Take-Two boss Strauss Zelnick has admitted he was skeptical of mobile games in the early-mid 2010s, and as a result his firm “missed the boat” during those early boom years.
Speaking on the Game Theory podcast (also embedded below), Zelnick said he started to look at mobile more seriously in 2019, and eventually ended up buying Zynga for $12.7bn in 2022.
Zelnick also suggested Take-Two could go out and acquire more game companies “if it makes sense”, and had a few sharp words for other game companies (EA? Microsoft?) who engage in “empire building” by striking deals that are “permanently dilutive” and “make zero sense”.
By contrast, Zelnick considers Take-Two’s M&A activity to have been pretty solid, of course. “All of our deals have worked out,” he said. “Pretty unusual for corporate M&A, very unusual in the interactive entertainment business.”
On the Zynga deal, Zelnick admitted that he “missed the boat” during the mobile boom of the early 2010s. “I was skeptical because it was presented as a direct marketing business dragging entertainment along, and I believe in entertainment businesses that have monetization attached.”
“But the truth is, I missed the boat. Now, it probably didn’t matter because in 2012, I was still pretty occupied with the turnaround and buildup of Take-Two as it was. We still had a very tight balance sheet.”
He continued. “It’s not like we could have decided, well, a great thing to do here would be to invest in a new business that we don’t understand…eventually, it became clear to us we had to be in the business.”
Zelnick goes on to describe the acquisition of Socialpoint for up to $276m and Twodots ($192m) as ‘smaller deals’ that led up to that then-record breaking $12.7bn Zynga acquisition.
“Mobile was 10, 12% of our business,” he recalls. “And in 2020 or 2019, when I started getting really quite focused on this, because our balance sheet would support the notion of doing something larger, I looked and said, we’re clearly a leader in console and PC and there’s every reason to believe we can play that role [in mobile].”
“But if you roll the clock forward 10 years…I couldn’t imagine just being essentially a PC and console company when the fastest growing part of the interactive entertainment business was mobile,” Zelnick continued. “And it served a really broad audience, an audience that skewed female, skewed older, as well as every other audience you could imagine.”
“Zynga was the natural property because like Take-Two, it has a broad array of owned intellectual property, has a big number of hits as Take-Two has a big number of hits. It’s not beholden to one, two or three titles. It wasn’t then, and is less so now thankfully with new hits.”
Elsewhere in the podcast, Zelnick described the Zynga buy as a “great deal” and a “a great, profitable business”. In particular he calls out the success of Peak’s Match Factory and Rollic’s Color Block Jam, both new launches that have gained traction in a very competitive environment.
“You know, the hardest thing to do is make a new mobile hit,” he adds. “If you really look at it, the only one created apart from the ones created at Zynga were Monopoly Go by Scopely, which is massive, of course. But apart from that, not a lot going on in the mobile business, you know, outside of China, that you can point to.”
“So it’s really exciting to see the green shoots of what we think Zynga can become as a leading part of Take-Two.”
