SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  For example, here is how to disable FireFox ad content blocking while on Silicon Investor.

   Technology StocksZynga, Inc.


Previous 10 
From: Glenn Petersen11/11/2017 10:14:36 PM
   of 349
 
Zynga pays $100 million for Peak Games’ casual card game studio

Dean Takahashi @deantak
VentureBeat
November 7, 2017 1:05 PM



Above: Okey Plus
Image Credit: Peak Games
_____________________________________

Zynga has acquired the mobile card game studio of Turkey’s Peak Games for $100 million in cash. The move is one of the biggest acquisitions Zynga has made under Frank Gibeau, who became CEO in March 2016. It’s also a big validation for Peak Games’ strategy of focusing on casual card games that are popular worldwide, like spades and gin rummy.

Zynga will get Peak’s card games such as Spades Plus, Gin Rummy Plus, and Okey. The latter is based on a popular Middle Eastern board game. Peak Games will retain its Toy Blast and Toon Blast games, and remain an independent company in Istanbul.

The deal is a big one for Zynga, which previously paid $527 million when it acquired NaturalMotion, a studio that made games such as CSR Racing and Dawn of Titans.

In an interview, Gibeau said acquisition is one of a few ways that Zynga is trying to increase its overall revenues. It is focused on growing its current base through services (live operations like events or tournaments), adding sequels to existing games, launching new intellectual properties, and acquiring licensed brands for new games.



Above: Frank Gibeau, CEO of Zynga.
Image Credit: Zynga
___________________________


“With Peak, we felt there was an opportunity to work with them to bring their games to our portfolio of card games,” Gibeau said. “They have the largest mobile rummy game in the world, and the largest spades game in the world.”

Peak has been making games for seven years, with a focus on mobile casual card games as well as the Blast series of mobile games. Peak Games founder and CEO Sidar Sahin will stay with Peak and operate it as a separate company.

“The opportunity was to acquire this piece of the company,” Gibeau said.

While Zynga’s own card games have common users with Peak’s games, Gibeau said that for the most part that Zynga will be acquiring new audiences with the Peak games. Zynga currently has 1,524 employees, and it will add Peak employees as well.

Peak Games titles grossed more than an estimated $165 million from the App Store and Google Play worldwide during the first three quarters of 2017, according to measurement firm Sensor Tower. Compared to the same period in 2016, this revenue grew approximately 145 percent.

Its highest-grossing title, Toy Blast, earned more than an estimated $124 million, or about 75 percent of the total.

After Toy Blast, its next largest earners are card games Okey Plus, Spades Plus, and Gin Rummy Plus, which grossed an estimated $18 million, $9 million, and $8 million, respectively during the first three quarters of this year.

venturebeat.com

Share RecommendKeepReplyMark as Last Read


From: hollyhunter11/20/2017 8:20:16 AM
   of 349
 
looking better after some consolidation. On watch for clear above 4.09.

Share RecommendKeepReplyMark as Last Read


From: Glenn Petersen5/2/2018 11:11:29 PM
   of 349
 
Zynga founder Mark Pincus is giving up voting control of his gaming company: ‘It’s time’

In an unusual move, Pincus doesn’t want the final say anymore and wanted more freedom.

By Kara Swisher @karaswisher
Recode
May 2, 2018, 4:05pm EDT

In an unusual move for a Silicon Valley company, Zynga chairman Mark Pincus has given up voting control of the social gaming company he founded more than a decade ago.

The establishment of voting rights parity — basically, one share, one vote — rids the company of its longtime multi-class share structure that concentrated all power in the hands of one person. What that means is that Pincus’s 70 percent voting power over Zynga will convert into a 10 percent economic stake. Under the Zynga plan, his high-octane voting shares will convert into Class A common stock in the San Francisco-based company.

Pincus is also shifting his title to non-executive chairman but will remain on its board.

That much-celebrated “power of the founder” has been common in tech, with companies like Facebook and Google continuing to concentrate voting control in the hands of a startup’s creators with the aim of resisting undue shareholder pressure and staying true to their vision.

