You will be hard-pressed to find more opposite games than “FarmVille” and “Grand Theft Auto” (GTA).
The former involves managing farm crops with your friends. The latter is a sandbox action game blamed for inspiring real-world carjackings.
Both games will now be under one roof
According to The Wall Street Journal, Two-Take Interactive (the $17B game studio behind GTA) will buy Zynga (FarmVille maker) for $12.7B in a cash-stock deal.
Why? Because — like the aforementioned games — opposites attract.
Take-Two creates dominant PC and console franchises, including “Red Dead Redemption” and “NBA 2K.” Meanwhile, Zynga — which launched on Facebook in 2007 — is a huge mobile player, including the popular “Words With Friends.”
The merged company will have 1B+ users…
… and be well positioned to gain share in a gaming industry that notched ~$180B in sales last year, per WSJ.
There are 3 notable opportunities moving forward:
- Mobile: Take-Two will have the team to port over its (extremely valuable) existing IP to smartphones
- Ads: Unlike most game makers, Zynga has a growing advertising business (most game studios use 3rd parties)
- Web3 (ugh): While Take-Two tried to avoid buzzwords, they acknowledged that both companies are exploring NFTs and the metaverse
Take-Two is paying…
… a ~64% premium on Zynga’s stock price. It may be an overpay, but the deal is on trend with recent gaming acquisitions:
- Microsoft acquired “Doom” maker Bethesda Softworks ($7.5B)
- EA shelled out for Glu Mobile ($2.4B), Playdemic ($1.4B), and Codemasters Group ($1.2B)
Zynga founder and chairman Mark Pincus reflected on the deal by noting that his studio’s 1st Facebook game was poker.
It’s fitting that Zynga’s story is now bookended by a huge bet from Take-Two.
