Take-Two has finally made its big move into the smartphone games market by acquiring Spanish games maker Social Point.
The Barcelona-based developer of mid-core smartphone games was bought for $250m (with earn-outs of up to $25.9m). That includes $175m in cash and $75m in shares. Take-Two is a cash-rich business and has been open to making acquisitions, with IP, talent and technology being the key factors in any buy-out.
Take-Two CEO Strauss Zelnick has been publicly skeptical of the mobile games market due to its high failure rate, and has observed that only a handful of businesses have enjoyed more than one hit game on the platform. However, Social Point fits the bill as one of those companies, as it counts Dragon City and Monster Legends amongst its big brands. Those two games have been downloaded more than 180m times and have been a consistent presence in the Top Grossing charts (App Annie data).
Social Point was founded in 2008 in Barcelona. It is led by co-CEOs and founders Horacio Martos and Andrés Bou, alongside CTO and co-founder Marc Canaleta. It employs 270 staff. The firm generated over $90m in revenue during the last calendar year, and Take-Two says that 50% of the revenue came from the US, and 90% from mobile platforms.
"With the acquisition of Social Point, Take-Two has further diversified its business, expanded its portfolio of owned intellectual property, and significantly enhanced its position in the fast-growing free-to-play mobile gaming space," Zelnick said.
"The experienced team at Social Point shares our commitment to delighting consumers with high-quality entertainment, and we believe that Social Point's deeply-engaging mobile offerings will be a perfect complement to our business. Social Point is one of the few mobile game developers that has a proven track record of growing revenues and delivering multiple hits, and we expect this growth to continue given the company's exciting development pipeline. We are fortunate to have acquired Social Point in a transaction that is expected to be immediately accretive to net cash provided by operating activities, and to be accretive to net income per share, excluding transaction costs and amortization of intangible assets, in fiscal 2018."
Both Moartos and Boy said in a statement: "Take-Two is one of the interactive entertainment industry's premier publishers, whose labels are renowned throughout the world for their ability to create some of the most successful and beloved entertainment experiences on consoles and PC. We are thrilled to have Social Point become part of an organization that shares our commitment to quality and innovation, and we look forward to being part of Take-Two's continued success for many years to come."
Take-Two hopes the business will significantly boost its recurrent consumer spending and free-to-play revenues, which has been transformed in recent years following the launch of Grand Theft Auto Online in 2013.