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Snap's Gaming Platform Gets an Exclusive Battle Royale Game

Zacks Equity Research

Snap SNAP and Zynga ZNGA recently came together for the exclusive launch of the latter’s Tiny Royale game on Snap’s gaming platform.

Tiny Royale, a fast-paced battle royale (BR) game, was made available to Snap users starting Jun 5, 2019. The game, which lasts for two minutes, for one round, allows 30 players to compete at a time by forming a group of up to four people.

Like other BR games, players can unlock new features and characters and amass weapons as they progress in the game. Snap users can access Tiny Royale from Snapchat’s messaging feature itself. Additionally, during the gameplay, users’ can easily communicate with each other by texting or by using Snapchat’s voice chat feature.

Notably, Zynga will bring another feature, Tiny Royale Leagues, this summer. The feature will offer a more competitive environment for players.

Snap Inc. Revenue (TTM)

Snap Inc. Revenue (TTM)

Snap Inc. revenue-ttm | Snap Inc. Quote

Snap’s Gaming Initiative to Aid Engagement Levels

Snap’s gaming platform, Snap Games, consists of original and third-party games. Third-party game providers, apart from Zynga, include Game Closure, PikPok, Spry Fox and Zeptolab. Notably, the real-time multiplayer gaming platform was launched on Apr 4, 2019 with six titles.

Snap’s entry into games comes at a time when the company is continuously bringing new features to its platform to attract users. Notably, the company had 190 million daily active users (DAUs) in first-quarter 2019.

We expect Snap’s new gaming venture to quickly gain traction as Snapchat is the most preferred social networking medium among teens. Further, the powerful PlayCanvas game engine coupled with exciting games from popular game developers is likely to boost user engagement levels.

Ad Revenues Growth to Drive the Top Line

Snap’s strategy to improve its platform’s features and boost user engagement levels is likely to attract advertisers. Additionally, advertisers are likely to choose Snapchat as its ads reached more users in the 13 to 34 age group in the United States than Facebook’s Instagram.

Moreover, advertisers’ ability to reach new audience and increase sales by advertising on Snapchat is likely to attract new advertisers to the platform. This is expected to boost ad revenues.

Snap’s gaming initiative is also likely to bring in more ad revenues. Notably, the gaming platform has video advertising that features Snap’s non-skippable, six second Commercials ad format. Growth in ad revenues, the primary source of revenues for Snap, is likely to aid the top line.

Zacks Rank & Stocks to Consider

Snap currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector include eGain Corporation EGAN and j2 Global, Inc. JCOM. Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Long-term earnings growth rate for eGain and j2 Global is pegged at 30% and 8%, respectively.

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