The news Zynga is spending $100 million buying Peak Games’ portfolio of card and board games was portrayed as just another step in the US company’s recovery.
Nothing wrong with that, particularly given the deal was announced by Zynga as part of its strong FY17 Q3 financials.
Yet, such a narrative does ignore other elements of the deal: Peak Games was selling an asset for $100 million, and why?
To some degree, the answer is why wouldn’t you sell an asset you can get $100 million for? But, again, that’s not the full answer.
To understand more, we need to look deeper into Peak Games’ business.
Another piece in the puzzle
After the deal closes later in the year, Peak Games will effectively be left with two mobile games, Toy Blast and Toon Blast.
Both of these match puzzlers are already successful, with Toy Blast hitting a high of #5 on the US iPhone top grossing game chart in November 2016.
Peak Games expects to double its US audience over the next 12 months.
Released in August 2017, Toon Blast has been climbing the charts too, breaking into the US iPhone top 20 grossing game chart in mid-November (this week in fact).
Significantly, the North American market provides the vast majority of Peak’s revenue and it’s clear this is where it’s going to be investing its new warchest.
It expects to double its US audience over the next 12 months.
It’s a bold plan, particularly because Peak isn’t the only match puzzle game developer making strong inroads into the US mobile market.
It could be argued Russian studio Playrix is doing even better than Peak with its Gardenscapes title performing similarly to Toy Blast in terms of grossing chart placement, while new release Homescapes is already doing better than both.
Who's the daddy?
Whether any of these two companies can really compete with market leader King, however, remains open to question.
A reinvigorated Candy Crush Saga has nailed down to the #1 top grossing game slot in the US, and, according to research from Verto Analytics, King has another five match puzzle games with over 1 million regular players in the US.
It's the only developer with such games that have audiences over 5 million (Candy Crush Saga at 9.7 million and Candy Crush Soda Saga at 7.3 million).
In this context, the biggest loser in this increasingly competitive market looks like US outfit Jam City.
It has failed to build on the foundation provided by its top 50 grossing match puzzler Cookie Jam, although it does have another top 50 grossing game in the shape of Panda Pop.
Where this situation will leave its planned 2019 IPO remains unclear, but the value of Playrix is rising fast, and that’s a trajectory Peak Game’s $100 million marketing fund seems certain to enable it to emulate, both with its existing and its forthcoming games.