Grand Theft Auto publisher Take-Two Interactive has acquired the Zynga mobile gaming empire for $ 12.7 billion. This move consolidates Take-Two as the largest player in the growing mobile games industry and gives it a huge place in the lucrative advertising market.
Zynga publishes some of the world’s most popular mobile games, including Words With Friends, Farmville, and Zynga Poker. Its position among the top game publishers is based on an understanding of mobile monetization; the company was among the first to truly take advantage of microtransactions and in-game purchases on mobile.
Importantly, it was also among the first publishers to use in-game advertising, effectively monetizing users who otherwise wouldn’t spend. It has continued to invest in this space, acquiring the mobile advertising company Chartboost for $ 250 million last year. This was a move widely seen as foreshadowing that Zynga was building its own ad network based on the first-party data it has on its users.
Zynga CEO Frank Gibeau said of the merger with Take-Two: “The combination of Zynga’s expertise in mobile and next-generation platforms with the best capabilities and intellectual property of Take- Two will allow us to advance our mission of connecting the world through play while jointly achieving significant growth and synergies ”.
Strauss Zelnick, Chief Executive Officer of Take-Two, said: “We are delighted to announce our transformative transaction with Zynga, which significantly diversifies our business and establishes our leadership position in mobile, the fastest growing segment. rapid interactive entertainment industry.
“This strategic combination brings together our best console and PC franchises, with a diverse and market-leading mobile publishing platform that has a rich history of innovation and creativity. Zynga also has a very talented and deeply experienced team, and we look forward to welcoming them to the Take-Two family in the coming months. “
Take-Two publishes franchises that include Grand Theft Auto, the NBA 2K series, and upcoming series such as Marvel Comics-inspired Midnight Suns, in addition to smaller properties. Zynga’s main focus, however, has been on new IP addresses; the acquisition will enable mobile iterations of these larger franchises and the extension of the brand into mobile audiences.
The release explains, “Other strategic benefits include the use of Zynga’s Chartboost advertising platform, which will improve new user acquisition through better audience targeting and optimize mobile ad inventory to drive better yields; geographic expansion into growing markets across Asia, including India, and the Middle East, among other regions; and an increased focus on technological innovation and new business models that will use the collective knowledge of forward-thinking talent.
While Take-Two has traditionally focused on huge tent releases and annual iterations of franchises, its stable of developers, including Rockstar, have shifted to providing online services for games like Grand Theft Auto Online. This model of recurring player payments suggests that he sees recurring consumer spending (RCS) as a major focus for the future, and that Zynga’s tools and focus on RCS are an asset in diversifying his revenue strategy.
The release says Take-Two has also identified over $ 500 million in additional annual net booking opportunities to unlock over time and approximately $ 100 million in annual cost synergies in the first two years after closing. . For marketers, the merger enables new ways to advertise alongside some of the world’s largest entertainment franchises, in a medium that is increasingly a priority for consumers and brands.