environment.

Developer Disruptor Beam launched Game of Thrones: Ascent in February on Facebook (NASDAQ:FB), and it has since picked up 1 million players. But that number could tick a lot higher now that Disruptor Beam has struck a distribution partnership with social gamemaker Zynga (NASDAQ:ZNGA).

Zynga’s troubles aside for a moment, the company still boasts a whopping 250 million monthly active users, and it not only knows how to create successful franchises (such as FarmVille), but how to market them. So Disruptor Beam’s attraction to Zynga is understandable.

The deal is a big departure for Zynga, whose bread and butter is either creating its own titles (CityVille, Poker) or purchasing top games (Words With Friends). However, considering Zynga’s recent string of duds, licensing — a highly popular strategy among other companies, like Electronic Arts (NASDAQ:EA) with the Madden and Star Wars franchises — might be the best way to regain some momentum.

Licensing does have its own set of risks. Costs can get onerous — in addition to EA, Activision Blizzard (NASDAQ:ATVI) and Take-Two Interactive (NASDAQ:TTWO) are among other companies that can bid for top content — and brands can get overexposed. But Zynga does have a cool $1.27 billion in the bank, so it should be able to compete on the auction block.

Most Zynga investors are looking toward the company’s prospects for real-money gambling (which admittedly could be an enormous driver), but ZNGA also has to live in the here and now, which means bolstering its weakening lineup.

To this end, a licensing strategy makes sense.

And a licensing strategy involving one of TV’s hottest shows makes a chalice-ful of sense.

Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO StrategiesAll About Commodities, and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/ipo-playbook/zynga-makes-a-shrewd-jump-onto-the-game-of-thrones-bandwagon/.

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