Zynga – In play.

Mobile gaming is much trickier than it would appear.

• Zynga appears to be attracting interest for acquisition (see here), but I think that the notion that buying Zynga will suddenly fix one’s weakness with regard to mobile gaming is problematic at best.
• Bloomberg has made the case as to why Ubisoft could benefit from owning Zynga (see here) which similar to a case I have also made several times (see here), but while the theory is great, it is proving more difficult in practice.
• The field of mobile gaming is both volatile and fragmented and unlike every other Digital Life segment, there is no single dominant player.
• This is because the major platforms in developed markets for games (Xbox Live, PlayStation Network and Steam) have failed to make any real impact on mobile devices.
• Consequently, the space is wide open and has been for some considerable time.
• Hence, for gaming studios with lots of successful games, there is an avenue to take those games and push them to mobile users and grow revenues.
• This was exactly why Activision Blizzard bought King Digital in 2015 (see here) as it had lots of games and no mobile users whereas King Digital had only 2 games but 500m mobile users.
• However, things have not gone well and instead of a thriving gaming community based on Activision games, there are still just two games and a rapidly declining user base as those games age and are not replaced.
• Supercell which was acquired by Tencent has also not fared desperately well (see here) indicating that this strategy has some complications that make it much harder than it looks.
• I suspect that the main issue is that PC and console gamers are hard-core gamers happy to spend $60 on a title and play it for hours.
• On the other hand, mobile gamers pay nothing for the games and can choose to buy add-ons to speed their progress.
• Furthermore, these gamers are casual in that they dip in and out, often playing a game for only a few minutes at a time.
• No one has been able to cross this divide (except perhaps Fortnite) and I think that should Ubisoft buy Zynga, it may end up suffering the same fate as Activision.
• This is a very attractive proposition, but it is clear that to get it right superlative execution and an ironclad strategy are required.
• I doubt Ubisoft has these in hand for Zynga.