Take-Two Interactive just announced its intent to buy FarmVille developer Zynga for $12.7 billion in what could be the biggest acquisition in video game history. It’s an absolutely massive deal; to put it in perspective, the acquisition would be $5 billion more than Microsoft’s $7.5 billion purchase of the parent company of Skyrim maker Bethesda Softworks. You could throw in the money Disney paid for Lucasfilm and still have cash left over.
So what is Take-Two getting for its money? Yes, big Zynga games like FarmVille, Words With Friends, and High Heels! will join Take-Two’s own roster of franchises that includes Grand Theft Auto, NBA 2K, and Civilization. But perhaps more importantly, Take-Two will now be able to use Zynga’s expertise building hugely popular free-to-play mobile titles so it can make new hit games based on its own properties. In fact, Zynga will be the new brand for Take Two’s mobile efforts, and current Zynga CEO Frank Gibeau will lead that organization, indicating the potential direction of Take Two’s mobile future.
Developers across the industry have been bringing big franchises to mobile and earning a lot of money doing so. PUBG Mobile was the top-grossing mobile game worldwide in November 2021, earning “close to” $254 million, according to Sensor Tower. League of Legends: Wild Rift, the mobile-optimized version of the hit PC MOBA, was in the top ten for App Store revenue that same month. Pokémon Go brought in more than $5 billion in revenue as of its five-year birthday in July, Sensor Tower reported. The Tencent-owned studio that makes Call of Duty: Mobile reportedly earned $10 billion in 2020.
And some of the biggest publishers have been buying their way into the space for years, with Activision Blizzard buying Candy Crush maker King for $5.9 billion in 2015 and EA buying Kim Kardashian: Hollywood developer Glu and Golf Clash maker Playdemic in 2021. Mobile games are big business, and it’s not hard to see Take-Two releasing free-to-play mobile versions of its biggest franchises with the help of Zynga.
Take-Two was fairly explicit Monday on its intention to take this path. “We see tremendous untapped potential to bring Take-Two’s renowned console and PC properties to mobile, a high-priority initiative that will be energized by the addition of Zynga’s leading development, publishing, and live operations teams,” Take-Two CEO Strauss Zelnick said in an investor call Monday. Take-Two also noted that the acquisition offered a “clear path to bring Take-Two’s console/PC games to mobile” in an investor presentation (PDF). (The deal is expected to close in Take-Two’s first fiscal quarter of 2023, which ends on June 30th, 2022.)
The Zynga acquisition doesn’t mean that Take-Two will be bringing its franchises to mobile for the first time. Right now, you can download and play Grand Theft Auto III, Vice City, and San Andreas on your phone, for example. But those are paid titles on the iOS App Store and likely aren’t nearly as lucrative as some of the huge free-to-play hits on the market right now. (Take-Two already has some experience in that space, with its microtransaction-laden version of NBA 2K for mobile.)
And speaking of GTA, it’s not hard to imagine Take-Two wanting to translate the massive success of GTA Online onto mobile platforms with Zynga’s expertise. Despite being released in 2013 — and requiring that you own Grand Theft Auto V to play it (well, for now) — GTA Online has remained hugely popular. In February 2021, Take-Two said the game “had more players in every month and for the entirety of calendar 2020 than in any other year since its launch,” according to GameSpot. It also offers in-game currency for real-world money that has proven to be lucrative; Take-Two cited the game as one of its largest contributors to its revenue as recently as its November earnings release (PDF).
In addition to the very obvious business opportunity there — it’s hard not to see some sort of free-to-play GTA being an absolutely massive hit — Zynga also brings expertise in supporting games for years at a time. Zynga still offers multiple free-to-play versions of Words With Friends, including both a “classic” version and a sequel, Words With Friends 2, which seems like a better way to generate long-term revenue from a franchise than one-offs like 2K Games’ expensive and short-lived iOS port of BioShock. Imagine Take-Two and Zynga replicating the long-term model for GTA, Red Dead Redemption, Borderlands, and the rest of its titles, and you can start to see why Take-Two decided to pay as much as it did for the FarmVille-maker.
The deal isn’t just about turning Take-Two games into mobile hits. Take-Two highlighted how its “expertise in console/PC can be applied to Zynga’s cross-play ambitions;” Zynga is set to put its toe into console gaming with Star Wars: Hunters, which is coming to Nintendo Switch, iOS, and Android sometime this year. Take-Two plans to use Zynga’s Chartboost ad platform to “acquire new users more efficiently and optimize mobile ad inventory.” And yes, there may be something with NFTs in the future — Gibeau said during Monday’s investor call that “the idea that players will play-to-earn or play-to-own is a very compelling idea that we think will have legs as the industry develops,” according to Decrypt.
But it seems likely that the biggest shift following the acquisition is that Take-Two will start expanding its most important franchises into the lucrative world of free mobile games. While we don’t know exactly when the first games from the Take-Two / Zynga tie-up might be released, the acquisition could mean the next GTA might not be as far off as fans have worried — it just might be on your phone instead.
wazup.