Zynga wants to see if it can buy its way back into success on mobile.
The social-gaming company that made its fortune on Facebook revealed a plan to acquire mobile studio NaturalMotion for $527 million in cash and equity. NaturalMotion is best known for its CSR Racing game for iOS and Android, which is currently among the top 100 highest-grossing mobile apps.
Zynga will pay $391 million in cash and make up the rest with 39.8 million in Zynga shares. Around 11.6 million of those shares will go to NaturalMotion employees who are joining Zynga. Zynga is making this move while simultaneously cutting 314 jobs.
“We believe that bringing Zynga and NaturalMotion together is the right step at the right time,” Zynga chief executive officer Don Mattrick said. “Our acquisition of NaturalMotion will allow us to significantly expand our creative pipeline, accelerate our mobile growth, and bring next-generation technology and tools to Zynga that we believe will fast track our ability to deliver more hit games. Their creative portfolio aligns perfectly with our content strategy as Zynga will now have five top brands and capabilities in the farm, casino, words, racing and people categories. We are confident that we will build upon our market position with complementary strengths to generate long-term value for our consumers, our employees, and our shareholders.”
CSR Racing is the top-grossing game in the racing category on iOS. The game is notable due to its huge amount of success despite having minimal interactivity. Instead of steering the cars and controlling the gas and brake pedals, CSR players only have to time the shifting of their automobiles’ manual transmissions.
In addition to CSR Racing, NaturalMotion has a popular action game called Clumsy Ninja for iOS that uses the studio’s Euphoria physics engine. This technology was previously used in games like the best-selling Grand Theft Auto IV.
“NaturalMotion set out to make games that wow millions of people by being obsessed with quality, disrupting and creating genres, and using almost magical technology,” NaturalMotion chief executive Torsten Reil said. “When we started talking to Don [Mattrick] and his team, it quickly became clear that they shared this vision. Don’s background in triple-A games and Zynga’s expertise in social gameplay and large-scale game operations will be invaluable to helping us grow our existing CSR and Clumsy Ninja franchises and maximize the breakout potential of our upcoming titles. We’ve reached our first milestones — creating the No. 1 top-grossing and top-free titles — on our own. We can’t wait to see what we can achieve together with Zynga.”
As for the layoffs, Mattrcik explained that it was to help cut costs and to “create a more efficient organization.”
“We don’t take these decisions lightly, but we believe these actions will allow us to create a clearer, faster path to win,” said Mattrick.
While Facebook has made most of its cash through social games on Facebook, it has had mobile hits like Words With Friends. As Facebook’s viability as a social-gaming platform continues to wane, Zynga is still trying to figure out how to make its products work on mobile. This acquisition could help with that transition.