International Game Technology
(
IGT
) recently launched a free-to-play version of the new slot game
House M.D. Slots through its DoubleDown virtual Casino on the
social networking site
Facebook
(
FB
).
The game, House M.D. Slots, shares its name with the popular
drama series House M.D. The game is developed by Universal
Partnerships & Licensing and NBCUniversal Television Consumer
Products.
Although the game is free to play in Facebook, the company is
expected to generate revenue from advertisements and through the
sale of in-game virtual goods in exchange for virtual currency,
which is known as micro-transactions.
DoubleDown Casino is the most popular casino-style social
gaming application on Facebook, with more than 5 million monthly
active users, according to AppData. The addition of the new game
is expected to incrementally benefit the user base.
Moreover, IGT's interactive gaming segment had recorded robust
revenue growth in the last reported quarter. Interactive revenue
in the fourth quarter was $53.9 million compared with $13.4
million in the year-ago quarter. Social gaming revenue was $35.8
million, while IGTi revenue was $18.1 million in the reported
quarter.
Though IGT is a comparatively new entrant in the online social
and mobile gaming market, we believe that DoubleDown's strong
product portfolio and customer base will provide it a competitive
edge over other established players.
Additionally, the company is keeping pace with technology
demands and has made headway with its IGT Cloud offering. We
expect the IGT Cloud services to gain traction in the casino
gaming industry, as it is expected to be well received by new
casino properties, thereby improving the company's top line.
Moreover, IGT is also seeking expansion opportunities in
international territories to boost profitability. We believe that
IGT will continue to focus on expanding its presence in
international markets and will benefit from its licensing
agreements over the long term.
However, we believe that the increasing investment in product
development will drive operating costs, which will remain an
overhang on the stock in the near term. Moreover, fewer new
openings and increased competition from
Bally Technologies Inc.
(
BYI
) and
WMS Industries Inc.
(
WMS
) will keep the stock range bound in the near term.
Currently, IGT has a Zacks Rank #2 (Buy).
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