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Analysts have weighed in on Zynga's new web-based platform noting that, while the move may help it secure a more captive audience, it is currently unclear what impact this new platform will have.

Mike Rose, Blogger

March 2, 2012

2 Min Read

In light of the announcement regarding social giant Zynga's web-based gaming platform, analysts have weighed in noting that, while the move may help Zynga secure a more captive audience, it is currently unclear what impact this new platform will have for the company. Zynga revealed the new platform yesterday, which will see the company hosting its popular online games via its own website, partially freeing itself from Facebook -- although it's notable that the company will continue to use Facebook Credits as its virtual currency. Analysts Ben Schachter and John Merrick at Macquarie Securities suggested in a new analyst report that, while the new platform may potentially lead Zynga to larger revenues from increased advertising opportunities, it is not yet apparent whether or not the company will keep a larger percentage of revenue generated from its games. This is due to the fact that, as previously stated, it will continue to utilize Facebook Credits. The analysts also noted that we do not yet know whether consumers will accept visiting a new website for their games -- this, says Macquarie, is the "key issue." Schachter and Merrick also question how Facebook will react to the news. While Zynga has stated that the new platform is not an attack on Facebook, if Zynga attempts to push users away from Facebook to Zynga.com, there may be "complications", the pair suggests. Colin Sebastian of analyst group Baird Equity Research is also concerned about the news. He noted in a new report that the new platform will allow Zynga to provide a better user experience, while also introducing better game discovery for its full range of titles. However, he noted that Zynga is heavily dependent on Facebook, with more than 90 percent of its revenues coming from Facebook games, and anything that upsets this balance may cause Facebook to encourage a wider range of games on its network that will compete with Zynga's share of the users. As analysts speculated over how the platform will impact Zynga, the news appeared to have a visible effect on the company's shares this morning, as it shot up by around 10 percent and reached a record high of $15.91. As of press time, the stock is trading at $15.33. Zynga's share price seemed troubled when it fell well below the $10 it initially opened at when the developer went public last December. It's slowly risen in recent weeks, though, as the company beat analyst expectations with its first quarterly earnings report, audiences flocked to its new social game Hidden Chronicles, and Facebook announced its own IPO.

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