FILE PHOTO: The Zynga logo is pictured at the company’s headquarters in San Francisco, California April 23, 2014. REUTERS/Robert Galbraith
August 5, 2021
By Tiyashi Datta
(Reuters) -Zynga Inc agreed to buy China’s StarLark, the creator of “Golf Rival”, for $525 million in a cash-and-stock deal, as it looks to scoop up its fourth mobile game developer since last year.
Zynga’s shares fell 8.6% in extended trading, as the company’s full-year bookings forecast fell short of analysts’ estimates.
“FarmVille”-maker Zynga has spent billions of dollars on acquiring mobile game developers Peak, Rollic and Echtra Games to beef up its game roster after gaming skyrocketed during the COVID-19 pandemic as people stuck at home had limited entertainment options.
U.S. spending on mobile sports genre rose to $648.8 million, a 16% jump between June 1, 2020 and May 31 2021, data from analytics firm Sensor Tower showed.
“We have been investing in our game teams, new games, acquiring game companies like Peak and entering new categories like Rollic, the new purchase in China with StarLark is an example of that,” Zynga Chief Executive Officer Frank Gibeau told Reuters.
Rollic, a hyper-casual mobile game developer that Zynga acquired in 2020, has racked up over 1 billion downloads globally from its 15 titles that include the popular game “Hair Challenge”, where players have to run and avoid obstacles as their hair grows to Rapunzel-esque lengths.
Zynga lowered its full-year net bookings – an indicator of future revenue – to $2.8 billion from its earlier estimate of $2.9 billion on Thursday, as user activity fell in the summer with easing restrictions.
Apple Inc’s privacy changes have also created “choppiness in our business”, Zynga said, noting that the update resulted in lower user acquisition efficiency.
Apple has updated its iOS operating system with new privacy controls designed to limit digital advertisers from tracking iPhone users.
Zynga’s second-quarter net bookings of $712 million missed estimates of $715.2 million, according to Refinitiv IBES data.
(Reporting by Tiyashi Datta in Bengaluru; Editing by Subrat Patnaik and Shinjini Ganguli)