Phil Spencer, Microsoft's CEO of gaming, declared that Microsoft had examined a purchase of Zynga but chose not to proceed with it. His remarks were made during a court session regarding Microsoft's initiative to finalize its buyout of Activision Blizzard. In the past, Microsoft had attempted to buy Zynga, the creator of FarmVille, more than ten years ago.
While Microsoft attempts to persuade regulators to clear its $68.7 billion purchase of Activision Blizzard, the company has divulged details about additional ways it has sought to extend its reach into the video game industry. During Friday's hearing in San Francisco (which began on Thursday and will continue next week) to assess the Federal Trade Commission's request for a preliminary injunction halting the proposed acquisition, Phil Spencer, Microsoft Gaming’s CEO, declared that the corporation had previously held conversations with mobile game developer Zynga, but the discussions never resulted in a deal.
Spencer remarked at the hearing, “I have a lot of respect for people at Zynga and what they built. In the end, we needed something that was bigger than Zynga, given our limited starting point in the mobile gaming sector.” Before Microsoft’s proposed acquisition of Activision, the latter had engaged a financial firm with the intent of surpassing Take Two Interactive's $12.7 billion acquisition of Zynga in May of last year, according to CNBC. Spencer did not specify when Microsoft explored the possibility of buying Zynga, but the company referenced a filing from last year which revealed that executives of the former had met with representatives of an unnamed “strategic acquirer” in September 2021. Microsoft had previously contemplated acquiring Zynga as early as 2010.
To get the Activision acquisition over the finish line, Microsoft has pointed out that even with the two companies combined, the resultant entity would be smaller than both Sony's PlayStation and China's Tencent. Spencer said on Friday that mobile games have the potential for faster growth than PC games and consoles, from which Microsoft draws most of its gaming-related revenues. To improve cloud-based game streaming on mobile devices, the company has encountered difficulties, such as small typefaces on phone screens and the lack of controllers on smartphones. Additionally, Apple has obstructed Microsoft's Game Pass library of video games from entering the App Store, he noted.
After discussing with Zynga, Spencer collaborated with Microsoft's CFO Amy Hood to explore options in the mobile space. He identified Activision as the largest publisher of mobile content and a longtime Microsoft partner. In 2016, Activision added to its selection of mobile games with the purchase of King, publisher of Candy Crush Saga. In 2022, approximately 35% of the company's $8 billion in revenue was obtained from the King segment.
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