Pogo, the online gaming portal of
Electronics Arts Inc.
(
EA
), will be providing Gogo's new in-air multimedia platform with
three of its most popular games for in-flight entertainment.
Gogo is an in-flight internet provider, enabling flyers to get
online through their laptops and other Wi-Fi enabled devices during
flights. Moreover, through its new in-air multimedia platform,
passengers can now have free access to classic Pogo games such as
First Class Solitaire
,
MONOPOLY
and
Mahjong Safari
. Gogo's online services will also ensure that passengers can log
in to Pogo.com for other varied games available on the website.
Pogo is one of the leading providers of casual gaming with more
than 100 games in its portfolio. The collaboration ensures flyers
in-flight entertainment, increasing the popularity of Pogo
manifold.
The Social and Digital Gaming Market
According to market research firm eMarketer, the U.S. social and
casual gaming market is expected to be worth $2.18 billion in 2012.
Most of the social games are free to play and generate revenue
primarily through the in-game sale of virtual goods.
eMarketer expects revenues from virtual goods to contribute
heavily through 2012. Advertising spending is expected to grow more
quickly in 2012, and with advertising spending expected to increase
41% in 2012 over the 2010 level. Moreover, market intelligence firm
In-Stat expects the worldwide market for virtual goods to double in
2014 from $7.3 billion in 2010.
Additionally, the shifting preference toward the digital format
can be assessed by the rise in sales through digital media and
spending on social and mobile games. With consumer spending on
mobile games and social networking games rising, we believe that
publishing companies with an exposure in these segments would be
better positioned for growth.
Recommendation
EA has been shifting its focus to the digital format and with
its diversified portfolio and strong product pipeline, is expected
to generate strong top-line growth going forward. We believe that
high-quality titles, along with increasing online exposure,
particularly in the social gaming genre guarantee market share
gains over the long term.
However, the gloomy macro-economic environment, increasing
competition and weak video game sales results over the last 12
months, compel us to remain cautious in the near term. Competition
from Activision Blizzard Inc.
(
ATVI
),
Zynga Inc.
(
ZNGA
) and
International Game Technology
(
IGT
) may act as the other headwind going forward.
We have a Neutral recommendation on Electronic Arts over the
long term (for the next 3-6 months). Currently, Electronic Arts has
a Zacks #3 Rank, which implies a Hold rating in the short term.
ACTIVISION BLZD (
ATVI
): Free Stock Analysis Report
ELECTR ARTS INC (
EA
): Free Stock Analysis Report
INTL GAME TECH (
IGT
): Free Stock Analysis Report
ZYNGA INC (
ZNGA
): Free Stock Analysis Report
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