Electronic Arts Inc.
) has sued
), alleging that some characteristics of Zynga's popular
had unmistakable similarities with the former's
The Sims Social
. EA complained that Zynga had not only copied the basic structure
of the game, but also that some of the characteristics of the game
had been replicated.
This allegation by EA comes on the heels of launching the
The Sims Social
's latest version
is already available. Since the launch of
, the game has garnered 10 million monthly active users (MAU),
, which was launched last quarter, already has over 6 million daily
active users (DAU). Thus, EA's lawsuit comes at an opportune moment
with the intention to dent
's popularity and establish its own game on Facebook.
This is not the first time that Zynga has been accused of
copying games from other publishers. Earlier, Nimblebit had accused
of being a copy of the formers'
, which had won
) iTunes Rewind iPhone Game of the Year award in January. Also,
Digital Chocolate had accused Zynga's
of being a rip off of the former's
However, most of these cases against Zynga came from small
developers and were subsequently settled out of court. This time
around things may not be so easy, since Zynga is now up against EA,
which has the financial muscle to pursue a lawsuit.
has been one of the most popular franchises for EA and it was one
of the major contributors to EA's robust digital revenue growth in
the last quarter. Thus, the stakes are quite high for EA.
On the other hand, Zynga's future growth prospects will suffer a
heavy blow if it fails to defend the lawsuit. Moreover, a ban on
game would have a negative impact on its top line. Legal costs
would be another factor that the company would have to deal
However, both parties could prefer to settle out of court, as
legal battles are not only time consuming but also expensive. With
the lingering macroeconomic sluggishness taking a toll on the
overall video game industry, both parties would rather concentrate
on their core operations to improve their company's fundamentals
than get into a legal tussle.
We have a Neutral recommendation for both Electronic Arts and
Zynga in the long term. Currently, both Electronic Arts and Zynga
have a Zacks #3 Rank, which implies a Hold rating in the short
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