A record number of people have been playing poker and digital slot machines on their phones while under coronavirus lockdown, forming habits that game developer Zynga thinks will lead to sustainable profits.
The California-based company might still be best known for the success of its FarmVille app on Facebook a decade ago but amid the Covid-19 pandemic it has lifted its 2020 earnings guidance twice, reflecting how more people are engaging with its ad-driven games.
Zynga now anticipates $2.2bn in bookings this year, it said on Wednesday, referring to revenue booked but not necessarily paid as yet. That is up $360m from its June prediction, and 41 per cent higher than last year’s total.
“Free to play mobile games are very resilient in tough times,” said Frank Gibeau, chief executive.
Zynga stock, already up by two-thirds this year, rose as much as 10 per cent in after-hours trading after it posted record bookings of $518m for the second quarter, up 38 per cent and ahead of estimates at $503m. That was driven by the success of games such as Zynga Poker, Social Slots and Words With Friends.
The company also announced it would spend $168m to purchase Istanbul-based Rollic, signalling an expansion into the genre known as “hyper casual” games — simple, mass appeal games often played by consumers who would not identify as “gamers”. Rollic’s portfolio, including the knot-untying sort Go Knots 3D and Tangle Master 3D, have been downloaded more than 250m times.
Mr Gibeau said the acquisition was slightly tricky because of coronavirus but it is scheduled to close by October 1.
“We had talked to them via Zoom from the US because we couldn’t fly there, obviously,” he said.
Zynga has made three other acquisitions of Turkish gaming companies, including its $1.8bn purchase of Peak Games in June.
Hyper-casual games, Mr Gibeau said, were “the fastest-growing category on mobile” and Rollic is set to bring in 65m new monthly active users into the Zynga network.
“They build massive numbers of games as prototypes, then test them with players to find out which ones work — and go forward,” he added. “The ones that don’t work they move on from.”
The number of daily users playing Zynga games hit a record last quarter, at 22m. That was only up 4 per cent from a year ago, but average bookings per such user grew 32 per cent, to $0.248, indicating that consumers were spending more time solving puzzles and racing cars on their smartphones.
Higher engagement helped Zynga report $70m in adjusted earnings before interest, taxes, depreciation and amortisation — double its projection in June. Its net loss for the quarter was $150m, nearly triple the loss a year ago, but 6 per cent smaller than it projected in June.