International Game Technology’s (IGT - Analyst Report) DoubleDown Casino has added Bingo to its portfolio of casino-style games. Simultaneously, a free-to-play version of the game was launched on Facebook Inc. (FB - Analyst Report).
DoubleDown Casino is the most popular casino-style social gaming application on Facebook, with more than 5.2 million monthly active users, according to AppData. This addition is expected to boost the user base for the game going forward.
Facebook fans can now get their hands on the new version of Bingo where players are offered up to 12 carded plays per round contrary to other Bingo sites that offer up to four carded game plays. In addition, players will have the option of customizing their dauber and play in themed rooms. The game offers as much as three themed rooms namely Art Deco, Fashionista and High Orbit. Moreover, the game offers speed control for different skill sets and can be played in either automatic or manual modes.
Although the game is free to play on Facebook, the company is expected to generate revenue from advertisements and through the in-game sale of virtual goods in exchange for virtual currency, which is known as micro-transactions.
Moreover, IGT’s DoubleDown Casino is leveraging its online casino-style games to different land-based casinos. Recently, it struck a deal with Hard Rock Hotel and Casino in Las Vegas. A similar deal with Jacobs Entertainment was signed last month. The popularity of the DoubleDown platform is encouraging, enabling IGT to generate incremental revenue in the long run.
We believe that IGT stands to benefit significantly from the massive growth potential of social and mobile games over the long term. According to market research firm BI Intelligence, the U.S. social gaming market (including mobile games) is expected to more than double from approximately $2.0 billion in 2011 to approximately $5.5 billion by 2015.
IGT is comparatively a new player in the online social gaming market. We believe that DoubleDown’s strong product portfolio and customer base will help it to garner new partnerships that would provide a competitive edge over other established players.
New contract wins along with an improving domestic gaming environment, international expansion opportunities, an impressive product portfolio, reduced dependence on the domestic machine replacement cycle and strong growth from the interactive business will drive growth going forward.
Moreover, the company is keeping pace with the technology demands of the day and has made headway with its IGT Cloud. 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.
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. and WMS Industries Inc. (WMS - Snapshot Report) will keep the stock range bound in the near term.
We have a Neutral recommendation on the stock over the long term (6-12 months). Currently, IGT carries a Zacks #3 Rank, which implies a Hold rating in the short term.