Take-Two Interactive, the game publisher behind Grand Theft Auto and 2K Sports, has agreed to acquire Zynga for a mix of cash and stock in a deal worth $12.7 billion, the two companies announced Monday. The number represents the highest ever acquisition deal between gaming companies.
The deal is larger than both Tencent's purchase of Supercell in 2016 ($8.6 billion) and Microsoft's acquisition of Bethesda parent company ZeniMax Media in 2020 ($8.1 billion). Zynga is a public company, meaning Take-Two is paying a premium of about 64% to buy out outstanding shares and pay shareholders $3.50 in cash and $6.36 in Take-Two stock per share. The deal is expected to close by June 30, 2022.
“We are thrilled to announce our transformative transaction with Zynga, which significantly diversifies our business and establishes our leadership position in mobile, the fastest growing segment of the interactive entertainment industry,” Take-Two CEO Strauss Zelnick said in a statement. “This strategic combination brings together our best-in-class console and PC franchises, with a market-leading, diversified mobile publishing platform that has a rich history of innovation and creativity. Zynga also has a highly talented and deeply experienced team, and we look forward to welcoming them into the Take-Two family in the coming months."
The deal in many ways represents the growing importance of the mobile game industry, which now accounts for more than half of total global games revenue, according to market research firm Newzoo. In 2021, the mobile market grew more than 7% to $93 billion, while the console market declined and the PC market stayed relatively flat. NewZoo estimates the gaming market will grow to $200 billion by 2024. Much of that growth is expected to come from mobile and a general expansion of the gaming audience, beyond the core group of players who buy and play higher-end games on console and PC. That audience has remained relatively flat for years.
Take-Two, like many big publishers, has tried to get into the mobile market through a series of smaller-scale acquisitions, including of mobile game makers Playdots, Social Point and Nordeus. But similar to Electronic Arts' mobile push over the last couple of years, in which EA bought Glu Mobile and Golf Clash maker Playdemic in deals each worth more than $1 billion, Take-Two is turning to a much more established player in the mobile scene to make deeper inroads to reach new players.
Many of Take-Two's biggest properties, like Rockstar's Grand Theft Auto and 2K's BioShock and Borderlands, are absent on mobile, outside of ports of classic games. With Zynga, Take-Two clearly sees an avenue for bringing those series to more players and also embracing more free-to-play design across the board. Zynga also has a newly established blockchain division, which gives Take-Two an opportunity to experiment with fast-growing new markets like NFTs and blockchain-based game design.
For Zynga, joining a major game publisher seems like an inevitable outcome for the company. Zynga has long prided itself on maneuvering complex platform dynamics, like the shift from Facebook browser games to mobile, and figuring out how to reach the largest number of casual players possible.
Much of Zynga's business now depends on big hits like Zynga Poker, Words with Friends 2 and inking big deals for mobile spinoffs of properties like Harry Potter and Star Wars. It also has a marketing and analytics division through its Chartboost acquisition. Zynga is now expanding into the console market with a planned released of Star Wars: Hunters on the Nintendo Switch later this year. Joining a company like Take-Two is a logical step to combine its talent for building casual games with even more established franchises.
Correction: An earlier version of this story misstated the cost of the Supercell acquisition. This story was updated on Jan. 10, 2022.
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