Pincus said that was no longer needed at Zynga, since the company has stabilized after several years of turmoil. Thus, he said, he felt “it’s time” to move to a new corporate structure and also remove himself from active management in the company. He had done that once before, stepping back in 2013, only to return in a more prominent role in 2015.

“Given our positive momentum, now is the right time to simplify our stock structure and transition to one share, one vote. I believe it’s in the best interests of our shareholders to establish voting rights parity for all,” Pincus said in a statement.

In a longer interview this morning, he noted that he also wanted space to undertake a number of other things in investing and elsewhere.

“When I came back, I put my other aspirations on hold,” said Pincus, noting he has become interested in areas like blockchain and building a new internet (yes, he gets the reference to the HBO show, “Silicon Valley). “But now it’s time to create more space between me and the company to do that as a separate person and entity ... I have a lot of pent-up ideas and energy that for well over a year I have wanted to pursue.”

More importantly, said Pincus, the founder-as-ruler concept may have outlived its usefulness, at least at Zynga. “We asked ourselves, is there a benefit to this, and I think it is a healthy debate for any company to be having,” he said. “Recently, my control did give air cover for the team, but that is not needed any longer as we have become more stable.”

Zynga CEO Frank Gibeau agreed. “When Mark approached the board with this idea, we thought it was a good time, because we were growing with a lot of momentum and this change makes us more accountable to shareholders,” he said. “When we are not worried about defense but growing the company, a one-share-one-vote structure where everyone’s economic interests aligned is positive to shareholders. The perception of a controlling shareholder causes that to skew and this gives us a clean road ahead.”

Zynga was founded in April of 2007, taking off like a rocket ship via its game integration with Facebook. With Pincus as its energetic and high-profile leader, it went public in late 2011. According to Zynga, it had three classes of stock ownership, with its Class C common shares — all held by Pincus — getting 70 votes per share. Class B shares, which Pincus held a majority of, got seven votes per share and Class A shares had one vote each.

Under the new structure, all Zynga shareholders will have equal voting rights.

Zynga’s shares have certainly recovered over the last several years, after getting hit by changes at Facebook and in the mobile market. Its stock price dipped below $2 a share in early 2016, but it has now risen to $3.61.

While still in turnaround, the company reported stronger first-quarter results today and has announced more stock repurchase programs. Recently, under Gibeau, its flagship games and live services, like “Words With Friends 2” and “Zynga Poker,” have seen solid growth.

While not directly commenting on current Silicon Valley giants like Google and Facebook, which continue to give founders huge latitude, he did note that there will be some pushback on the idea that “founders don’t feel accountable to shareholders.”

Added Pincus: “Is the value we were worried about at founding served by multi-class structures? It’s no longer obvious what benefit it has given. So many companies like this are now in amazing positions that seem very well aligned with visions of founders.”

If you want to read more from Pincus, here is his blog post.

recode.net

Share RecommendKeepReplyMark as Last Read


From: Glenn Petersen5/30/2018 8:54:21 PM
   of 349
 
Zynga buys 1010 maker Gram Games for $250 million

Dean Takahashi [url=https://twitter.com/deantak]@deantak [/url]
VentureBeat
May 30, 2018 6:02 AM


Above: Gram Games founders Mehmet Ecevit (left) and Kaan Karamanci.
Image Credit: Gram Games
________________________________________

Zynga has acquired 1010 mobile game maker Gram Games for $250 million in cash plus other considerations.

Frank Gibeau, CEO of San Francisco-based Zynga, said in an interview with GamesBeat that the company will also pay an earnout, or bonus, over three years if Gram Games hits unspecified financial targets.

Gram Games has studios in Istanbul, Turkey, where it was founded in 2012, and in London. Gram Games currently has nine live games, including 1010 and Merge Dragons, which is a top-50-grossing game in the U.S.

Above: Gram Games’ Merge Dragons.
Image Credit: Gram Games
____________________________________

Zynga will add Gram’s 77 employees to its roster, and Gibeau said the deal could add to the company’s “forever franchises,” or long-life live services games such as Zynga’s Words With Friends franchise.

“Their franchises are in good shape, and we are very excited to bring them into the company,” Gibeau said. “They have a unique way of building games through rapid prototyping with small teams.”

