Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Hasbro, Inc. (HAS) Follows Zynga Inc (ZNGA)’s Lead

Hasbro, Inc. (NASDAQ:HAS) is making a bet on social gaming, and it probably couldn’t have happened without Zynga Inc (NASDAQ:ZNGA).

Hasbro, Inc. (NASDAQ:HAS)Hasbro, Inc. (NASDAQ:HAS)’s decision to invest $112 million for a 70% stake in Backflip Studios is being applauded by the market. Shares of the second-largest toy maker opened higher on the news. Investors seem to have forgotten that the last time that a publicly traded company spent nine figures on a mobile gaming company was Zynga’s ill-advised $210 million purchase of OMGPOP last year.

Buying the parent company of Draw Something didn’t pan out well for Zynga Inc (NASDAQ:ZNGA). It had to write off nearly half of its acquisition price a few months later. One would expect that the next notable deal in casual and social gaming would be greeted with brutal skepticism, but then Xbox chief Don Mattrick decided to leave Mr. Softy to become Zynga’s new CEO.

If the Xbox boss is leaving the country’s leading console platform to hop on a social gaming company that was dogged by declining bookings and defecting executives, surely this must be a sign that mobile gaming has bottomed.

The market seems to think so. Shares of Zynga Inc (NASDAQ:ZNGA) soared 23% last week on Mattrick’s move. Even Glu Mobile Inc. (NASDAQ:GLUU) — another publicly traded mobile gaming player — popped 15% higher on the week.

Glu did introduce a new game during the week, but let’s not kid ourselves here. Glu moved higher because Mattrick’s move validates Zynga’s realm of free-to-play games that are easy to download through the growing base of active smartphones, tablets, and media players.

I’m not suggesting that Hasbro, Inc. (NASDAQ:HAS) wasn’t courting Backflip before Mattrick’s arrival at Zynga. However, one simple appointment probably helped seal the deal. Buying a mobile gaming company is suddenly fashionably acceptable on Wall Street. If anything, the deal may have rushed Hasbro into completing the terms to avoid having to pay even more. After all, if Zynga and Glu saw their market values increase sharply last week, what does this mean for the countless privately held app makers?

Zynga and Hasbro, Inc. (NASDAQ:HAS) have helped each other before. The two companies teamed up last year to put out Zynga properties as real-world Hasbro board games. They obviously didn’t work together this time, but it would be hard to picture Hasbro being praised for snapping up a majority stake in the company behind the Paper Toss franchise if Zynga Inc (NASDAQ:ZNGA)hadn’t made casual gaming cool again a week earlier.

The article Hasbro Follows Zynga’s Lead originally appeared on

Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Hasbro. The Motley Fool owns shares of Hasbro.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.