The Sims Social has quickly become the number two game on Facebook, putting out over 8 million DAUs. It is estimated that the game could produce between $20 million and $40 million for the third quarter of the year, and that overall social games revenues could exceed $200 million for the fiscal year.

“This revenue has high contribution margin, likely at the 50 percent level after taking into account R&D spending on other social games,” writes Wedbush Securities analyst Michael Pachter. More importantly, we think that The Sims Social’s large installed base provides a platform for EA to market its other social games, with players encouraged to invite the same friends to play upcoming games (likely Plants vs. Zombies and Sim City) when they launch. This model has worked well for industry leader Zynga, and we think that it can work for EA now that it has a large installed base playing its games.”

“In our view, the company can leverage its 67 million monthly active users (MAU) with each new game it launches, and we expect this figure to grow to in excess of 80 million by this time next year. Competitor Zynga generates approximately $250 million in revenue per quarter with 202 million MAU, suggesting that EA can generate $80 million or more per quarter from social games once the company enhances its ability to monetize players,” Pachter added. “We think that this kind of revenue growth will command a high multiple, driving EA shares higher.”