“Gram Games helped define the hyper-Casual genre with games like 1010 and Six, and we continued to grow our footprint with Merge Dragons,” said Kaan Karamanci, cofounder of Gram Games, in a statement. “We look forward to marrying our unique approach to game making with Zynga’s live services expertise to grow our games and continue to delight millions of players around the world.”

Above: Gram Games’ studio in Istanbul
Image Credit: Gram Games
________________________________________

Gibeau added, “They focus on culture and creativity. We will keep them as is, and they will operate as an independent studio inside our company.”

Gram Games has 3 million daily active users, and its free-to-play games have been downloaded more than 170 million times. Gibeau said Gram has good games in its pipeline as well.

Gibeau said the acquisition will be accretive at the outset, and the company will remain committed on delivering its guidance for the fiscal year. Gibeau said the price Zynga paid was two to three times the revenue that Gram generates.

“We are proud to join Zynga and combine Gram Games’ unique culture, talented team and hit games with Zynga’s world-class organization,” said Mehmet Ecevit, Gram Games CEO, in a statement. “We believe deeply in Zynga’s mission to connect the world through games and are excited to work with Frank and the rest of the Zynga team on our next phase of growth.”

Above: Gram Games’ studio in London
Image Credit: Gram Games
_______________________________________________

“We were drawn to the talent of the team,” Gibeau said.

The deal is similar to Zynga’s purchase of assets from Peak Games, another Istanbul-based game studio. Zynga paid $100 million last year for Peak’s casual games studio.

“This deal fits with Peak Games in a lot of ways, as both have talented teams with strong creativity and big opportunities, both globally and in emerging markets,” Gibeau said.

Zynga said it expects to hits its previous guidance for earnings for the second quarter. Gibeau said that for GAAP (generally accepted accounting principles) purposes, Zynga does not expect any significant revenue impact from Gram Games, as the expected bookings generated in Q2 of $10 million will be accounted for as an increase in deferred revenue and recognized as revenue in future quarters.

Zynga expects a reduction to its adjusted earnings before income taxes, depreciation, and amortization (EBITDA) of $8 million, as a result of the $10 million increase in deferred revenue partially offset by $2 million of expected operating contribution

venturebeat.com

Share RecommendKeepReplyMark as Last Read


From: Glenn Petersen12/20/2018 8:23:36 PM
   of 349
 
ZNGA was up about 6.4% in AH trading.

Zynga will buy 80% of Empires & Puzzles maker Small Giant Games for $560 million

Dean Takahashi
@deantak
VentureBeat
December 20, 2018 1:05 PM



Above: Empires & Puzzles has more than 10 million downloads.
Image Credit: Small Giant Games
_____________________________

Zynga has agreed to acquire the Helsinki-based mobile game maker Small Giant Games, the creator of the hit title Empires & Puzzles. Zynga will pay $560 million in cash and stock for 80 percent of the company, and the rest will come later.

It’s the biggest deal since Zynga acquired CSR Racing maker NaturalMotion for $527 million in 2014. And it reflects the strategy of CEO Frank Gibeau to grow during an age of mobile gaming consolidation through both the creation of new games and acquisitions.

Back in May, Zynga acquired 1010 mobile game maker Gram Games for $250 million in cash plus other considerations. That was preceded by Zynga’s 2017 purchase of assets, including a casual game studio Peak Games, another Istanbul-based game studio, for $100 million.

The deal will close on January 1, pending various approvals. To put the purchase price in perspective, the amount is larger than the $494 million valuation of Cloud Imperium, which is making the Star Citizen and Squadron 42 games, which hold the record for the highest crowd-funded games in history. While Cloud Imperium has 520 employees making its triple-A games, Small Giant Games has just 47. That means Zynga is paying at least $11.9 million per Small Giant Games employee.

“I’ll take our 47 Finns,” Gibeau said in an interview with GamesBeat. “The Finns have small teams that are very skillful. What they have accomplished with Empires & Puzzles is phenomenal.”

