Zynga acquires Wild Needle
The new acquisition focuses on mobile games for women.
It has always focused on growth, and while it has developed a lot of games in-house, much of its growth can be attributed to acquired gaming studios and developers. Zynga acquired around 22 companies in 2010 and 2011 for nearly $150 million, and then topped it off by acquiring OMGPOP, the maker of Draw Something for $210 million, its biggest acquisition to date.
This week, it announced the acquisition of Wild Needle, a casual gaming company that is focused on the female demographic. Wild Needle was founded in 2010 to concentrate on games for women, and is backed by a co-founder of Playdom, which was acquired by Disney in 2010.
Wild Needle specializes in mobile games, which is one area that Zynga is focusing on to drive growth going forward. The company recently announced that it plans to continue its acquisition spree to maintain its high revenue and user growth. This seems to be a talent acquisition, as the deal size is rumored to be around $3.8 million. Wild Needle launched Shoptown Hero on iOS in 2011, but recently pulled it from the App Store. The acquisition will enable Zynga to continue to churn out new mobile games going forward, increasing its chances in the search for that elusive next big hit.
We estimate Zynga's new games to account for a major portion of its revenues going forward. You can see the impact of the number of users for its new games on its value using this chart:
We have a $14 Trefis price estimate for Zynga, which stands nearly 70% above its current market price. New games account for almost half of its total value.
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So far, the chain is only testing the offering in a few locations. It's ramping up its breakfast menu nationwide, however.
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