Market Insight

Zynga acquires iOS developer Newtoy

December 03, 2010

Steve Bailey Steve Bailey Principal Senior Analyst, Games, IHS Markit

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USA-based social network gaming operator Zynga has acquired development studio Newtoy for an undisclosed amount. Newtoy's founders were the creators of the Age of Empires strategy franchise for PC, but the studio is now focussed on iOS titles, such as Chess with Friends and, most prominently, Words with Friends.  Newtoy claimed in November that the combined revenue from both Words titles, via both free and premium versions of the apps, was exceeding $1m per month.

This acquisition is one of many performed by Zynga in 2010, which has included Serious Business, XPD Media, Challenge Games, Unoh, Conduit Labs, Dextrose and Bonfire Studios. It's the latter two, along with Newtoy, that are the most recent, and indicative of Zynga's attempts to find fresh audience beyond its Facebook stronghold, where the operator still holds premiere position.

There are two major initiatives laying ahead of social network games in 2011. First is finding increasing value in user retention as opposed user acquisition, by developing games that cultivate a smaller but more dedicated userbase, resulting in growth in ARPU. Second is to introduce such content to the wider ecosystem, of which mobile devices are becoming a rising, vital prospect. Newtoy's focus on iOS, along with Bonfire's experience with social-style apps on iOS and Dextrose's expertise in browser-based middleware, indicate Zynga's growing intentions to find traction in the mobile gaming space. This has been affirmed with the recent launch of FarmVillage for Japanese social network Mixi, an iteration of FarmVille specially retooled for play on mobile devices. This launch arrives on the back of Zynga's $150m round of funding from Japanese Softbank in July of this year, itself already active in social network gaming in Asia.

Operators such as DeNa, Gree and Mixi are already seeing significant success and growth in the Asian mobile-gaming space, and we expect there to be increased interest from social network gaming operators in such a platform over the next year. One such example is PopCap Games, whose pervasive Facebook title Bejeweled Blitz has seen release on iOS, and who has formed several key partnerships with Asian gaming companies to further extend the reach of its titles.

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