Zynga to launch real-money online poker in early 2013

Poker-by-Zynga-screenshot

Over the past year, Zynga has struggled to keep its foothold in the mobile gaming market as new entrants have entered the industry. Zynga’s solution: real-money poker, which is set to launch in the first half of 2013 in international markets.

Zynga’s latest quarterly earnings report – its sales of $332.5 million missed the $343.1 million mark that Bloomberg had forecasted – sent the company’s stocks plummeting as low as $3.03 per share on Wednesday. At the end of today’s trading Zynga’s stock price sat at $3.17 per share, but has dropped even further in after-hours trading. During the earnings conference call, Zynga CEO, Mark Pincus blamed Zynga’s second quarter shortcomings on Facebook. Changes to Facebook’s algorithm apparently surfaces fewer games, thereby decreasing the frequency with which Facebook users discover Zynga games.

Despite accounting for 15 percent of Facebook’s total revenue, Zynga’s importance to Facebook will decrease as the social network pursues other ambitions, including the alleged Facebook phone. (For the record, Facebook CEO Mark Zuckerberg denied during the Facebook conference call that his company was building a phone, despite reports to the contrary.)

Zynga’s plans to release a real-money poker application could be a boon to its future financials. Zynga’s poker application would likely not have to rely on Facebook, and could be accessed as a mobile or desktop application. But more importantly, the move would bring in significantly more revenue per user than the in-app purchases that Zynga currently relies on.

To put the potential of a real-money poker game into perspective, Zynga netted $291.5 million in online gaming revenue in the second quarter, or approximately $97.1 million per month. In 2011, Bwin.Party, the entertainment corporation that owns the second largest poker site, Party Poker, netted approximately $261.9 million from its three online poker properties alone (excluding the United States). Per month, the revenue generated from Bwin.Party’s online poker properties is roughly $21.8 million, or 22 percent of Zynga’s monthly revenues. Bolstering its real-money gambling service with digital casino games could further expand its revenue. Bwin.party’s online casinos and gaming netted the company an additional $323.12 million.

Currently, Zynga’s foray into real-money poker is pending on regulatory and licensing approvals. “We have our first products in development and we intend to release them in markets that are regulated and open subject to our getting licensing. The U.S. is obviously an attractive market, but it’s not open, regulated market,” Pincus revealed during the conference call.

While the U.S. may be out of luck with online real-money gaming opportunities, a glimmer of hope still exists as casinos in Nevada may receive online poker licenses this fall.

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