Zynga execs anticipate more deals on the scale of OMGPop
Bloomberg report explains how failed $2b Rovio deal created culture of acquisitions
Executives at the social gaming giant Zynga expect more deals on the scale of its acquisition of OMGPop in the next three to five years.
Speaking to Bloomberg, CEO Mark Pincus and and EVP of business and corporate development Barry Cottle indicated that the $180 million paid for the Draw Something developer was not an isolated incident - indeed, Pincus predicted "a few" more deals of a similar size.
"We love finding great, accomplished teams that share our mission and vision," Pincus said. "If we ever see breakout opportunities that massively accelerate social gaming at Zynga, we'll aggressively pursue those, too."
According to a source close to the deal, Zynga fought off competition from the Walt Disney Co., Gree and DeNA to buy OMGPop, though Bloomberg was unable to get official confirmation from any of the parties involved.
"If we ever see breakout opportunities that massively accelerate social gaming at Zynga, we'll aggressively pursue those, too"Mark Pincus, CEO, Zynga
Zynga has been very active in terms of acquisitions over the last 2 years, spending $147.2 million for 22 companies during 2010 and 2011 in addition to the money paid for OMGPop.
According to another source, the company's focus on effective acquisition practices was spurred on by a string of failed bids, principally a failed $2 billion for Rovio Entertainment.
"We're sitting in a very advantageous position," Cottle added. "We have a significant amount of cash, we have no debt, and we have access to debt to be as aggressive as we need to be."
And in the current landscape of social game development aggression is exactly what's required. Ever since Facebook closed the viral channels exploited by companies like Zynga in social gaming's early days the cost of user acquisition has spiralled.
A key part of Zynga's solution to the problem is Cottle's highly effective approach to acquisitions. The article claims that the company brings HR executives to meet potential candidates, makes its technical staff look for solvable problems with their technology, and offers reassurance that the needs and traditions of each team will be honoured.
"We bring a ton of people in to listen and understand what's really religious about their organisation," said Cottle. "It's important that the secret sauce does not change after they become a part of Zynga."