Zynga Acquisitions Show Mobile Gaming’s Momentum
The global games market has skyrocketed throughout the last decade.
But while consoles did see an uptick in hardware and software sales courtesy of pandemic conditions, this explosive growth is ultimately the story of mobile gaming.
As close as it’s ever been to generating more revenue than PC and console combined, the mobile games sector is enjoying success that’s reflected in the two most recent acquisitions from a leader in this category, Zynga.
Echtra Games
Known for social-media-driven titles like “Farmville” and “Words With Friends,” Zynga is predominantly active in mobile games.
But its recent acquisition of Echtra Games, which made popular cross-platform RPG “Torchlight 3,” shows Zynga wants to expand more outside of mobile.
During Wednesday’s portion of the Morgan Stanley Technology, Media and Telecom Virtual Conference, Zynga CEO Frank Gibeau explained that mammoth games like “Fortnite” are usually cross-platform, further asserting that game engines like Unity and Unreal are “the best they’ve ever been.”
Likewise, Gibeau remarked that improved stability for games afforded by cloud services like AWS and expanding 5G infrastructure means more games are developed for mobile in 4K resolution, making them easily portable to newer consoles and high-end PCs, often a big plus for attracting developers and IP partners who don’t want to limit titles to mobile platforms.
Zynga has grown more active in licensing IP, revealing “Star Wars Hunters” for Nintendo Switch during February’s Nintendo Direct stream. In September 2020, Zynga partnered with Warner Bros. Games to release “Harry Potter: Puzzles & Spells” for mobile platforms, Facebook and Amazon Kindle.
Bringing in Echtra will help Zynga expand its cross-platform output further. Still, mobile is the company’s bedrock, as exhibited by its acquisition of Rollic.
Rollic
In October 2020, Zynga acquired 80% of the Turkish developer specializing in mobile games categorized as “hypercasual,” a designation for games that maximize player convenience via simple touch-based controls usually mimicking the actual in-game action in order to cast as wide of a net as possible and attract consumers who aren’t typically gamers.
Zynga games were always enabled for in-app purchases, the main revenue driver for free-to-play games of Zynga’s ilk. But the motivation to acquire Rollic came from the company’s ability to generate significant ad revenue via titles like “High Heels,” a game in which players overcome obstacles in, you guessed it, high heels. The company’s earnings have already proven Rollic to be a smart addition.
While Zynga’s overall revenue went up consistently throughout 2020, ad revenue was lagging up until Q4, which ended up being Zynga’s best quarter.
Now Zynga and Rollic’s team will work on finding solutions to a major problem that comes with the territory of hypercasual games: player retention.
While Q4 saw a significant uptick in monthly active users (MAUs) across Zynga titles, daily active users (DAUs) saw no observable increase beyond slight quarterly additions the company experienced throughout 2020.
Per Gibeau, Rollic’s strategy is to “test 400 games a month” and then “whittle [them] down and optimize” in order to figure out the right combination of banner ads and videos that aren’t disruptive to players.
Hypercasual games as a genre have led mobile game downloads since 2018, thanks to the simple, silly gameplay often seen in titles like “Slap Kings” (slapping an AI opponent across the face before they slap you) or “Acrylic Nails” (painting nails at a salon), but keeping a majority of players engaged past initial download can be challenging.
A report by Newzoo and Facebook Gaming found popular hypercasual titles still fail to retain just over half of players after a day, with the rate plummeting to nearly 90% after only one week.
With Zynga’s financial support, Rollic can further fine-tune in-game ads, allowing Zynga to offer a vast suite of titles with consistent ad strategies and gameplay across changing facades.
If Zynga can expand DAUs as much as its revenue and MAUs, the company’s hypercasual strategy will be one that further cements mobile as the preferred moneymaker for the games space as it inevitably crosses the $200 billion mark.