Zynga has announced the purchase of UK game-maker NaturalMotion for $527 million.
Oxford-based NaturalMotion has had a string of mobile game hits, such as CSR Racing and Clumsy Ninja. Its purchase gives Zynga an entry into the lucrative mobile games market.
As news of the deal emerged, Zynga also reported a loss of $25 million for the fourth quarter.
It said it would trim its workforce by 15% – equivalent to about 314 jobs.
“We believe that bringing Zynga and NaturalMotion together is the right step at the right time,” said Zynga chief executive Don Mattrick in a statement.
“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.”
In a note to employees, Don Mattrick highlighted that with the acquisition, Zynga will now have five top gaming brands: Farmville, Casino, Words with friends, CSR Racing and Clumsy Ninja in the “people” category.
Zynga has announced the purchase of UK game-maker NaturalMotion for $527 million
NaturalMotion’s Clumsy Ninja has been rated more than 78,000 times in the US and UK version of Apple’s App Store – the vast majority of them positive.
Don Mattrick also told employees the acquisition gives Zynga access to NaturalMotion’s Euphoria technology, which helps create realistic motion for characters in movies and games.
The takeover of the 13-year-old firm is being interpreted by some as Don Mattrick’s bet on character-driven intellectual property.
As part of the terms co-founder of NaturalMotion, Torsten Reil, will stay on and report to Don Mattick, and new games will continue to be released under the NaturalMotion brand.
Zynga has struggled to replicate the success it has had with desktop games Farmville and Mafia Wars and has been unable to generate new hits on smartphones.
This is seen as a crucial weakness, as more and more consumers play games on their phones.
NaturalMotion is the biggest acquisition for the firm, and it comes after Zynga bought OMGPOP for $180 million in 2012, only to see that firm’s flagship game, Draw Something, shed users.
In June, Zynga announced it would cut 18% of its workforce and then a month later, it was announced that Don Mattrick would take over from the company’s founder Mark Pincus.
The $25million loss actually represents good news for Zynga: it is 43% lower than the same period last year.
Bitcoin’s value has topped $1,000 again after social gaming firm Zynga said it would start accepting the virtual currency as a payment option.
Zynga is perhaps the most significant video games firm to accept bitcoins to date.
The virtual currency has been gaining in popularity but its value has been highly volatile in recent weeks.
It peaked at $1,250 in November last year, but fell sharply in December after China restricted trade.
According to the South China Morning Post, the value of a single Bitcoin fell to as low as 2,560 yuan ($421) in December, after China’s move.
On Monday, a single Bitcoin was trading close to $1,030 on MTGox, one of the virtual currency’s major exchanges.
Zynga follows Ouya, the Android-based video games console-maker, which began accepting payments for its hardware in bitcoins last month.
Zynga is the most significant video games firm to accept bitcoins to date
The Humble Bundle – an organisation selling a changing selection of indie games – also began accepting bitcoins in 2013.
Supporters of Bitcoin, which is not backed by a central bank, have been pushing for its increased usage.
Its popularity and value surged last year after a US Senate committee described virtual currencies as a “legitimate financial service”.
Zynga said it had tied up with BitPay, a Bitcoin payment service, to allow users to purchase virtual goods in some of its games using the facility.
“In response to Bitcoin’s rise in popularity around the world, Zynga, with help from BitPay, is testing expanded payment options for players to make in-game purchases using Bitcoin,” the company said in a post on Reddit.
Concerns over the use and risks associated the virtual currency have also grown.
Bitcoin became popular, in part, due to it being difficult to trace transactions that use it. The currency has been linked to illegal activity online.
Last month, the European Banking Authority warned the public about the potential risks of using bitcoins.
“Currently, no specific regulatory protections exist in the European Union that would protect consumers from financial losses if a platform that exchanges or holds virtual currencies fails or goes out of business,” the EBA said.
China, the world’s second largest economy, has also banned its banks from handling Bitcoin transactions, saying they had no legal status and should not be used as a currency.
At the same time, there have been concerns that the rise in Bitcoin’s value has been triggered by speculators looking to cash in on its popularity.
Alan Greenspan, former Federal Reserve chairman, has called the rapid rise a “bubble”.
Facebook and Zynga have amended an agreement that gave Farmville’s developer strong access to the social network’s one billion users.
Farmville is a game once mostly played on Facebook, which at its peak attracted 82 million players a month.
Zynga now has its own games platform, but players will no longer be able to share their progress on Facebook.
Zynga’s share price fell by 13% in after-hours trading following the news.
It is the latest blow for the company, which last month announced job cuts and studio closures.
The change, which will take place from March 31st, 2013, ends Zynga’s ability to promote its Zynga.com platform on Facebook.
The move also means it will no longer be required to display Facebook advertising on its own site.
Facebook and Zynga have amended an agreement that gave Farmville’s developer strong access to the social network’s one billion users
“There was plenty of speculation Zynga was getting referrals within the Facebook community that other gaming companies weren’t getting which helped drive web traffic to Zynga games,” Digital World Research chief executive PJ McNealy said.
Facebook said the move would bring its relationship with Zynga in line with other games studios.
“We have streamlined our terms with Zynga so that Zynga.com’s use of Facebook Platform is governed by the same policies as the rest of the ecosystem,” Facebook said in a statement.
“We will continue to work with Zynga, just as we do with developers of all sizes.”
Facebook has not announced plans to build its own games platform.
Recent figures suggest 80% of Zynga’s revenue comes from Facebook users.
In an email to staff in October 2012, Zynga founder Mark Pincus said the company would close its Boston studio and consider closing studios in the UK and Japan as part of an “overall cost reduction plan”.