Above: Timo Soininen (left) of Small Giant Games and Dean Takahashi of GamesBeat at Casual Connect Europe.
Image Credit: VentureBeat
_________________________


Zynga is buying the company because it has a hit game which has been downloaded more than 24 million times in the past 18 months and has broken into the top 10 grossing games on iOS and Android. That’s a remarkable result for the first game from Small Giant Games, which Timo Soininen cofounded in 2013. He previously the CEO of Habbo Hotel, an early hit online game.

Small Giant Games is expected to contribute to Zynga’s growth in 2019. Empires & Puzzles game successfully blends approachable match-3 battles with deeper gameplay elements including Hero Collection, Base Building and Social Alliances.

“Our studio was founded on the idea that small, skillful teams can accomplish giant things, and I am confident that partnering with Zynga is the right next step in our evolution,” said Soininen in a statement. “We will now operate as a separate studio within Zynga, maintaining our identity, culture and creative independence. By leveraging the expertise and support from the wider Zynga team, we will amplify the reach of Empires & Puzzles and the new games in our development pipeline.”

Above: Empires & Puzzles has match-3 gameplay.
Image Credit: Small Giant Games
____________________


In terms of details, Zynga will acquire 80 percent of Small Giant for $560 million, made up of approximately $330 million in cash and $230 million of unregistered Zynga common stock (issued at the average closing price per share over the thirty-day trading period ended December 19, 2018). The final upfront transaction consideration will also include customary closing adjustments and will be partially funded by a newly established $200 million revolving credit facility.

Zynga will purchase the remaining 20 percent of Small Giant over the next three years at valuations based on specified profitability goals. Gibeau said that represents an “earnout,” or a way to retain the employees of Small Giant Games with the potential of a bigger payday down the road.

Small Giant Games had bookings last year of $190 million, which would put it just behind Zynga’s own Words With Friends in terms of revenue generation.

“It’s already at scale, profitable, growing, with fantastic engagement metrics,” Gibeau said. “People play it and they keep on playing. The team has great talent.”

Empires & Puzzles also gets Zynga to new users, as more of Empires & Puzzle audience is on Android and 60 percent of its revenues are outside the U.S., Gibeau said.

“From our perspective, it really checked the boxes,” he said.

Over time, Zynga will contribute its own live operations expertise and help take the game into Asia.

Separately, Zynga is raising its fourth quarter 2018 guidance based on the strong performance of holiday bold beats across its live service portfolio — in particular, Words With Friends, Merge Dragons! and CSR2. In addition, Wonka’s World of Candy is off to a promising start since its launch in early November.

This performance does not include any contributions from Small Giant yet. Small Giant Games raised $41 million in February, making it one of the rare mobile game studios to be able to raise a large round of money in a mature mobile gaming market. The Small Giants Games investors include EQT Ventures, Creandum, Spintop Ventures, and Profounders. Gibeau said they requested to be paid in Zynga stock out of confidence in Zynga’s future.

“We have hit our margins, gross revenue goals, and are fundamentals are good,” Gibeau said. “The turnaround is over and it’s all about growth. We are layering in new themes and products as opposed to just trying to fix things. It is emotionally and culturally exciting for the company.”

venturebeat.com

Share RecommendKeepReplyMark as Last Read


From: Glenn Petersen2/10/2019 10:04:05 PM
   of 349
 
Zynga’s turnaround: How once-beleaguered game company plans for 2019 growth

Dean Takahashi [url=https://twitter.com/deantak]@deantak [/url]
VentureBeat
February 9, 2019 7:15 AM


Above: Social-gaming publisher Zynga's headquarters.
Image Credit: Zynga
__

Zynga went public in 2011, and it grew quickly on the strength of social games like FarmVille. But it hit the skids in 2013, and it began going downhill. Frank Gibeau, a former Electronic Arts executive, joined as CEO in 2016, taking over from Mark Pincus, the original CEO, who replaced his own replacement, Don Mattrick, who was Gibeau’s former colleague from EA. (Did you follow all that?)

It was a long slog, but Zynga has gone through a turnaround. In fact, Gibeau said this week in an interview with GamesBeat that the company’s “turnaround is now complete.” The company broke even, even with 1,778 employees, and it is 39 percent bookings growth in 2019.

