With video game sales soaring due to coronavirus quarantines, the company is busy acquiring new titles.
By Chris Metinko and Mark Andress
The pandemic has forced millions of people to stay home and shelter in place, wreaking havoc on the economy and putting pressure on everyone’s mental health. One way consumers have attempted to stay sane — by playing more video games — has been a boon for once beleaguered gaming companies like Zynga
ANKARA, TURKEY - JUNE 1: The logo of Peak is displayed on a smartphone as Zynga logo is seen behind, ... [+]
The developer and publisher of mobile games FarmVille, Words with Friends and Zynga Poker, recorded record revenue growth in the second quarter and has been busy making acquisitions.
The company’s president of publishing, Bernard Kim, said the San Francisco-based company will continue to look at acquiring new products as well as game developing teams with a proven track record after it paid a record $1.8 billion for Peak Games on June 1, followed by $168 million for Rollic on August 5.
Zynga is expected to look at acquiring anything in the social, casual or casino realm that will give it scale, said a technology banker. Its focus will remain in the more accessible gaming category, which includes things like puzzles, spelling or car racing games, he said.
Possible targets for Zynga, according to the banker, could include San Francisco-based Glu Mobile and privately held Scopely or Jam City, both based in Culver City, Calif. All three mobile game developers would be tough takeout targets, however, given that they are big, profitable and their founders would demand decent multiples, said the banker.
Kim declined to discuss names of potential targets but said the company has its “eyes and ears” open for deals.
Zynga also has seen an influx of studios come to the company looking to possibly be acquired in recent months, Kim added.
Zynga realized record growth in its second quarter as people have taken to gaming during the pandemic. Revenues for the quarter were $452 million, up 47% from the same quarter last year, and bookings totaled $518 million, up 38% year-over-year.
The growth is part of a larger turnaround at the company that started more than four years ago when CEO Frank Gibeau came aboard but there’s no doubt people sheltering in place have helped. Zynga gained new users as people looked for things to do and for social games to connect with others, said Kim.
Some of Zynga’s products have seen around a 400% increase in chatting, gifting and sharing since the pandemic began, and the company has organic plans to keep up significant growth, said Kim. The company plans to launch a new Star Wars game soon and has been creating games for different platforms such as Amazon’s Alexa, said Kim.
The company also now has 11% of its workforce in Istanbul – where both Peak Games and Rollic are based — and Kim would not dismiss the idea of doing more deals in a region where Zynga has “credibility.”
The company believes its acquisition of Rollic will enhance its high engagement with users, said Kim. The deal helps Zynga get into the “hyper-casual” game space — games designed for people who are not avid gamers and which can be consumed in short time periods — which the company had considered moving into organically, said Kim. Rollic’s games have been downloaded more than 250 million times.
The company also will continue to look at different platforms — although it will remain focused on mobile — and work with partners such as Facebook and Amazon, he added.
Chris Metinko is a San Francisco reporter covering technology, media and telecommunications for Mergermarket and Dealreporter. Mark Andress is San Francisco editor for the publications.
https://www.forbes.com/sites/mergermarket/2020/08/19/game-on-zynga-to-continue-shopping-spree/
2020-08-19 14:00:00Z
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