Take-Two Interactive announces $12.7B deal to acquire Zynga

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Gaming giant Take-Two Interactive has announced that it will acquire mobile gaming company Zynga in a $12.7 billion deal that could be one of the industry's largest.

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The cash and stock deal, which the companies expect to close in the first quarter of 2023, will make Take-Two Interactive one of the largest publisher of mobile game.

Take-Two is known for game franchises like "Grand Theft Auto," "BioShock," and "Red Dead." Zynga, on the other hand, has re-established itself as a mobile juggernaut with titles such as "Words with Friends," "Farm Heroes" and "Zynga Poker" across iOS and other platforms.

"We are thrilled to announce our transformative transaction with Zynga, which significantly diversifies our business and establishes our leadership position in mobile, the fastest growing segment of the interactive entertainment industry," said Take-Two CEO and Chairman Strauss Zelnick.

As part of the deal, Zynga stockholders will receive $3.50 in cash and $6.36 in shares of Take-Two common stock for each share of Zynga stock they own at closing.

Take-Two said that the deal will result in about $6.1 billion of 12-month pro-forma net bookings. It will also help the company save about $100 million annually.

"Combining Zynga's expertise in mobile and next-generation platforms with Take-Two's best-in-class capabilities and intellectual property will enable us to further advance our mission to connect the world through games while achieving significant growth and synergies together," said Frank Gibeau, Zynga's CEO.

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Comments

  • Reply 1 of 9
    emig647emig647 Posts: 2,446member
    I really don’t understand this, especially when Bethesda was $7.5B. 

  • Reply 2 of 9
    emig647 said:
    I really don’t understand this, especially when Bethesda was $7.5B. 

    Just going to leave this here: https://medium.com/halting-problem/zyngas-offices-now-worth-more-than-zynga-the-company-47a704d48249

    Because everyone has a phone. There isn’t one person out there who doesn’t have at least 1 game on their phone, be it if they play it or not. Mobile gaming is a huge deal, more so than any other platform. 

  • Reply 3 of 9
    Words With Friends has gotten “improved” to the point of being unplayable. Why can’t they stop themselves from adding more and more “features.” They did finally offer a Classic version, but they couldn’t even keep their hands off it. Rather than find a way to make it cheat-proof, they just add legal cheats and hope you’ll pay for them. Suppose the new owners will make things even worse. Thank god for Letterpress, an Apple award-winning game that has stayed simple and elegant. 
    edited January 10
  • Reply 4 of 9
    emig647 said:
    I really don’t understand this, especially when Bethesda was $7.5B. 

    Just going to leave this here: https://medium.com/halting-problem/zyngas-offices-now-worth-more-than-zynga-the-company-47a704d48249

    Because everyone has a phone. There isn’t one person out there who doesn’t have at least 1 game on their phone, be it if they play it or not. Mobile gaming is a huge deal, more so than any other platform. 

    I had to look on my phone to confirm but - yes I am that one person - but to be fair, I have never played any sort of game on any sort of device - ever. Just not a fun kind of guy.
    williamlondonrobin huber12Strangersapplguy
  • Reply 5 of 9
    emig647 said:
    I really don’t understand this, especially when Bethesda was $7.5B. 

    Revenue from mobile gaming is now larger than revenue from PC gaming and console gaming combined. This is a point that I always make when people say Apple can't be taken seriously for gaming unless they do PC/console style AAA games.
  • Reply 6 of 9
    emig647 said:
    I really don’t understand this, especially when Bethesda was $7.5B. 

    Revenue from mobile gaming is now larger than revenue from PC gaming and console gaming combined. This is a point that I always make when people say Apple can't be taken seriously for gaming unless they do PC/console style AAA games.
    This is like saying Disney wont be taken seriously in the cruise industry until they offer gambling on their ships. Wrong. It is exactly what differentiates it from toxic sludge.
  • Reply 7 of 9
    MarvinMarvin Posts: 14,739moderator
    emig647 said:
    I really don’t understand this, especially when Bethesda was $7.5B. 

    Revenue from mobile gaming is now larger than revenue from PC gaming and console gaming combined. This is a point that I always make when people say Apple can't be taken seriously for gaming unless they do PC/console style AAA games.
    Zynga's revenue growth over recent years has been pretty high too at 50-60% per year. Here is Zynga's latest annual report:

    https://zyngainc.gcs-web.com/static-files/5b5771d0-52d1-4b91-8381-e86bdf8c8237

    Latest 2021 quarterly is here:

    https://zyngainc.gcs-web.com/static-files/6c50be4b-7b76-4cdb-9b5d-24e529ca5c33

    Their top games are Empires and Puzzles, Merge Dragons and Zynga Poker. These 3 games made over $800m in 2020. Total revenue in 2020 was $1.97b and $2.1b in 9 months in 2021. They made over $400m loss in 2020 but they managed to cut costs a lot in 2021. One of their significant costs is ads to attract new players, they spent $583m in 2020 on Facebook and Google ads. They also made $300m on ads in their games, mainly Words with Friends.

    Microsoft bought Zenimax for $7.5b, which includes Arkane (Dishonored, Wolfenstein, Deathloop), Bethesda (Elder Scrolls, Fallout), id (Doom, Quake). It's quite a few popular franchises but most of them don't sell many copies. Arkane games are around 2 million copies. The Bethesda games are the biggest ones but they sell over a long period of time. Elder Scrolls and Fallout sell tens of millions of copies but even considering the 30 million copies of Elder Scrolls, if every copy was $60, that's still only $1.8b and they don't all sell at $60 and not all in 1 year. Zynga has recurring, growing revenue that exceeds AAA games.

    The problem with mobile is it seems to be mostly driven by addictive games rather than quality. The mobile game charts hardly ever change. AAA is all about quality experiences but they are really expensive to produce and usually have low recurring revenue, this leads to making sequels of their most popular franchises. The Call of Duty games have a good mix of quality single player and recurring online multiplayer.

    Companies like Take Two will have seen how much revenue games like Fortnite, Minecraft, Call of Duty Mobile have been making and the revenue growth. They need to stay competitive with companies like Tencent:

    https://www.theverge.com/2021/4/4/22367089/tencent-timi-studios-call-of-duty-mobile-10-billion-2020

    Companies like Tencent are using their revenues to buy up as much of the gaming industry as they can. Even when mobile gaming isn't directly a threat to non-mobile game companies, having profitable mobile game companies buying up the strongest players in the industry definitely is.
    williamlondonmuthuk_vanalingam
  • Reply 8 of 9
    crowleycrowley Posts: 10,034member
    emig647 said:
    I really don’t understand this, especially when Bethesda was $7.5B. 

    Revenue from mobile gaming is now larger than revenue from PC gaming and console gaming combined. This is a point that I always make when people say Apple can't be taken seriously for gaming unless they do PC/console style AAA games.
    This is like saying Disney wont be taken seriously in the cruise industry until they offer gambling on their ships. Wrong. It is exactly what differentiates it from toxic sludge.
    You're comparing PC/console style AAA games to gambling, aka toxic sludge?  And mobile games are the Disney cruise experience?

    I don't think it's like that at all.
    tommikele
  • Reply 9 of 9
    emig647 said:
    I really don’t understand this, especially when Bethesda was $7.5B. 

    Did. you bother to notice the article you refer to is about to be six years old and is applicable to nothing at this point?
    edited January 11
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