Part of the solution has been acquisitions. Starting in November 2017, Zynga began making new acquisitions, such as buying Peak Games board and card games for $100 million. In May, Zynga also bought Merge Dragons maker Gram Games for $250 million, and then in December, it got a 80 percent of Small Giant Games, maker of Empires & Puzzles, for $560 million.

But Zynga has doubled down on its “forever franchises” (those that can top $100 million in a year and sustain a business for five years or more) and driven growth on existing games like Words With Friends and CSR Racing 2. Zynga Poker is still kind of limping, but nine new games are in the works.

Gibeau will be a speaker in a fireside chat with Michael Metzger of Drake Star Partners at our GamesBeat Summit 2019, which takes place in Los Angeles on April 23-24. Here’s an edited transcript of our interview.

Above: Frank Gibeau, CEO of Zynga.
Image Credit: Zynga

GamesBeat: It sounds like you guys had a good quarter there.

Frank Gibeau: It was a good quarter and a good year. We beat on the top and the bottom. We even beat our raised guidance for the quarter. We’re set up for a really strong 2019. The business has a lot of momentum. The thing we’re most excited about is how Gram with Merge Dragons and Small Giant with Empire of Puzzles have fit nicely into the portfolio alongside Words With Friends, CSR 2, and Zynga Poker. We have a good lineup of games to create the base for us, and then we have more than nine games being built right now that will come out over the next couple of years, with a bunch coming in soft launch

It’s an exciting time. We’re out of the turnaround. We’re done. There’s more “Spill on aisle three!” cleanup stuff. We’re focused in on growing the business, making games. It’s a lot of fun. Mobile is the place to be right now.

GamesBeat: You always had the declining Facebook desktop business and rising mobile. Has that stabilized, or is that still happening, still slowing down overall growth?

Gibeau: There’s a couple ways to think about it. We’re 93-plus percent mobile now. When we started I think we were in the 60s. Over the last couple of years we’ve accelerated the transition to mobile. That’s part of how we did the cleanup on the turnaround, to start to exit and focus in on where we had the highest growth. That was in mobile.

The good news is that more than 90 percent of the business is in mobile. We still have a headwind from what we call legacy mobile and web. We have to overcome that when we talk about how we’re going to grow the company. It’s going down. It hasn’t reached bottom yet, but it’s as close to the bottom as it’s ever been. When you think about how we performed this year and how we’ll perform next year, we always start out with a $50 to $70 million headwind in revenue decline from those businesses. Then you tack on the growth in our forever franchises and the new games coming in. We’re almost to the end, but it’s still an artifact that we have to deal with.

I think what’s encouraging is if you remove that from our growth performance, we’re growing even faster. We had a great year over year in the quarter, where I think we grew 19 percent on the top end. If you took out the headwind from web we’d be growing in the 20s. It’s encouraging to see.

Above: Empires & Puzzles has more than 10 million downloads.
Image Credit: Small Giant Games

GamesBeat: Are you already more confident about Empires and Puzzles than acquisition time?

Gibeau: Last week it was in the top 10 on Android. Merge Dragons was in the top 20. We see a lot of momentum in those two franchises, especially on Android and international, which as you know has been a key strategy for us. We’re falling more in love with those guys every day.

If you look forward into next year, we’re projecting that we’ll grow the company 39 percent on the top line. We’re going to try and achieve $1.35 billion on the top. We finished this year just a bit below a billion. It’s a 39 percent growth rate in terms of bookings. It should make us one of the fastest growing game companies, if not the fastest growing public game company, next year. That should set us up for growth in 2020 and beyond.

A big part of that is Empires and Puzzles and Merge Dragons, but also you’ll see growth from Words With Friends and CSR 2. Poker is going to be in a good position too. We have a new lineup of games coming. We’ll have a bunch of them in soft launch in the near future, some of them in the next few weeks actually. They’ll include Star Wars and Harry Potter, Game of Thrones, CityVille, FarmVille. We’ll have additional games from Gram and Small Giant.

We’re going to leave 2018 with about a billion dollars of revenue from our top five franchises, our five forever franchises. Those are going to grow, and then you’ll layer in the new games. We’re very fired up about the fact that we’ll be growing in the next couple of years.

