Zynga deals for animation firm in rebound effort

January 30, 2014
Zynga announced Thursday it was buying mobile game and animation firm NaturalMotion for $527 million in a fresh reboot effort for the struggling social games pioneer

Zynga announced Thursday it was buying mobile game and animation firm NaturalMotion for $527 million in a fresh reboot effort for the struggling social games pioneer.

San Francisco-based Zynga announced the deal for the British-based firm as it unveiled more losses in the fourth quarter and said it was slashing 314 jobs, or 15 percent of its workforce.

"The investments we are making to grow and sustain our leading franchises are bearing fruit, and show that with improved quality, sharper focus and better execution we can achieve better results," chief executive Don Mattick said in a blog post.

"We now have a solid foundation for growth.. Zynga is getting back to its roots of innovating in social. We are committed to refining our skills in the art and science of creating new hits and are excited about the mobile market opportunity in front of us."

Zynga said it lost $25 million in the fourth quarter on revenues of $176 million. For the year, the loss amounted to $36 million of $873 million in revenue.

"Over the last seven months, our teams have been working with a sense of urgency," Mattick said in the earnings statement.

"We finished 2013 in a strong position and expect 2014 to be a growth year. We believe that the first quarter will be a solid foundation for that growth and we expect substantial improvements for the remainder of the year."

Mattick, who took over last year from co-founder Mark Pincus, said the company's Casino program with real-money gaming, and its Words With Friends game, were starting to deliver results.

"Our market is growing as measured by device, audience and dollars and we have the privilege to compete in one of the fastest growing parts of the entertainment industry," he said

But Mattick said Zynga also needs "to create a more efficient organization" and that the job cuts would lead to "agile, dedicated teams."

"We don't take these decisions lightly but we believe these actions will allow us to create a clearer, faster path to win," he said.

Zynga said its acquisition of NaturalMotion, creator of the popular mobile games CSR Racing and Clumsy Ninja, would help the new effort.

Zynga will pay $391 million in cash and give 39.8 million shares of Zynga Class A stock, amounting to a total value of $527 million.

"We believe that bringing Zynga and NaturalMotion together is the right step at the right time," said Mattick.

"Our acquisition of NaturalMotion will allow us to significantly expand our creative pipeline, accelerate our mobile growth and bring next-generation technology and tools to Zynga that we believe will fast track our ability to deliver more hit games."

Zynga shares surged 19.9 percent in after-hours trade to $4.27.

Zynga rose to stardom by tailoring games for Facebook, but the two firms have grown apart as Facebook develops new revenue streams and Zynga seeks new consumers.

Zynga has been pulling the plug on unpopular games and investing in titles for play on smartphones or tablets, as well as its own online arena at .com.

Explore further: Zynga to lay off 15 pct of employees as sales sink

Related Stories

Zynga's 2Q losses narrow as company slashes costs

July 26, 2013

(AP)—Zynga narrowed its second-quarter losses as the troubled company laid off workers and trimmed other expenses to help offset its difficulty coming up with compelling games to play on smartphones.

Zynga to report 3Q net loss, take charge

October 4, 2012

(AP)—Zynga expects a loss for the third quarter and says its preliminary results reflect weak demand for some games. It's also taking a charge related to its acquisition of OMGPop, a mobile game maker.

Recommended for you

New method analyzes corn kernel characteristics

November 17, 2017

An ear of corn averages about 800 kernels. A traditional field method to estimate the number of kernels on the ear is to manually count the number of rows and multiply by the number of kernels in one length of the ear. With ...

Optically tunable microwave antennas for 5G applications

November 16, 2017

Multiband tunable antennas are a critical part of many communication and radar systems. New research by engineers at the University of Bristol has shown significant advances in antennas by using optically induced plasmas ...


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.