Interview

Despite $1.8 billion Peak deal, Zynga isn't 'acquisition-ed out'

Despite $1.8 billion Peak deal, Zynga isn't 'acquisition-ed out'

When it comes to acquisitions, Zynga has been methodical and increasingly forthright in applying its strategy over the past three years.

First came the $43 million deal for card game Solitaire by Harpan, followed by $100 million to acquire the casual cards business of Turkish studio Peak Games.

Then Zynga dropped $250 million for Gram Games, $560 million (plus a growing earnout) for Small Giants, and now $1.8 billion for the rest of Peak, effectively the match-3 puzzle games Toon Blast and Toy Blast.

"It's a big acquisition but we're not acquisition-ed out," says Zynga's president of publishing Bernard Kim.

"We've still got plenty of cash [c.$600 million] and we think consolidation is continuing in mobile games. It's eat or be eaten."

A great landing spot

It's a trenchant attitude, for sure, but one that chimes with increasing positivity, both from within Zynga about its ability to keep growing, and externally - especially from investors who are driving the company's stock price higher and higher.

This rose over 50 per cent in 2019 and is already up a further 50 per cent in 2020 so far.

(As a tiny shareholder myself, I notice such things.)

This buoyancy makes it even easier for Zynga to acquire companies, using its stock as financial leverage. For example, the $1.8 billion paid to Peak's owners was split between 50:50 cash and Zynga stock.

Kim also points to Zynga's success accelerating the growth of the companies it buys, while ensuring they maintain independence and their own culture as being an important if soft factor.

"We've proved Zynga is a great landing spot," he says.

Indeed, in that regard, he describes Peak's acquisition as "a deal that's been in the works for more than three years": that is the three years since Zynga first acquired Peak’s card games.

"Since then, we've kept in touch with them, traded best practices," he explains.

"They've seen we can run a studio, keeping its creativity and integrity. We've seen they can scale their games. This deal is built on a strong relationship."

Better, together

As for why such a huge deal was interesting to Zynga, that boils down to its future aspirations for Toy Blast and Toon Blast.

Surprisingly, given Zynga has previously looked to buy IP with a strong international presence on Android devices such as Small Giant's Empires & Puzzles, these two games are currently North American and iPhone-centric products.

Our mantra is grow faster together.
Bernard Kim

However, Kim points to Toon Blast's performance as a top performing game in the Japanese market, which is a strategic market for Zynga.

Also, as Zynga has gained experience scaling its games internationally - again notably Empires & Puzzle - so it's gained confidence it can expand the audiences for games like Toy Blast and Toon Blast globally.

On that subject, Kim says Zynga remains very bullish about the growth potential for what he labels such "mass casual games", especially those that play well with the social mechanics and competitive events that underpin high levels of retention and monetisation.

Kim also reveals Peak also has some new unannounced projects in development, which for which it has high hopes.

But in the meantime, he says the synergies of the deal are about maintaining Peak's culture and brand identity and adding Zynga's resources and services.

"Our mantra is grow faster together," he says.


Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.

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