Above: Zynga’s CSR2 has added new vehicles from the Geneva Motor Show.
Image Credit: Zynga

GamesBeat: Electronic Arts gave a mixed outlook for mobile. They described it as a difficult business. Command and Conquer didn’t do as well as they’d hoped. You guys seem a lot more optimistic than EA and some others in the space.

Gibeau: As you know, I spent some time there. I ran the EA mobile business for a while, and we did fine. I think the issue for me is that–it’s not the fact that mobile is competitive. It’s the fact that it’s the largest platform, the fastest-growing platform. It reaches the most people and the most devices. It’s an awesome platform to be on. It’s competitive, but it’s pro ball. You have to execute. You have to be able to compete.

We don’t typically blame the competition around here. We try to focus in on what we can do better than anyone else in the world. What is it about our games that connects with players? How do we go out and find those players and get them to connect with our games and stay with them for a long time?

I understand their point of view, but it’s one of those things where — at Zynga we’re a mobile-first company. We’re focused on mobile. We’ve spent the last few years really getting fit to be able to compete and grow the business. If we were worried about the competition I wouldn’t publicly tell you that we’re going to grow the company 39 percent next year. Poker has been around 10 years. Words With Friends has been around eight years. CSR is a five-year-old franchise. Empires and Puzzles and Merge Dragons are going like hotcakes now. They’re growing fast.

Merge Dragons wasn’t that high in the charts when we started working with them. We think the combination of our studios, our publishing platform, and the fact that we’re out here being inquisitive–we’re out looking for franchises and talented game teams that want to join a company like ours. 2018 was a strong year. We leave it with a lot of momentum. It’s not that we aren’t paranoid about the competition. We just don’t blame it.

Above: Zynga’s leaders. Frank Gibeau, CEO, is on far left.
Image Credit: Zynga

GamesBeat: Is Poker still trying to recover right now?

Gibeau: It had a really good first half of 2018. Then, about midsummer, it got some hits from a Facebook platform shift, as well as some challenges inside the game economy. We’ve been working through that. As you know, with live services, it’s a marathon. You’ll have periods of time where it goes rapidly. You might level off a bit, have to make some changes, and then you get back to growth.

That’s the story right now on Poker. It finished 2018 in line with what it did in 2017, which was phenomenal year, so it’s not like it’s off its peak. It’s performing at its peak. It’s just not growing as much as we want it to. From the time I came into the company, we introduced some new things like tournaments, and the product grew about 96 percent in that period. When you grow that fast, sometimes you have to level off a bit and look at things again.

That’s where we’re at right now. We wish it was doing better, but we feel like we have a good handle on it. We need to make some adjustments to some of the tournament structures, the economy. It’ll return to growth in 2019. It remains a forever franchise for us. We hope to be in business with it for another 10 years. But it’s one of those things where, if you look at the Q4 timeframe, it was really a story of Merge Dragons, Words With Friends, and CSR. Poker did well, but it wasn’t growing year over year as much as we wanted.

GamesBeat: As far as forever franchises, can you talk about that again and why some of these might be considered your forever franchises, even if they’re pretty new?

Gibeau: We have a definition for it, which is a game that does over $100 million a year in bookings, and a game we believe can last for five years or more. We have a couple of other definitions in terms of engagement metrics. When you look at Merge Dragons and Empires and Puzzles, they’re well above the $100 million mark and growing. They have a global audience. They’re about a year and a half into their lives, both below two years I think. We believe these games have the potential and the depth to do that same business through the next couple of years.

Above: Zynga Poker Classic
Image Credit: Zynga

When we greenlight new games, like the nine games we’ve been talking about, we look at the potential in each game and ask ourselves, “Can this last for five years or more? Does it reach a global audience? Does it have a potential to do more than $100 million in a year?” Maybe not the first year, because in mobile you have to grow into it, but it’s definitely not a buzzword. We use it as a decision-making point to classify the games and the investments we make at Zynga.

GamesBeat: You’re at 1,700 people. Is that going to change much in the coming year?

