Quarantine drives M&A in mobile gaming
With everything from Broadway to indoor dining closed, people are starved for entertainment. Enter mobile gaming. Despite restrictions slowly easing, mobile games are expected to see strong interest in the long-term and game makers are looking for acquisitions to keep their portfolios fresh.
“There’s a lot of supply of great companies out there, big, small and different categories in different regions of the world," Zynga CEO Frank Gibeau recently told investors. He pointed out that Zynga has the cash to make more deals and will continue to look for them. "So, consolidation is obviously underway in the interactive category. We’re actively participating in growth through finding partnerships with companies out there. Scale is going to be increasingly important in mobile.”
FarmVille and Words With Friends maker Zynga Inc. (Nasdaq: ZNGA) is buying an 80 percent stake in mobile games developer Rollic for $168 million. The target is known for its Go Knots 3D, Flipper Dunk, Onnect – Pair Matching Puzzle, Pixel Shot 3D, Picker 3D, Repair Master 3D, Tangle Master 3D, Water Shooty and Wheel Smash titles.
“With Rollic, we are meaningfully growing our audience, expanding and diversifying our global advertising business, and adding to our game pipeline and developer network," Gibeau said in a release about the deal. “Zynga and Rollic are well-positioned to grow faster together.”
Over the next three years, Zynga will acquire the remaining 20 percent in Rollic in equal installments at valuations based on profitability goals. Zynga also owns the CSR Racing, Empires & Puzzles, Merge Dragons!, Merge Magic!, Toon Blast, Toy Blast and Zynga Poker games.
Acquisitions in mobile games are beneficial to both buyers and sellers. Small and midsized developers gain resources to grow, while companies like Zynga gain access to more users and games faster. In other deals, Zynga announced plans to buy Turkish mobile game maker Peak for $1.8 billion, marking its biggest acquisition ever.
Other game developers making deals include Grand Theft Auto maker Take-Two Interactive Software Inc. (Nasdaq:TTWO). The latter is buying Playdots Inc. for $192 million. Playdots is known for the Two Dots title.
“Our acquisition of Playdots will diversify and strengthen further Take-Two's mobile game offerings, particularly within the casual, free-to-play segment," says Michael Worosz, executive vice president and head of strategy and independent publishing for Take-Two.