Take-Two turbocharges its mobile business with $12.7 billion acquisition of Zynga

On January 10th, in one fell swoop, Grand Theft Auto publisher Take-Two Interactive transformed itself from a company that occasionally releases mobile games to a leader in the category thanks to a massive acquisition of Zynga. The record-setting deal, which has a total enterprise value of approximately $12.7 billion (the next highest was Tencent’s purchase of Supercell in 2016 for $8.6 billion), sees Zynga’s Bernard Kim, President of Publishing, and CEO Frank Gibeau leading the company’s combined Zynga and T2 Mobile Games business.

Take-Two CEO Strauss Zelnick labeled the deal as “transformative” and said his company now expects 50% of net bookings to come from mobile in 2023 compared with just 12% in 2022. Much of Take-Two’s business has been fueled by Grand Theft Auto purchases and recurring revenue from GTA Online, along with top sports franchise NBA2K. In the near future, Take-Two will be able to count on Zynga’s 183 million monthly active users who are engaging with mobile titles like Words With Friends, Zynga Poker, and Empires & Puzzles. With the help of Zynga’s mobile expertise, Take-Two will be more likely to take even more of its IP to mobile platforms.

Zelnick explained to GI.biz that the addition of Zynga will also enable much greater global expansion through mobile gaming: “80% of our collective revenue comes from the US and Western Europe… There is an enormous untapped opportunity in markets like Russia, China and the rest of Asia, India, Africa, Latin America… and we think free-to-play is the mechanic that will appeal greatly in those markets. We think Zynga has the possibility to be the leading wedge into those markets for the wider Take-Two family.”

While Take-Two likely was in talks with Zynga for some time, there’s been increasing interest in mobile studios and publishers, which has led to considerable consolidation. EA, for example, last year acquired both Glu Mobile and Playdemic. In 2020, Zynga itself bought Turkish mobile studio Peak Games for $1.8 billion.

The focus from big gaming companies is warranted. Apple recently stated that developers on its App Store brought in about $60 billion during 2021, which “set a new yearly record for App Store developer earnings.” While that includes more than games, it’s previously been revealed that games account for about 70% of all App Store revenues.

Interpret’s New Media Measure®  shows that from 2019 to 2021 mobile gaming has enjoyed an additional 2+ hours of weekly time spent among US consumers, representing a 23% surge. Moreover, mobile gaming’s growth represents almost half of the overall 4+ hour increase in weekly entertainment time. By contrast, gaming time on consoles and the PC fell by just over 1 hour per week (a 3% decline) during that same time.