Zynga’s 2020 financials are impressive but so they should be.
As a rule-of-thumb, most games companies got a 25 per cent revenue boost during the period thanks to Covid-19 lockdowns, while Zynga’s numbers were further increased by its M&A activity.
During 2020, it spent $2 billion acquiring Turkish mobile games companies Peak and Rollic, adding to the hundreds of millions it had previously spent buying the likes of Small Giant and Gram.
The result was annual revenue grew 49 per cent year-on-year to $1.97 billion.
It now has eight games generating more than $100 million annually; titles it labelled ‘Forever Franchises’.
2021’s looking good
With $1.6 billion in the bank, further acquisitions look certain, with both game developers and adtech companies in its sights as Zynga looks to build out its own in-house advertising platform.
Advertising accounted for around 14 per cent of 2020’s revenues, although that may be impacted in 2021 by Apple’s new IDFA rules potentially fracturing the user acquisition funnel.
Zynga’s advertising initiative is both a reaction to this as well as treating it as a competitive opportunity.
“We’ve a very confident business, with a highly scaled audience,” states COO Matt Bromberg.
“Mobile games is a complex business. Things will change. Technology will change. The whole marketplace will readjust.
We’ve a very confident business, with a highly scaled audience.Matt Bromberg
“But we believe we will continue to grow.”
Talking more generally to Bromberg, it’s clear that further acquisitions and spinning up its own adtech smarts are already baked into Zynga’s 2021 roadmap.
Sure, they’re important but they’re not the focus.
Instead, Zynga’s energies will be concentrated on successfully launching the games it’s been quietly developing in-house over the previous years.
Something borrowed, something new
Following prolonged soft launch testing, the company expects to release Combat Puzzles: Match-3 RPG, the next game from Small Giants, and FarmVille 3: Animals in the coming months.
It’s also been impressed with the performance to-date of Harry Potter: Puzzles and Spells, which launched globally in September.
Bromberg confesses the title, which brings the best of match-3 puzzle design into the Wizarding World, was Zynga’s largest undertaking to-date and took longer than expected to get right.
But Zynga didn’t rush the process and has been rewarded with a game that’s already a solid performer on the US top 100 grossing chart and is expected to scale further as content and marketing ramps up.
We think we have an opportunity. We have a strong experience in live ops and we also have iconic licenses.Matt Bromberg
“Harry Potter is on track to become a Forever Franchise,” Bromberg confirms.
It’s hoping for a similar trajectory with FarmVille 3, which has received significant updates during a testing process that has taken 19 months so far.
There’s also the small measure of Zynga's venture into consoles with Star Wars: Hunters, fresh off of this week's Nintendo Direct, which - if everything goes well - will first enter soft launch testing during summer.
“Our new game pipeline feels really exciting,” says Bromberg.
Indeed, the most surprising element of Zynga’s extremely bullish Letter to Shareholders is the announcement it’s actively developing “several cross-platform titles” - both original and licensed IP - that will be released across mobile, PC and consoles. Star Wars: Hunters is the company's first example of that.
Something of a surprise given its success in pure mobile games, Bromberg says moving cross-platform is now one of Zynga’s strategic pillars.
“We think we have an opportunity. We have a strong experience in live ops for free-to-play games and we also have iconic licenses,” he explains.
“Of course, we’re attentive to the differences of each platform. These are complex products that take time to develop.”
With UK-based developer NaturalMotion leading the charge, it seems likely its CSR Racing franchise will be another title that Zynga focuses on.
So, as much as Zynga has over-performed in recent years, it’s certainly not prepared to sit on its laurels as it enters its second decade.