The San Francisco-based Zynga will pay $168 million for 80% of Rollic, whose games have more than 250 million downloads. Hypercasual games can be played in a minute and are monetized through ads. Zynga will buy the remaining 20% of Rollic over time at prices based on whether the studio hits its profit targets. Zynga made the announcement as part of its earnings release today.
Zynga has been active in deals under CEO Frank Gibeau. In June, it acquired Peak Games for $1.8 billion, after buying Peak’s casual card game studio in 2017 for $100 million. Zynga has also bought Small Giant Games for $560 million, Gram Games for $250 million, and NaturalMotion for $527 million.
“This is our first entry into the hypercasual category,” Gibeau said. “When you look at the dynamics there, it is about mass market games and huge audiences. From a player standpoint, it’s a pretty broad demographic. It’s the largest and fastest growing category on mobile.”
In this deal, Zynga will move into one of the fastest-growing categories of mobile games. Rollic has more than 5 million mobile daily active users, or those who log in at least once a day. It has 65 million monthly active users. The deal will help Zynga expand its advertising business.
“Their overall audience will add 65 million MAUs to ours and that gives us close to 200 million, which gives us more scale,” Gibeau said in an interview with GamesBeat. “Ads will be a good business for games going forward. There is some choppy water now but they’re an efficient way to deliver games. Sometimes, when users are not ready to do a microtransaction in a game they are willing to watch an ad for currency in a game.”
Founded in December 2018 by Burak Vardal, Deniz Basaran, and Mehmet Can Yavuz, Rollic has eight games that have reached No. 1 or No. 2 among the top free downloaded games in the U.S. App Store. Its latest releases, Go Knots 3D and Tangle Master 3D, were the top two most downloaded games in the U.S. App Store in Q2 2020, Zynga said. Gibeau said the deal will also give Zynga more strength in the South Asia and Middle East markets.
Zynga said the final upfront transaction price will also include customary closing adjustments, and it expects the sale to close October 1. Over the next three years, Zynga will acquire the remaining 20% in equal installments at valuations based on specific profitability goals.
The deal is the fourth one that Zynga has done in Istanbul, which has become a hub for casual mobile games. Gibeau said in an interview with GamesBeat that his team met Rollic before the pandemic and negotiated during the lockdowns. It helped that Zynga’s teams from Peak Games (from a card game studio acquired before the overall acquisition of Peak) and Gram Games could meet in person with Rollic during the negotiations.
Zynga is picking up 40 people with the deal, and with the addition of Peak Games, Zynga now has 1,981 employees. Gibeau said the company continues to hire to fill openings around the world. He noted that the ecosystem in Turkey is very strong for mobile games, and the region is becoming an industry hub.
The deal comes at a challenging time for ads, as marketers have slashed advertising budgets during the pandemic. But Gibeau said that Rollic’s business has been strong. He noted that Apple is planning to end the Identifier for Advertisers (IDFA), which has been critical for performance marketing, in September. The IDFA has been used to judge how well ads have worked when targeting specific users. For privacy reasons, Apple will require people to opt-in again, and that opt-in rate is expected to be low.
But he said that Rollic’s ads are not dependent on the user-level data that comes with IDFAs. Rollic doesn’t use the IDFA to acquire customers, and Zynga can learn from that, Gibeau said.
“It’s a reason to pick them up, and there are advantages to how they run,” Gibeau said.