Grand Theft Auto maker Take-Two Interactive's acquisition of mobile gaming company Zynga will help the console and PC gaming firm make inroads into emerging markets such as India, its chief executive said.
"We think that it's going to be a whole lot easier to penetrate parts of the world like India, Africa, parts of Latin America, and the Middle East with free-to-play (gaming) titles. That's where I think Zynga's expertise lies." Take-Two Interactive CEO Strauss Zelnick said on a recent investor call.
"We have a business that is largely a United States and Western European business and we basically have 80% of the world's geography that is a greenfield opportunity for us," Zelnick added.
He spelled out his ambition at a time when India's mobile gaming industry is experiencing a massive user boom on the back of pandemic-induced home confinement.
Mobile app downloads in India increased by 50 percent and user engagement rose 20 percent, according to a recent report by consulting firm RedSeer.
The country is also showing early signs of maturity in the gaming sector with people starting to spend money on mobile games in 2021, Moneycontrol reported on December 24.
India is the fastest growing games market in Asia, with its mobile and PC gaming revenue projected to reach $534.1 million in 2021, according to Niko Partners, a market research and consulting firm that covers video games, e-sports, and streaming in the continent.
The market is set to grow at a five-year compound annual growth rate (CAGR) of 29.8% to touch $1.49 billion in 2025. This does not include revenue generated by real money games, or online games on whose outcome real money is wagered.
Focus on mobile gaming
Take-Two Interactive had on January 10 announced plans to acquire Farmville developer Zynga in a cash-and-stock deal worth $12.7 billion, making it the largest acquisition in the video game industry, surpassing Microsoft Corporation's acquisition of ZeniMax Media in September 2020 and Tencent's purchase of Supercell in 2016.
The deal is expected to create a global gaming powerhouse with a diverse portfolio spanning consoles, personal computers and mobile devices. After the deal is completed, the combined Zynga and Take-Two Mobile games business will operate under the Zynga brand as its own label within the company, led by Zynga's current CEO Frank Gibeau and its president of publishing, Bernard Kim.
Read: 2021 was the year people in India started spending money on mobile games
Take-Two Interactive plans to leverage Zynga's mobile gaming expertise to bring several of its console and PC game franchises to the mobile platform, which Zelnick said is currently the fastest growing segment of the interactive entertainment industry.
There is also an opportunity to enhance existing titles with cross-platform experiences and cross-promote content to a broader audience.
Once the deal closes, the company predicts mobile to comprise over 50% of its net bookings in FY2023, up from an estimated 12% in FY2022.
Apart from FarmVille, Zynga's portfolio includes Words With Friends, High Heels!, Zynga Poker, CSR Racing, Empires & Puzzles, Golf Rival, Harry Potter: Puzzles & Spells, Toon Blast, and Toy Blast, among others. Take-Two Interactive's roster of games franchises include Red Dead Redemption, BioShock, NBA 2K, Mafia, Civilization and Midnight Club, besides Grand Theft Auto.
In May last year, Take-Two Interactive had announced plans to release about 62 games by March 2024, which the company said was the strongest developer pipeline in its history.
Developer presence in India
The acquisition is also expected to boost Take-Two Interactive's developer presence in India.
Zynga set up a research and development (R&D) centre in Bengaluru in early 2010 and subsequently launched a gaming studio in 2013 that started managing the game development for several of its biggest mobile and web games including FarmVille titles and other games in genres such as action strategy and Match-3 puzzles. The firm expanded the studio in July 2019.
A Zynga spokesperson told Moneycontrol that its India studio currently has about 550 employees, making it one of the largest outside the United States.
Take-Two Interactive has had a developer presence in the country initially under the Rockstar Dedicated Unit banner (a partnership with Technicolor) and later a studio called Rockstar India, set up in August 2016.
Rockstar Games also acquired India's oldest video games company Dhruva Interactive for $7.9 million from Swedish video game developer Starbreeze Studios in May 2019.
Take-Two Interactive declined to disclose the size of Rockstar India. Moneycontrol has learnt that the studio has more than 500 employees, taking the combined developer base to more than 1,000 after the deal closes.
Globally, Take-Two Interactive said it has about 5,600 developers while Zynga has 2,200 developers, bringing the total combined base to about 8,000 developers across consoles, PCs and mobile platforms.
Read: ‘We are short-term global, long-term India-focused:’ 99Games founder Rohith Bhat
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