Microsoft looked at acquiring Zynga but opted to go bigger

like Microsoft Attempts to persuade regulators to approve its $68.7 billion acquisition Activision BlizzardThe company reveals some other ways it is looking to expand into the video game industry.

Microsoft Gaming CEO Phil Spencer testified in San Francisco on Friday that the company had previously opened talks with mobile game developer Zynga, but was unsuccessful in closing a deal.

The hearing, which began Thursday and will continue next week, came after the Federal Trade Commission obtained a temporary restraining order to prevent Microsoft from closing the Activision purchase. The court agreed to maintain the status quo as it reviewed the FTC’s request for a preliminary injunction for the transaction.

“A lot of respect for the people at Zynga and what they’ve built,” Spencer said at the panel. “Ultimately, for our opportunity, we thought we needed something bigger than what Zynga had, given the very small starting space in the mobile gaming space.”

Take two interactive, the publisher of Grand Theft Auto titles and other games, ended up buying Zynga, in May of last year for $12.7 billion. Zynga was originally the successful Facebook social game FarmVille, before eventually expanding into mobile games, largely through acquisitions.

Prior to Microsoft’s bid, Activision met with a financial firm to work out Take-Two’s purchase of Zynga, CNBC reported at the time.

Spencer did not say when Microsoft was in talks with Zynga, and the company did not provide further comment. However, Zynga said in filing Last year, the executives met in September 2021 with representatives from an unnamed “strategic acquirer,” which “expressed unspecified interest in acquiring Zynga.”

This wasn’t the first time Microsoft had shown such interest. company It said He tried to buy Zynga in 2010.

In an effort to get the Activision deal over the finish line, Microsoft says that even if the two companies meet, the combined entity will be smaller than Sonywhose PlayStation console competes with Microsoft’s Xbox, as well as China’s Tencent.

Spencer said on Friday that mobile games represent a faster growth opportunity than PC games, with Microsoft getting the bulk of gaming revenue. Microsoft has tried to boost cloud-based game streaming on mobile devices, but that effort has challenges. They include the smaller fonts on phone screens and the fact that smartphones don’t come with controllers, Spencer said.

in addition to, apple He said he stood in the way of bringing Microsoft’s Game Pass video game library into its App Store.

After the company went to Zynga, Spencer said, he worked with Microsoft CFO Amy Hood to look for mobile opportunities. Activision was the largest publisher of mobile content, and had already been a longtime partner of Microsoft, he said.

Activision has grown its mobile game portfolio with its 2016 acquisition of King, publisher of Candy Crush Saga. About 35% of the company’s $8 billion valuation 2022 revenue It came from the king’s department.

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