Gibeau: A lot of that is international now. Our European organization is really cool. We have two teams in Istanbul, two teams in Helsinki, teams in London and Brighton. We’ve been growing internationally, because mobile has so much talent in terms of developers and franchises everywhere. We’ve been expanding through acquisitions. We’ve actually expanded our team in Bangalore. They handle a lot of new mobile games. We’ve been investing in new games there for India as well.

I think you’ll see us hang around that number. But if we do scale it up, it’ll be probably more related to acquisition activity than organic growth. We feel like we have a good handle on the size of our company and our operating margins. As we look at how we’re going to grow in 2019 and 2020, we don’t see a big headcount lift. We see a lot more efficiency than a scaling-up army of people.

venturebeat.com






Share RecommendKeepReplyMark as Last Read


From: Glenn Petersen6/7/2019 10:48:38 AM
   of 349
 
Zynga Is Now Flush With Cash and Investors Are Watching for More Deals

By David Marino-Nachison
Barron's
Updated June 3, 2019 9:59 a.m. ET Order ReprintsPrint Article


Photograph by David Paul Morris/Bloomberg
______________________

Mobile gaming company Zynga finally sold its headquarters building last week, raising millions in the process. So now what?

That—instead of “When will they sell it?”—is what investors are asking following Tuesday’s announcement that the San Francisco-based company, known for Farmville and Words With Friends, agreed to sell its building to a Boston investment firm.

The deal, expected to close before August, should net Zynga (ticker: ZNGA) some $600 million in cash this year, the company said. It bought the building for $234 million in 2012, and Barron’s readers were contemplating its potential value not long after the purchase.

Zynga owned nearly 690,000 square feet of space, leasing roughly half. In December, the company said “close to 100%” of the free space was leased out. Tuesday’s deal is a sale-leaseback, which means Zynga won’t be leaving its digs, though $15 million in new annual expenses are expected as a result.

Zynga had $252 million in cash, equivalents and long-term investments on its balance sheet as of the end of March, so the infusion of funds is a hefty one. But because management had previously indicated that a deal was likely, investors weren’t particularly surprised—though the shares did finish the week up nearly 4%.

Next up is the job of putting the money to work. “We look forward to investing the proceeds into future growth,” CEO Frank Gibeau said Tuesday in a statement that didn’t offer much additional detail. (Zynga didn’t reply to a request for comment.)

That could mean acquisitions. Two recent deals offer clues as to what might be in store.

In December, Zynga acquired 80% of the Finnish company Small Giant Games for $560 million, mostly in cash. It said the deal was expected to boost profits thanks largely to Empires & Puzzles, which it termed a “forever franchise.” (Zynga plans to buy the rest over the next three years.)

And in May 2018, it bought European developer Gram Games, known for Merge Dragons, for $250 million in cash plus future considerations based on Gram’s progress toward profitability goals.

Both games, the company believes, have the potential to hook players because they are easy to pick up, but have lots to offer over weeks, months or even longer, giving Zynga more opportunities to push various digital upsells. And both, Zynga believes, bring in users that won’t necessarily have to drop other Zynga games to start playing.

The deals, management has said, took about a year to come off. Zynga thinks its strength as an acquirer is that it can offer efficiencies on things like marketing, testing, and product management, while leaving a developer’s culture relatively untouched.

Zynga’s “reputation as a place where creatives want to go work has vastly improved over the past year,” Stephens analyst Jeff Cohen wrote Thursday.

Wall Street expects revenue to grow from $970 million last year to about $1.78 billion in 2021, with earnings per share rising from 11 cents to 30 cents. Zynga has said that while it wants to be able to make moves it thinks can help it grow, it is also comfortable with what it has.

“We don’t need to acquire anything else to grow,” Gibeau said at a JPMorgan Chase conference in mid-May, saying Zynga has a solid strategy for organic growth over the next couple of years. “But if we do find an opportunity to partner with a company, like we have with Gram or Small Giant, we’d like to be able to do so.”

Zynga’s shares are up 60% this year through Friday’s close at $6.29, not only outpacing the S&P 500 and competitor Glu Mobile (GLUU) but larger, console-heavy developers Activision Blizzard (ATVI), Electronic Arts (EA), and Take-Two Interactive (TTWO). Wall Street’s average price target is just under $7.

