NYC-based gaming powerhouse Take-Two Interactive has just announced that it will be buying mobile gaming giant Zynga in a cash and stock deal, reportedly creating one of the largest publicly traded interactive entertainment companies in the world.
This acquisition, which values San Francisco-based Zynga at $12.7 billion, brings together two titans in the games industry. Take-Two, which counts hits like Grand Theft Auto and Red Dead Redemption among its vast portfolio, has been a prominent developer, publisher and marketer of games for the better part of 30 years; and Zynga, which is perhaps best known as the maker of widely popular titles like FarmVille and Words with Friends, is considered to be a leader in the mobile gaming industry.
Together, these two companies will combine their complementary intellectual properties and mobile gaming titles in a deal that Take-Two’s CEO and chairman Strauss Zelnick says will “significantly diversif[y]” its business and establish its “leadership position in mobile,” which he says is the fastest growing segment in the interactive entertainment industry.
“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,” Zelnick added in a statement. “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.”
Indeed, the video game sector has experienced tremendous growth over the last couple of years, and is reportedly the most lucrative area of the entertainment industry today. Within that is the mobile gaming space specifically, which is considered to be among the industry’s fastest growing segments. It is expected to reach a market size of more than $420 billion by 2026.
This trend is bolstered by a series of other major consolidations within the gaming space. Microsoft bought popular video game studio Bethesda and its sister companies for $7.5 billion in 2020, followed by Netflix, which made its first foray into the gaming industry last year with the acquisition of Night School. Plus, there’s Meta’s recent purchase of VR fitness startup Within and the mergerof Fortnite creator Epic Games and Rock Band creator Harmonix — indicating that the gaming industry is rapidly moving beyond traditional mobile devices and into the metaverse.
Meanwhile, this deal between Take-Two and Zynga, which is slated to close by June, is expected to create $100 million in annual cost synergies within the first two years, with potential net bookings of at least $500 million over time. The combined company will be led by Zelnick, and Zynga’s CEO Frank Gibeau and president of publishing Bernard Kim will oversee the larger mobile business, which includes the integration of Zynga and Take-Two’s existing mobile operations.
“Combining Zynga’s expertise in mobile and next-generation platforms with Take-Two’s best-in-class capabilities and intellectual property will enable us to further advance our mission to connect the world through games while achieving significant growth and synergies together,” Gibeau said in a statement. “With this transformative transaction, we begin a new journey which will allow us to create even better games, reach larger audiences and achieve significant growth as a leader in the next era of gaming.”
