Kenny. Rebello, President and co fart.
Founder of Arcadium joins us now, Kenny, Thanks for joining us this morning.
Thanks so happy to be here.
So for Take Two, Why was this such a strategic acquisition?
Well, it's 2022
welcome to the year of mega gaming deals.
It's a strategic acquisition for Take Two because it brings them new audiences.
It brings them a whole wealth of ad tech
data that they didn't have under their repertoire before.
They are pretty much a great console maker,
but they didn't really have the chops on the mobile gaming side.
So for Take Two said that this deal is a win win for them.
What kind of how will this help them in the gaming space get to the next level?
Yeah, I think it is a win win for both.
As I said, it brings a new audience to take to for example, I run a game company.
Let's play a little game here.
I'm gonna list four games you tell me which one may resonate with you,
right Words with Friends, Grand theft, Auto
poker or Red Dead Redemption. Which one of those games resonates with you?
Michelle,
I'm gonna say Red Dead redemption.
Oh that's not what I thought you would say.
But the reason I asked that question is
because take to pretty much has this history of
having games that are very popular for 18 to 34 year old males with this acquisition.
Now they open it up to the wider gamer audience.
35 plus females and males and it really allows Take two to capture, you know,
this huge growing industry that I think is gonna set to be over $200 billion.
That's definitely something that I had a question about this deal.
It just seems like such a range of products.
And when you think about the family friendly Zynga
and you think about the more edgy Take Two,
but there's so many other competitors in the gaming space.
You have so many different platforms out there, You have Nintendo Microsoft.
Do you think that this is enough of a strategy to give them a competitive edge?
I think it does because it really well rounds their whole portfolio.
If you think about all of the studios that
Zynga has acquired in the last couple of years,
they've done a phenomenal job with Peak Games and
their acquisition of Rolling and companies like that.
So Zynga has this really nice portfolio,
but then when you couple it with take two's history of creating amazing content,
beautiful storytelling, cinematic type games,
it really makes a very powerful mega gaming company that's gonna rile.
Tencent is one of the biggest in the world.
You know, one thing that take two,
Ceo said he admired about Zynga is their free to play model,
so that's where you can download the app for free,
but you have to make those in app purchases if you want to advance in the game.
Do you think that this is where the majority of the industry is going.
Yeah, well, I mean let's just talk about Zynga's innovation, right,
Zynga has always been an innovator.
They have you know brought the facebook gaming world,
you know they they entered that space with chirality, but here's an inside story.
Mark pincus, you know, the founder of Zynga showed steve jobs,
these steve jobs in app purchases and steve jobs called the idea.
Stupid, he told Mark pincus it was a stupid idea.
Well in app purchases now make up for the majority
of revenue that is generated in the gaming space.
So steve jobs got a lot of things right in app purchases, one that he did.
How lucrative are these free to play games?
I mean we talk a lot about the big blockbuster games whenever they come out,
but we're starting to hear a little bit more
about these downloadable apps with the in app purchases.
Yeah, just think about it like this,
you could go to a game stop and buy a game for 60 $70.
You can download it from your console for around that price.
But in the in app purchase space you may play the game,
enjoy the game and spend hundreds if not thousands of dollars
on that game over a time period from you know,
a week, a month to several years.
So if you go back to think about, you know Activision and candy crush,
they bought King for $6 billion.
That game is still around making a lot of
money even though it's been so many years later.
So the lifetime value of a free to play user is
much higher than the lifetime value of a 1 $70 purchase.
Now this isn't the most recent. I mean this isn't the only acquisition. We've seen.
One of the ones that fascinated me recently was netflix getting into
the gaming space with a night school studio oxen freeze creator,
a huge fan of that game as well.
Just wondering,
do you think we're gonna see more acquisitions in 2022 in the gaming space?
Absolutely.
We're gonna see a lot and this is just january where we're seeing, you know,
one of the biggest deals of all time.
So I think we're gonna see a lot of new deals.
I think we're gonna see a lot of consolidation in this space and N. F. T.
S and Web three is going to dominate the headlines of gaming companies
probably for the remainder of the year.
Well, thank you for joining us today. That's Kenny, Rebello, president and co
founder of Arcadium