“We are not anticipating a major, transformative acquisition, but instead, opportunities similar to its recent spate of purchases,” PiperJaffray analyst Michael Olson wrote on Tuesday. “We view Small Giant/Gram sized acquisitions as the sweet spot for Zynga, which we believe seeks to acquire small studios looking to scale an established title.”

Email David Marino-Nachison at david.marino-nachison@barrons.com. Follow him at @marinonachison and follow Barron’s Next at @barronsnext.

barrons.com

Share RecommendKeepReplyMark as Last Read


From: Glenn Petersen6/27/2019 11:48:12 AM
   of 349
 
The power of casual gaming:

More than 9m play Candy Crush for three hours or more a day

Executive of maker King tells MPs he does not believe there is addiction problem

Mark Sweny
The Guardian
July 26, 2019



Last year one player spent $2,600 in a day on gold bar currency that can be used to propel gamers faster through Candy Crush Saga. Photograph: Mark Lennihan/AP `
_______

A top executive at the maker of the multi billion dollar Candy Crush Saga game has revealed that more than 9 million players a day spend from between three to six hours or more playing the puzzle game.

Alex Dale, a senior executive at its maker, King, also told a Commons select committee investigating immersive and addictive technologies that last year one player spent $2,600 (£2,050) in a single day on the gold bar currency that can be used to propel players faster through the game.

However, he told MPs he did not believe that there was an addiction problem among Candy Crush Saga players.

“Among 270 million players we have between two and three contacts a month from people concerned about having spent too much money or time on the game,” he said. “It is a very, very small number who spend or play at high levels. When we speak with to them they say they are happy with what they are doing.”

Dale told the committee that of the 270 million players, 3.4% (9.2 million) play for three or more hours a day, while 0.16% (432,000) play for six or more. He said the average player – the core market is women aged 35 and over – plays for 38 minutes a day. Defending the numbers, Dale pointed out that the many players were from demographics that had “plenty of time on their hands”, including older people and those convalescing.

“Excessive time, it is very difficult to know what excessive is,” he said. “We have a fair number of people in their 60s, 70s and 80s playing Candy Crush,” he said. “We do want people to play more. There are going to be people that like to play our games a lot.”

Dale used the example of the player who spent $2,600 in one day as an example of not jumping to conclusions in assuming a person had a problem. He said the player took advantage of a “sale” of bundles of the gold bar currency and used them up over a seven-month period. That person then spent a further $1,060 on gold bars to use over an extended period.

“That sounds, and is, a large amount of money,” Dale said. “There was a sale on at the time so they were making a rational decision. It is down to player choice if that is what they want to do.”

Damian Collins, the Conservative MP who chairs the committee, asked whether Dale felt the games’ maker had an obligation to intervene or suspend an account of a player behaving in an excessive way. Dale said an email used to be sent out to players who spent $250 in a week for the first time but that gamers would respond that they would not play if they could not afford it and felt the communications intrusive.

Collins suggested that King had been passive in dealing with the issue. “What I’m not getting is any sense that you feel you have a responsibility as a company to identify people that are addicted,” the MP said. “You are only happy for them to refer themselves to you if they think they have a problem.”

In light of the World Health Organi zation recognising playing games to excess as an official medical condition, Dale said King would revisit the possibility of proactively reaching out to players.

“We will look at the whole area again but we have done it before and they didn’t like it,” he said. “We have customer support available in 24 languages. Among 270 million players we have between two and three contacts a month from people concerned about having spent too much money or time on the game.”

A colleague of Dale also attending the committee hearing said only one player in the UK in the last 18 months had asked for her/his account to be blocked.

• Representatives of King have said that the testimony given to the select committee relating to how many players spend three hours or more a day on Candy Crush was inaccurate. The 270m active users is a monthly total while the percentages for the proportion of gamers who spend more than three hours and more than six hours playing Candy Crush relate to daily users. King says it does not disclose daily user numbers so it is not possible to determine how many players spend three or more hours playing. The company is contacting the select committee to clarify the comments made by Alex Dale.

theguardian.com



Share RecommendKeepReplyMark as Last Read
Previous 10