The acquisition of Zynga by Take-Two Interactive might become the video game industry’s version of the AOL Time Warner merger.
History Could Repeat Itself (Not for the Better)
Back in 2000; AOL announced its plans of purchasing Time Warner for USD 165 billion. At the time, the merger of the internet titan with the media giant into AOL Time Warner was seen as one that would redefine the industry. Instead, it was a relationship plagued with issues and a clash of corporate culture that resulted. The “AOL” in the name was dropped while different divisions of the company were sold-off between 2003 to 2009.
Today; the AOL Time Warner merger has become the textbook example of one of the worst mergers in corporate history. Unfortunately; it’s a lesson few have learned as many continue to make the same mistake. Now it looks like the video game industry is about to have its own version in the form of Take-Two Interactive’s acquisition of Zynga Inc. The difference being is an industry titan is spending a lot of money to purchase a company with a history boom and bust cycle.
Just how much is Take-Two Interactive is spending to acquire Zynga? The answer is $12 billion. This may seem like nothing compared to the $165 billion AOL spent on acquiring Time Warner (or at $266 billion when adjusted for inflation). Do realize that Microsoft spent $7.5 billion to acquire ZeniMax Media. In that deal; Microsoft acquired some of the most valued IPs such as Fallout, Doom, and The Elder Scrolls. Meanwhile; Take-Two is spending $12 billion on the studio and publisher of Farmville. Honestly, I can’t think of another title from Zynga.
To be fair; Take-Two Interactive isn’t spending all this money just for Farmville. This is all about Zynga’s track record in the free-to-play market. They have made it clear that the goal of this acquisition is to use their history in the market to bring their vast library to mobile gamers. Following in the footsteps of Fortnite and Call of Duty, we might see a mobile version of GTA Online or Red Dead Online.
One has to also question the price tag and why on Zynga. There are other studios with the experience and a better track record. Studios like Nexon Games and Cygames are the first that come to mind. Take-Two Interactive could have also bought one of the many mobile game studios under Tencent’s belt for the same price. Zynga does have that name recognization but it’s not through the kind of free-to-play games that Take-Two Interactive wants to bring to the market.
The future is unwritten and anything could happen with this deal. It might work out for Take-Two Interactive and Zynga Inc. or it might not. For now; there are too many signs that this might become the video game industry’s version of the AOL Time Warner merger.
8Bit/Digi is an independent media outlet that provides an insight into the video game community and industry of the San Francisco Bay Area.