Zynga Posts Highest Revenue in Company History, Unveils Acquisition of "Hyper Casual" Game Dev Rollic

Frank Gibeau-Publicity - H 2020
Zynga

Growth was largely driven by 'Empires & Puzzles,' 'Merge Dragons!' and 'Game of Thrones Slots Casino.'

Zynga on Wednesday posted the highest revenue in the game developer's history for its second quarter, hitting $452 million, a 47 percent bump year-over-year.

Growth was largely driven by stronger than anticipated performance results from the match-3 puzzle and RPG crossover game Empires & Puzzles — which has a widespread user base in Eastern and Western Europe, Asia, and North America — as well as the puzzle adventure game Merge Dragons! and the slots game Game of Thrones Slots Casino. 

"The players at Zynga are what we call busy adults," Frank Gibeau, CEO of the San Francisco-based mobile games giant, tells The Hollywood Reporter. "The majority of our players are women, so it's very different than the Xbox crowd or the PlayStation crowd in terms of how you think about gaming sometimes. When we looked at the types of games that did very well, all of our forever franchises performed nicely, whether it was Words With Friends or Zynga Poker or CSR Racing, and then of course Merge Dragons and Merge Magic performed nicely."

He went on to say, "I would never have imagined the year would unfold in the way that it has, obviously, with all the craziness in pandemics and other things. We actually ended up generating the highest cash flow we have in eight years, [and] we feel very good about where the business is at and where it's positioned, and even with the uncertainty in the second half of the year, we are raising our 2020 revenue bookings guidance."

Gibeau continued, "The core business of live services has performed very well. As people went into shelter-in-place, they really started to look for ways to socially connect with other people, to play, to escape, and fortunately, interactive games is one of the places they went — and mobile games specifically was something that performed extremely well. If you can't be with somebody physically, in proximity, then playing Words With Friends and chatting with them is shown to be kind of the next best thing.

"The social side of it was probably the most surprising thing for me; if you look at the amount of chatting that people were doing inside the games — I think it started in May, the amount of chatting inside Poker was up 4X. The amount of games in Words With Friends that had social chatting going on in the background was up, so you could really see people wanting to connect, reach out, socialize, in addition to playing with each other, so that was a really encouraging thing to see across the board."

Overall, the San Francisco-based mobile gaming giant reported a net income loss of $150 million, partially offset by an increase in contingent consideration expenses — a function of Zynga's acquisition of developer Small Giant Games (Empires & Puzzles) and Small Gram Games (Merge Dragons!) performing ahead of expectations.

The entire company was redeployed to a work-from-home configuration, Gibeau went on to explain, which did not impact game production since the games can be built and updated from virtual environments. "I would be doing video conferences with our Brighton studio in England, talking about the next game we're working on, and we'd be playing the prototypes," continued Gibeau. "It just changed the requirements in order to get the creativity out of people — like, it required us to build more things as opposed to talk about them."

Gibeau also spoke of the company's acquisition of Instanbul-based mobile games developer Rollic, which he says is a relatively new company that makes "hyper-casual" games. "The way to describe that is it's kind of a universal idea behind every game — one of their top performing games is a puzzle game where you untie knots. It sounds crazy, but people really love it." He noted that the games are universally appealing, broad based in terms of distribution, and very accessible. "It's the fastest-growing category and also the largest category on mobile," says Gibeau.

Rollic will bring about 65 million monthly active users (MAU) to Zynga's network, Gibeau says, which will "supercharge" their advertising in the second half of quarter four. "What's really important in mobile is the scale of your audience and the depth of your portfolio. Fortunately, Zynga's in a place right now where adding the 65 million MAU to our existing base, we're going to get to, as a company, around 160 million MAU, which is a pretty good number."

With the company's acquisition of Turkey-based mobile games firm Peak in July, the popular games Toon Blast and Toy Blast were added to Zynga's main portfolio. As a result, Zynga expects revenue of $445 million in the next quarter, with key franchises continuing to drive growth. 

Among Zynga's most recent titles is mini bumper car game Bumped Out, the first from a partnership with Snapchat to launch multiplayer titles exclusively for Snap Games.

Looking ahead, the company is working on several new games. "We're working on three in soft launch right now with Farmville 3, Puzzle Combat and Harry Potter: Puzzles & Spells," says Gibeau, "so those are all finishing up their test markets, and our goal will be to start releasing them more toward the second half of the year."

New titles for 2021 include the Star Wars license. "We have a fairly robust set of products on the new side that are coming, in addition to what Peak, Rollic and Gram are potentially working on," explains Gibeau. "What really carries the company is our foundation of live services, and by adding new games on top of it just increases our growth rate."