M&A Analysis: How Take-Two’s $12.7 Billion Zynga Acquisition Transforms its Mobile Business

Take-Two recently made history with the (then) largest acquisition in the history of the games industry by announcing its intention to purchase Zynga for $12.7 billion. According to Sensor Tower Store Intelligence data, the deal expands Take-Two’s mobile business from $330 million in 2021 to $2.5 billion, with Zynga generating $2.2 billion last year, 6.7 times more from player spending than Take-Two. The move gives Take-Two a significant foothold in the global mobile games market, which generated $88.6 billion across the App Store and Google Play last year. At the apex of industry-wide M&A–recently surpassed by Microsoft’s $68.7 billion purchase of Activision-Blizzard–Sensor Tower has analyzed the deal to see what it adds to Take-Two’s mobile business, and where Zynga’s core strengths lie.

Forever Franchises

Zynga has a long history of big money acquisitions as it gradually expanded into the mobile business, from its $200 million purchase of Draw Something developer OMGPOP back in 2012, to the deal for social casino outfit Spooky Cool Labs in 2013 and its $527 million swoop for publisher NaturalMotion in 2014. Further transformative deals came from later with a series of big-money purchases aimed at building a portfolio of forever franchises, including the acquisitions of Merge Dragons developer Gram Games, Empires & Puzzles studio Small Giant Games, Toon Blast publisher Peak Games, and Hypercasual specialist Rollic, to name a few.

Approximately 64 percent of player spending in Zynga’s mobile games can be attributed to IP the company has acquired, making up many–though not all–of its top grossing titles. The No. 1 revenue generating title in Zynga’s portfolio is Toon Blast, which has accumulated $1.6 billion to date, followed by Empires & Puzzles at No. 2 and Toy Blast at No. 3.

Puzzle-led Portfolio

Following a raft of acquisitions, as well as its own internal output, Puzzle genre games accounted for nearly half of player spending across Zynga’s portfolio in 2021, thanks to the success of titles such as Toon Blast, Toy Blast, Merge Dragons, and Harry Potter: Puzzles & Spells. Meanwhile, RPGs accounted for 18 percent of revenue last year, led by the match-three-infused Empires & Puzzles. Over the years, each acquisition has led to the makeup of Zynga’s portfolio moving away from being Casino genre-led, with it becoming the No. 2 revenue generating genre in the publisher’s portfolio last year, having accounted for 43 percent in 2014.

North America Focus

North America is Zynga’s top market, accounting for 62 percent of player spending in 2021. Each of its top titles also count the region as their most lucrative market. Europe, meanwhile, ranks No. 2 for the publisher’s portfolio revenue, while Asia ranks No. 3.

Empires & Puzzles is one of Zynga’s biggest global hits, with the Puzzle RPG seeing 40 percent of its 2021 revenue come from North America, while 36 percent was generated from Europe and 18 percent from Asia. Toon Blast is one of Zynga’s biggest hits in Asia, with the region accounting for 27 percent of total 2021 player spending. This is largely driven by Japan, where the title grossed more than $104 million last year, or approximately 25 percent of global revenue.

Mobile Money Maker

Zynga doesn’t represent Take-Two’s first mobile games industry M&A, with the publisher having acquired the likes of Playdots, Nordeus, and Social Point in the past–the latter generating approximately one-third of its mobile revenue in 2021. Those deals gave Take-Two a foothold in categories such as Sports, Simulation, and Strategy, while the Zynga deal adds to this with a major expansion in Sports (Golf Rival) and Puzzle (Toon Blast), as well as significant new areas such as RPG (Empires & Puzzles), Social Casino (Zynga Poker), and Hypercasual (Rollic). It’s a transformative deal that brings with it forever franchises and enormous licences, instantly making Take-Two a global mobile gaming leader.