Social game maker Zynga has bought rival NaturalMotion, which is well-known for its popular mobile games like CSR Racing and Clumsy Ninja.
Zynga has bought UK-based NaturalMotion for $527 million to boost its gamut of game offerings. Additionally, the company also announced that it is reducing 15 percent of its work force as part of its turnaround measures.
Zynga, famous for its FarmVille game, made the announcement on Thursday, January 30, and revealed that it is axing 314 people, who are mostly from its San Francisco headquarters, as part of its cost reduction plan.
"We believe that bringing Zynga and NaturalMotion together is the right step at the right time," said Don Mattrick, Zynga CEO. "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. Their creative portfolio aligns perfectly with our content strategy as Zynga will now have five top brands and capabilities in the Farm, Casino, Words, Racing and People categories. We are confident that we will build upon our market position with complementary strengths to generate long term value for our consumers, our employees and our shareholders."
Zynga moved up its earnings call by a week so that it would coincide with the announcement of the job cuts and NaturalMotion acquisition.
With gamers increasingly turning to mobile devices like tablets and smartphones for their gaming needs, Zynga has been reducing jobs and posting losses of late. The company's hits like Mafia Wars and FarmVille have primarily been played on desktops and laptops. With NaturalMotion on board, Zynga's gaming repertoire will get a major boost.
"NaturalMotion set out to make games that wow millions of people, by being obsessed with quality, disrupting and creating genres, and using almost magical technology. When we started talking to Don and his team, it quickly became clear that they shared this vision. Don's background in AAA games and Zynga's expertise in social game play and large-scale game operations will be invaluable to helping us grow our existing CSR and Clumsy Ninja franchises and maximize the breakout potential of our upcoming titles. We've reached our first milestones - creating #1 top-grossing and top-free titles - on our own. We can't wait to see what we can achieve together with Zynga," said Torsten Reil, CEO and Co-Founder, NaturalMotion.
Zynga expects to save $33 million to $35 million in 2014 as a result of the recent job cuts.
For the quarter ended December 31, Zynga's revenue fell from $311.16 million in the same period in 2013 to $176.4 million.
Post the acquisition announcement, Zynga's shares rose to $4.26 after closing at $3.56. On Friday, the company's shares closed up 23.60 percent at $4.40.
