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Zynga Is Looking for an International Break

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Apr. 8 2019, Published 7:18 p.m. ET

Zynga is buying companies overseas

If we consider estimates from Newzoo, the global gaming market will generate $174 billion in annual revenue by 2021, up from ~$134.9 billion in 2018. Newzoo also points out that countries and regions such as India, Southeast Asia, and the Middle East are fueling the growth in the global gaming industry.

This trend means that Zynga (ZNGA) will need to build a deeper presence in overseas markets to realize its full potential, and Zynga can be seen rising to the challenge. According to CEO Frank Gibeau, many of the company’s recent acquisitions have been international deals. For example, Zynga’s most recent acquisitions were in Europe. The company bought Turkey-based Gram Games and followed that purchase with the purchase of Finland-based Small Giant Games in a transaction worth close to $600 million.

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The US currently supports Zynga

At the moment, Zynga generates the majority of its revenue in the United States. In the fourth quarter, Zynga derived 65% of its revenue from the United States, with only 35% coming from its international operations. But Google and Facebook (FB), some of Zynga’s competitors in the advertising market, are more geographically diversified.

Alphabet (GOOGL) generated 52% of its fourth-quarter revenue outside the United States, while Facebook generated 51% of its revenue outside the United States and Canada. Twitter (TWTR) derived 46% of its revenue outside the United States in the fourth quarter, while Snap (SNAP) generated 31% of its revenue outside North America in the quarter.

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