Zynga Inc (ZNGA), Electronic Arts Inc. (EA): Developers Shifting to Mobile Gaming

For the time being, mobile franchises won’t be a large source of revenue for Electronic Arts Inc. (NASDAQ:EA). Presently, most of the company’s investment will go toward maintaining its pre-existing franchises like Battlefield and Madden.

The industry hasn’t grown much in 2013 due to a console refresh cycle. Microsoft Corporation (NASDAQ:MSFT), however, estimates that its install base can increase by 30% over the Xbox 360.

To Electronic Arts Inc. (NASDAQ:EA), Activision Blizzard, Inc. (NASDAQ:ATVI), Zynga Inc (NASDAQ:ZNGA), and other well-established gaming companies, mobile gaming is a tough nut to crack. All companies are investing some money into it, while others like Zynga, are making it a primary focus. The problem with mobile is that none of the major gaming studios have any significant market share.

The upside to mobile gaming is that the industry is expected to grow at high rates. The lack of predictability largely indicates that smaller more agile companies like Zynga Inc (NASDAQ:ZNGA) may be able to get a leg up on the major game studios.

Microsoft Corporation (NASDAQ:MSFT)  reported a year-over-year decline in console sales. Going into the next quarter, its gaming segment is expected to generate low single digit growth. This closely correlates with Advanced Micro Devices, Inc. (NYSE:AMD)‘s weak guidance. However, demand could pick up in the fourth quarter as new consoles become available.

Conclusion

Until we get conclusive evidence that Zynga Inc (NASDAQ:ZNGA) can launch a successful mobile product, investors should stay on the sidelines. Microsoft Corporation (NASDAQ:MSFT)’s guidance largely contradicts that of Electronic Arts Inc. (NASDAQ:EA). Because of this, it’s tough to be bullish about the next quarter.

The article Developers Shifting to Mobile Gaming originally appeared on Fool.com.

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