Video game publisher Take-Two Interactive has announced that it’s set to acquire game developer Zynga. You might be familiar with the name. Zynga is behind those Farmville Facebook requests from the time before the social network was an obvious data-predator.
But it’s what Take-Two intends to pay for the developer that’s remarkable. The company that handles Grand Theft Auto-maker Rockstar Games, among others, reckons Zynga is worth $12.7 billion. In local terms, that’s about R205 billion. That’s enough to build a second Kusile power station, with some R40 billion left over for “performance bonuses”.
But why? That’s the question, isn’t it? Why is Take-Two willing to part with such a stupendous amount of money for Zynga? That $12.7 billion is a fair bit more than Zynga is valued at currently. Heck, Bethesda only cost Microsoft $7.5 billion.
At one point Zynga was completely hosed, its stock value having tanked. It reached the point where the company’s physical assets were worth more than its stock. But the company rallied, enough to shut down the original Farmville (because Farmville 2 was still going strong).
Take-Two takes a chance
That still doesn’t explain why on Earth one of the largest traditional game publishers would be willing to pay six times the value of Oculus for Zynga. Well, much the same reason why Activision lobbed $6 billion in the direction of Candy Crush maker King.com seven years ago. Mobile games expertise. Hopefully, Take-Two’s purchase works out better than Activision’s buy. King.com hasn’t turned out much of note since its 2015 acquisition.
Take-Two is certainly going to try and do better. Company CEO Strauss Zelnick said in a conference call earlier this week, “We believe we have the best collection of console and PC intellectual property in the interactive entertainment business, and it’s basically nearly entirely un-exploited from mobile and free-to-play around the world. Zynga’s best-in-class studios can help us develop that property.”
Strauss has a point. There’s serious potential for mobile games based around Grand Theft Auto, Borderlands, Bioshock, and other big names in the company’s stable. And Zynga, as weird as it sounds, might have the talent to make the most of these properties. See, the studio recovered from its nuisance-message days and plummeting stock value. It now makes almost three-quarters of a billion dollars a quarter and can count on 168 million monthly users across its properties. Several acquisitions of its own, including Torchlight developer Echtra Games, have swelled Zynga to the point where Take-Two is looking over at them hungrily.
The future of mobile gaming for Take-Two remains to be seen. They’re obviously chasing Fortnite‘s mobile dominance, hoping to leverage their existing properties onto something that can slug it out with Epic Games’ juggernaut. Zynga’s acquisition might be the jolt that both companies are looking for. Or it might be that Take-Two has saddled itself with an overpriced King.com. We’ll see, soon enough.