Zynga’s Future Depends On NaturalMotion


Game maker Zynga Inc (NASDAQ:ZNGA) has hit hard times. Zynga was on top of the world as the king of Facebook Inc (NASDAQ:FB) gaming in the summer of 2012, but things went downhill rapidly from there. After peaking at 306 million monthly users two summers ago, Zynga is down to just 112 million monthly users today, a decline of more than 63% in just over 18 months.

Zynga Inc (NASDAQ:ZNGA) has not been standing still, and has made several cost-cutting moves, including revamping core games and hiring new CEO Don Mattrick. But there is only so much the company can do internally, as gamers are always seeking a new thrill and more and more users switch to mobile gaming. Mattrick decided the company needed some new blood, so he ponied up $517 million to acquire up-and-coming British gaming concern NaturalMotion back in January.

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Details of NaturalMotion

NaturalMotion, based in Oxford, England, is known in the gaming sector for mobile hits CSR Racing, My Horse and Clumsy Ninja, as well as developing the Euphoria physics engine used in Grand Theft Auto V and a number of other games.

Zynga’s transition to mobile

The lynchpin of Zynga Inc (NASDAQ:ZNGA) comeback effort is mobile gaming. The company has struggled as gamers moved from playing games on Facebook with desktops and laptops to playing games on smartphones and tablets. Mattrick was willing to pay what most industry analyst called a premium price for NaturalMotion because of their success with mobile games. “The transition to mobile is well underway,” Mattrick says. “And we’ve been able to find a great strategic fit with the team at NaturalMotion. We have faith that they will continue their string of mobile hits, after shipping CSR in 2012 and Clumsy Ninja in 2013 in the categories of racing and people, and also will do other amazing things.”

Zynga betting on games with high-quality graphics

Mattrick also believes NaturalMotion’s cutting-edge graphics technology will be a big draw for future games. “Their products have a tremendous wow factor,” says Mattrick, commenting on NaturalMotion after the acquisition. “CSR and Clumsy Ninja have set a high bar in terms of production values, and they’ve learned that once you give people something delightful, they engage with it.”

Zynga Inc (NASDAQ:ZNGA) is trading down seven cents at $5.21 as of noon EDT today.