Take-Two recently announced that it will acquire social game and mobile game publisher Zynga for $12.7 billion. The cost of the deal even exceeds Microsoft's acquisition of ZeniMax Media($7.5 billion), the parent company of The Elder Scrolls series developer Society B, and Disney's acquisition of Lucasfilm ($4.05 billion).
But what did Take-Two get with the money? First, with this acquisition, Take-Two will receive Zynga's casual game masterpieces such as FarmVille, Words With Friends and High Heels!. But more importantly, Take-Two will soon be able to leverage Zynga's expertise in making popular free-to-play mobile games to develop new mobile games around its own PC and console game IP such as GTA, NBA 2K and Civilization.
In recent years, many traditional publishers have launched mobile game products based on best-selling games for mobile platforms and made a lot of money from them. For example, in November 2021, According to Sensor Tower, PUBG Mobile was the world's best-selling mobile game that month, with revenue of nearly $254 million; in addition, "League of Legends" mobile game also entered the top ten of the global App Store best-selling game list that month. Pokémon Go has generated more than $5 billion in revenue in the five years since its launch.
In Europe and the United States, some giant publishers are accustomed to deploying in the mobile game space through acquisitions, such as Activision Blizzard's acquisition of Candy Legends developer King ($5.9 billion, 2015), EA's acquisition of Glu and Golf Clash developer Playdemic. Considering the revenue scale of the mobile game market, Take-Two is likely to launch a large number of free mobile games based on the company's console and PC game IP with the help of Zynga in the future.
According to Take-Two, this is indeed part of the company's plan. On Monday, Take-Two CEO Strauss Zelnik said in an investor conference call: "We believe there is tremendous potential to bring Take-Two's prestigious console and PC games to mobile platforms. Zynga's presence of an industry-leading (mobile game) development, distribution and online operations team will energize the program. ”
Take-Two also noted in an investor note that the acquisition "provides a clear path to launching Take-Two's console/PC games for mobile platforms."
In fact, Zynga has also released its own best-selling mobile game versions before, but those games require players to pay to download, and the revenue potential is far less than that of works that use the F2P model... Now with Zynga joining, Take-Two is likely to want to launch mobile games that can operate for a long time on mobile platforms and continue to be profitable around game IP such as GTA, Red Dead Redemption, and Borderlands.
On the other hand, with years of experience in console/PC gaming, Take-Two will be able to help Zynga achieve its "cross-platform ambitions." Zynga plans to enter the console market, launching Star Wars: Hunters for Switch, iOS and Android within this year. In addition, Take-Two said the company can also use Zynga's Chartboost advertising platform to "acquire new users more effectively and optimize mobile ad inventory."
Take-Two has a reputation for being a "big hit" in the PC and console gaming markets, but progress in the mobile gaming market has been rather slow. In 2020, App Annie and IDC released the "2020 Game Industry Trend Forecast" and it is very clear that mobile devices have become the main driver of digital game consumption growth, and mobile games (mobile games) have increasingly become the most popular form of gaming in the world.
In the face of the growing mobile game market, Take-Two is impossible to say that it does not care at all, in the May 2020 earnings call, Take-Two said that it plans to release 93 games in the next five years, and of these 93 games, 21 are specifically for mobile games, while others may be multi-platform plans.
However, in November last year, in a new round of earnings meetings, Take-Two adjusted its previous plans, and the company revealed that by March 2024, the company plans to release 62 games, of which 20 are mobile games. That is to say, in the new year, Take-Two has reorganized all the products of the company, the number of games on PC, console and cloud game platforms has been greatly reduced, and the mobile game has only cut one, which shows that Take-Two still has a very strong willingness to the mobile game market. After all, in June 2021, Take-Two also acquired Nordeus, the developer of "Top Eleven Football Managers", for $378 million, hoping to improve its mobile business capabilities and enter the football game market. Therefore, the acquisition of Zynga today is even more determined to strengthen the mobile game market.
So, after the acquisition of Zynga, what kind of change will Take-Two have in the focus of the business? At the beginning of 2021, there were rumors in the market that Tencent may plan to raise funds to acquire Take-Two with a market value of $24 billion, and at the price of Take-Two's $12.7 billion acquisition of Zynga, Take-Two will achieve a five-to-five situation in PC games and mobile games.
Zynga showed great strength when the mobile game market was just starting out, but because of the rapid expansion, Zynga fell into a situation of selling out in 2019. In 2019, Zynga sold its headquarters building in San Francisco for $600 million, which Zynga bought for $234 million in 2012, and made a lot of money a few years later.
Zynga CEO Gibeau said on the matter that the deal will bring a good benefit to Zynga's shareholders and reduce the cost of transfers. At the same time, the money is used to invest in the underlying business, corporate acquisitions and buyback projects.
Zynga, which sold its San Francisco headquarters building, began a "buy-and-buy", and in 2020, Zynga bought Turkey's match-3 king Peak in the form of $900 million in cash and $900 million in stock financing. Two months later, an 80 percent stake in Istanbul-based Rollic was acquired in cash for $168 million.
Fortunately, in the second quarter of fiscal 2020, Zynga successfully turned around, its mobile game revenue set a record in a single quarter, and Words With Friends, Empires & Puzzles, and Merge Dragons! became the new flagship mobile game titles. It is also because of the success of Zynga's subsequent products that it is regarded as a "declining aristocrat" by the outside world, and finally successfully sold itself with the highest amount in the history of the game.
It's unclear how long it will be before take-Two and Zynga's first games are released, but in any case, the acquisition means the next "GTA" game may be coming soon — though you may need to play on your phone.