The largest acquisition in the history of the gaming industry is finalized.
"Grand Theft" and 2K game developer Take-Two announced Monday in cash plus stock.Spent $12.7 billion (editor's note: about $80.9 billion) to acquire social gaming giant Zynga。 Based on Zynga's share price last Friday, the offer of $9.86 per share equates to a premium of 64 percent; each Zynga stock receives $3.50 in cash and $6.36 worth of Take-Two shares.
The deal is expected to close on June 30 this year. Once the acquisition is complete, Zynga will continue to operate as an independent subsidiary of Take-Two, continuing to be led by the current CEO and holding two seats on Take-Two's board of directors.
If successfully completed, it would also be the largest acquisition in the history of the gaming industry, surpassing Tencent's $8.6 billion acquisition of Supercell in 2016 and Microsoft's $8.1 billion acquisition of Bethsda's parent company ZeniMax Media in 2020.
Netizens who remember the "stealing vegetables" game may know Zynga, and the stealing games that were popular in domestic Happy Network and Tencent games at that time were all imitations of the successful model of the social game giant on Facebook.
Zynga was founded in San Francisco in 2007 by founder Mark Pincus, an early investor in Facebook, and Zynga's name and logo come from Pincus' pet bulldog, Zinga.
Of course, with such a dog-loving founder, Zynga also welcomes employees to bring pets to work. More than a decade ago, Zynga was San Francisco's hottest startup, with a staff treatment comparable to Google's and the most interesting company culture.
The company's headquarters, also known as the "Dog House", is available from a games room, basketball court, and gym.
In 2009, Zynga launched farm game FarmVille on Facebook, and the idea of stealing vegetables was all the rage, achieving 10 million daily lives in just six weeks, and surpassing 80 million users the following year. In 2010, Zynga launched the city game CityVille, which was once again a huge success, achieving a monthly activity exceeding 100 million in just 41 days. In December 2011, Zynga was successfully listed on the NASDAQ.
However, success in the social gaming space comes and goes quickly. In 2013 alone, Zynga was in a state of decline in both users and revenue, with nearly half fewer users than in 2012, and had to start layoffs and shrinking businesses. Pinkus also had to resign as CEO and bring in Don Mattrick, president of Microsoft's interactive entertainment division, as CEO.
But in less than two years, Zynga, whose business has not improved, has changed coaches again, bringing in Frank Gibeau, head of Electronic Arts's mobile department, as CEO. Over the past few years, Zynga has continued to dominate social games on mobile phones, with major successful game products including Zynga Poker and Words with Friends 2.
After today's trading news was announced, Take-Two shares plunged 15% and Zynga shares soared 45%. The main concern of the market is that Take-Two is paying too much for Zynga. Zynga shares have fallen 40 percent in the past year's big bull market in the U.S. stock market and are now at their lowest point in the past five years. One of the main reasons for the stock price plunge was Apple's tightening of mobile privacy controls, which prevented Zynga's targeted advertising business from accessing user data.
Console gaming giant Take-Two acquired Zynga with the apparent goal of expanding its mobile business. Take-Two CEO Strauss Zelnick said that after the acquisition of Zynga, more than half of the company's net scheduled revenue will come from the mobile sector, and the total number of users will exceed 1 billion.
While Grand Theft Auto is one of the world's most successful console games, with cumulative sales of more than 155 million copies over the past eight years, Take-Two is still under pressure for slow growth. The company expects fiscal year revenue to be $3.35 billion to $3.45 billion.
As smartphones become the internet access and entertainment centers for people around the world, mobile games have gradually become the biggest cake in the game industry. Although Take-Two has been a huge success in console games such as Grand Theft Auto, their mobile business has grown slowly, and the mobile game business currently accounts for only 10% of revenue. Taking down Zynga is obviously about gaining users in the mobile space and expanding new free-to-play modes.
In addition, Zynga also has a game advertising platform and blockchain product business in addition to the main game business. Perhaps Take-Two will also consider exploring new business models for launching NFT and blockchain products in the gaming space.
According to market research firm Newzoo, mobile games have now accounted for more than half of the total revenue of the global game market. The global mobile gaming market grew 7 percent to $93 billion in 2021, while console and PC gaming grew slowly. NewZoo expects that the growth of the global gaming market in the coming years will mainly come from mobile games.
Another console game giant, Electronic Arts, has long been actively expanding the mobile game market, successively acquiring PopCap, developer of "Plants vs. Zombies", "Titanfall" developer Respawn, racing game developer Codemasters, and last year, it spent $2.4 billion and $1.4 billion to acquire Glu Mobile and Playdemic, the developer of "Golf Clash".
It is worth mentioning that in February last year, Electronic Arts beat Take-Two and won Codemaster for $1.2 billion. Perhaps the deal has also spurred Take-Two to seek bigger acquisition targets.