Investment in the Gaming Industry – $12.7bn Acquisition of Zynga
Earlier this month, Zynga Inc which is a social game developer was acquired by Take Two Interactive Software, Inc. The advisor on this $12.7 billion deal was global leading investment bank Goldman Sachs.
Take Two will acquire all of Zynga’s shares which were valued at $9.861 per share. This deal will establish Take Two as one of the largest mobile game developers in the industry. The transaction is set to be completed by June and will require a vote by stockholders. As well as this Take Two is set to expand its executive board and will add two company members from Zynga.
With reoccurring lockdowns as a result of Covid-19, the amount of time people staying inside drastically increased and with this, came the increase in downloading mobile phone video games. The international data corporation (IDC) conducted a survey which showed that 63% of respondents were spending an increased amount of time playing video games. Amongst these respondents, 6% of them claimed that until the pandemic occurred, they had never played video games before.
In context to Zynga Inc, the company reported an increase in active video game users by 3%, taking the toll to 37 million.
The IDC predict that even with an end to covid and return to normality, the trend in playing mobile video games will continue to rise in the next few years. With this, it is clear that there is space in the market for video games and it is understandable why Take Two Interactive wanted to make an investment into the gaming industry.
In a Covid-19 era, mobile video gaming could provide ‘solutions’ to cancelled plans. Cancelled sporting events could lead to to an increase in online sporting games for sports fans, cancelled teaching could lead to a more interactive online based approach through the use of educational games and so on.
Take Two reason this acquisition as strategic as they predict an increase in revenue and the use of Zynga’s advertising platform will allow for better targeting of audience. Take Two’s hopes are that they’ll reach global markets, including India and Middle East.
However, despite Take Two’s predictions, pending the acquisition of Zynga Inc., the shares of the video game publisher remained flat. Whether its share prices will indeed rise will be a test of time. Perhaps with the vaccines and the return to normality for the most part, the boom in increased video game users will come to an end.