International Game Technology (IGT - Analyst Report) 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 - Analyst Report).
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 - Snapshot Report) and WMS Industries Inc. (WMS - Snapshot Report) will keep the stock range bound in the near term.
Currently, IGT has a Zacks Rank #2 (Buy).