Zynga looks to expand after reaching new heights on High Heels!

Zynga, the mobile gaming company that has the most downloaded iPhone app in the US, is again on the hunt after six acquisitions in the past five years.

But while its recent buys — including a $1.8bn deal last year for Turkey’s Peak Games — have been focused on mobile-only, Zynga chief executive Frank Gibeau said there were more opportunities for Zynga to acquire young teams as it pushed “further afield” into games that could be played on multiple devices.

“We’re going to [launch] new cross-platform games, games that are able to be played across mobile PCs and consoles together,” Gibeau told the Financial Times.

Zynga is owner of Zynga Poker, Social Slots, Words With Friends. It has recently scored a big hit with High Heels!, a first-person game in which users strut around obstacles in absurdly tall platform shoes to earn accolades such as “Queen!” It is the number one iPhone app in the US.

The game went viral on TikTok — the second most popular app — and is being downloaded more than any other free app on the iOS App Store, outranking YouTube, Zoom and Clubhouse, according to App Annie, the mobile data and analytics provider. On Android, High Heels! ranks fourth.

Zynga’s foray into “hyper casual” titles — inexpensive games made for the moment that are free-to-play but can be highly lucrative through advertisements — helped revenues last year shoot up 49 per cent to $2bn.

Frank Gibeau: ‘The barrier to entry into these things has really dropped dramatically’ © David Paul Morris/Bloomberg

The company’s market value of $12bn is up more than 500 per cent in the past five years as mobile gaming has become the fastest growing segment in the gaming market. According to App Annie, gaming makes up more than one-third of App Store downloads but accounts for 70 per cent of consumer spending.

The data provider projects the market will surpass $120bn in consumer spending this year. That is larger than global recorded music revenues or film revenues including cinemas, mobile and streaming.

Gibeau told the FT that the rise of mobile gaming was causing “tectonic changes” in the industry as small budget teams can leverage graphics engines from gaming development groups Unity and Unreal, computing power from Amazon Web Services, and high-performance internet from 5G, and then compete for attention with some of the biggest companies in the world.

“When I was doing this 10 years ago at EA (Electronic Arts) you would have to spend hundreds of millions of dollars in tech development tool and infrastructure to make that happen,” Gibeau said. “Now, because the tools are so darn good, very small companies can get in. The barrier to entry into these things has really dropped dramatically.”

Last year there were 105 gaming acquisitions for a total of $17bn, the highest in six years of Dealogic data. Traditional gaming incumbents such as Activision Blizzard, the $80bn group behind Call of Duty, purchased Candy Crush Saga maker King in 2015 for $5.9bn and said last year it would bring “all our franchise to mobile over time.” EA, valued at $41bn, last week said it would pay $2.4bn for Glu Mobile, best known for its hit game involving an animated Kim Kardashian. 

The world’s biggest companies are involved too, with Apple, Google and Amazon all vying for supremacy with “Netflix for gaming” streaming services. Compared to these giants, Gibeau said: “We’re clearly of the new barbarians.”

He argued Zynga has an advantage with its mobile-first strategy, as the bigger rivals are usually trying to convert hit console games into a free-to-play mobile experience. Shifting in the other direction, from mobile to console, he said, is easier because “we’re capturing more data about what players are doing.”

Gibeau calls gaming “one of the richest places to run ads”, adding that Zynga sends its user video ads when they are stuck in a game; by watching the video they earn rewards.

“Players that watch ads inside games play the games longer,” he said. “Whereas on YouTube, you get hit with an ad and you’re saying, ‘OK how fast can I skip this?’ It’s a different dynamic.”

Zynga’s ad business grew 47 per cent last quarter to $117m in revenue.

In the year ahead Zynga expects total revenues to climb 32 per cent to $2.6bn, and forecasts double-digit gains in 2022. The long view indicates that Zynga expects rapid growth even if Covid-19 — whose effects clearly helped the gaming market — wanes and people return to the workplace.

“This category hasn’t peaked — it’s got growth happening in AR, VR,” Gibeau said. “It’s got growth built into it for the next 10 years.”

Source link

Related Articles

Back to top button