A week out from its Q1 earnings call, Zynga is talking about making more multi-million dollar acquisitions on the order of OMGPOP’s $180-million buy last month. Who could Zynga buy and where can they be found?
If Zynga really has a $1.8-billion war chest, then it can afford to shop strategically for studios that will provide games with long shelf lives or services it can integrate with its own games platform in the long term. While the OMGPOP buy was all about doubling its mobile footprint and cross-promotion network, we think the next acquisition will be more about compensating for Zynga’s weaknesses.
One place where Zynga is not weak is Facebook; its games have had a death grip on at least five out of the top 10 games on our AppData rankings charts for almost two years. Off-Facebook, however, Zynga is still figuring out mobile — particularly Android — and its Zynga.com games platform is young and fragile. It seems like the next major buys will be aimed at shoring up these parts of the business.
Editor’s Note: Some obvious choices in social and mobile are left off this list because we’ve heard that these studios already received and rejected acquisition offers from Zynga. They could always come back to the table in the future, but as far as we know, they’re not in M&A talks at this time.
Zynga has made it clear it’s looking to mobile for expansion. But why invest in another iOS developer when it could get an Android expert? Google Play may not monetize as well as iOS, but Amazon’s Appstore is an Android variant that is doing extremely well — which tells us it’s not the platform itself that has issues.
In the long term, investing in established Android developers is a good idea for Zynga because the platform not only has a size advantage in the U.S., it’s also more popular in emerging markets like China and Korea. An Android developer with international appeal will help Zynga expand its userbase out from its North American hub. An Asian developer could also help Zynga’s Japan and China studios gain better footing in the lucrative South Korean and Japanese mobile markets.
Finally, while Zynga does casual well, it might also look to pick up a more core-focused developer to help it expand its established user-base beyond casual-social players.
Using that line of thinking, here are the mobile developers Zynga might consider:
Gamevil — The South Korean company currently has two games in the top 50 of the Android top grossing charts, plus a larger catalog of popular games. It also has a market cap of US$326 million, which makes it seem expensive, but that’s far less than what Zynga was reportedly willing to pay for Rovio.
DroidHen — This is the Sequoia Capital-backed company behind Android’s current top-grossing title, Defender II. For the past few months it’s been rare not to see a DroidHen game somewhere on the top of the Android charts.
Creative Mobile — This Estonian developer’s sports-themed Drag Racing games have been a hit. It’s currently the No. 4 top grossing Android app. Given the small size of the studio, Zynga could likely make the purchase at a fairly low price.
For social game studio acquisitions, Zynga is likely looking in two different directions: Asia and the West. While an experienced studio like Hoolai Games or Happy Elements would help Zynga break into or amplify its presence on Asian games networks like Tencent or Mixi, a Western acquisition would be more about finding talent than anything else.
As for what kind of talent, we’re thinking developers that can offer a service as opposed to a game — much like how DNA’s testing methods attracted an acquisition last year. This could help Zynga grow its games platform out of its too-similar-to-Facebook nascent stage. We’re also thinking of developers with experience in transmedia properties — like the studios that know how to make a TV show into a game or the ones that have experience in converting a non-social video game franchise into a social game. Zynga Slingo proves that there’s room for growth there with the right IP.
Zynga could also shop around on Facebook for developers to pad out its platform with games that it doesn’t already make itself. Hardcore combat games or classic casual titles, for example, are the kinds of things Zynga hasn’t made in the past that still perform well on Facebook and on other games portals. We’ve heard some developers speculate that if a third-party game performs well on Zynga.com, it could fast track its developer to an acquisition; if true, Playdemic, MobScience and Row Sham Bow are first in line.
Aside from those developers, here are a few that could be interesting prospects for Zynga:
3 Blokes (What’s left of it) — Though publisher RockYou acquired and then shut down the Australian developer, the key people at the studio are reportedly soldiering on in the core strategy genre. Assuming larger studios with expertise in these kinds of games are off the table, this might be an easy way to get into the core strategy market and to improve combat game mechanics in Empires & Allies.
A Bit Lucky — This Nexon-backed niche game studio has some smart ex-MMO developers behind it. Its last Facebook title, Lucky Space, never saw the traction of its predecessor, Lucky Train. Even so, both games had a lot more going on under the hood than the average social game from UI design and art to layered gameplay mechanics. At the very least, this team could help Zynga resolve its mapping issues in the various ‘Ville games.
GameVentures — We get the impression that this sports-centric developer has more of a presence on open web than on Facebook. Its baseball and cricket games, however, attract a more male audience than what Zynga’s is perceived to be and could the titles could tap into the fantasy sports league types. EA and Disney Playdom have already proven the appeal of the genre and Zynga currently doesn’t have anything in the sports category.
If you’ve heard anything you think we haven’t about Zynga’s current M&A prospects, drop us a line: mail (at) insidesocialgames (dot) com. If you’re somebody looking to get bought, check out Inside Mobile Apps’ article, Secrets of the acquisition process.