Console and PC gaming franchise, Take-Two Interactive, has announced its intent to acquire mobile gaming giants Zynga. Take-Two is set to purchase all outstanding shares of Zynga at $9.86 per share, bringing the total value of the acquisition to $12.7 billion. The merger, one of the biggest in the industry, is expected to be completed in the first quarter of 2022.
The size of the deal has led to questions as to how Zynga’s valuation could be so high, with speculation surrounding the future implementation of NFTs or some degree of the ‘metaverse’.
Zynga’s Acquisition and the Mobile Gaming Surge
The acquisition will see Take-Two consolidate its position in the industry following its venture into mobile gaming. The gaming industry witnessed a massive boom in 2021 on the back of the pandemic and global lockdowns. The mobile sector saw over $10 billion in revenue in the first half of the year, leading to projections of over $120 billion by the year’s end.
According to Statistica, the industry ended 2021 with a market valuation of more than $178 billion. It is expected to grow at 8% yearly over the coming years.
The cost-saving move will see the console giants save about $100 million annually after two years of the merger. The possibility for the acquisition comes from Zynga’s slide in share price after it’s successful Initial Public Offering (IPO).
Take-Two’s roster currently includes Grand Theft Auto, Red Dead Redemption, NBA 2K, BioShock, Borderlands, Civilization, Mafia, and Kerbal Space Program. Zynga, on the other hand, boasts of a mobile catalog that includes; CSR Racing, Empires & Puzzles, FarmVille, Golf Rival, and Hair Challenge. Other offerings are; Harry Potter: Puzzles & Spells, High Heels!, Merge Dragons!, Toon Blast, Toy Blast, Words With Friends, and Zynga Poker.
Take-Two intends to build and expand a new mobile gaming experience for gamers. The merger will see it own an extensive library of franchises and Intellectual properties (IP). Meanwhile, Zynga will see its IPs gain new traction in more formats and screens.
NFTs & Metaverse: A Possibility in the Merger
NFTs and play-to-earn guilds, which have also exploded in popularity recently, may also be considered in the merger. Although not expressed explicitly, the previous disposition of both companies to integrating the blockchain points to the possibility of its adoption.
In 2021, Take-Two’s CEO Strauss Zelnick expressed his belief and support for the Metaverse and NFTs. He highlighted that his company provided the metaverse experience for its gamers already—and it was generating ‘real’ revenue.
“If there is a metaverse company out there generating real revenue and real earnings, that would be us. We would probably be the no.1 company that’s actually doing it already.”
Zelnick also hammered on the importance of NFTs, saying they had a significant role in future game offerings. Zynga, in November 2021, also pushed for the adoption of eco-friendly NFTswithin its gaming catalog. The company also hired Matt Wolf, a marketing veteran as VP of blockchain gaming, to oversee digital collectible integration.
Further, in a conference call on January 10th, 2022, Zelnick said the acquisition would allow for “web3 opportunities”. The merger would equip the firm with a much better tool set to embrace such opportunities, as opposed to doing it alone.
The interests from both companies in the crypto space, as highlighted, points to the possibility of adoption. However, that may not necessarily be the case following the merger.
The recent unfavorable reaction to Ubisoft’s adoption of tradable NFTs may halt other companies from integrating digital collectibles. Also, the ban of NFTs and blockchain games on its digital distribution platform Steam by Valve may derail potential use.
The PC marketplace operator raised concerns over the digital ownership concept, which it described as half baked. It also believes the technology will turn games into pay-to-win money pits.
Zynga Stock Soars as Take-Two Shares Plunge
Zynga shares soared more than 45% on Monday following the announcement, trading at $8.70 each. The stock had been down by about 6% so far in 2022. Take-Two, however, saw a fall in its share price by 13.7% to trade at $142.07. The decline set the company to record its most significant single-day percentage decline since December 4, 2009.