for more on the implications of this very big deal.
Let's bring in Mario Stephanie Diaz Vice
President over at Round Hill Investments Mario,
Good morning.
Thanks so much for getting up early with us this morning.
So take two is saying they anticipated about 100
million in annual cost savings from this deal,
but how big could this deal be for the gaming giant here?
Yeah, So make no mistake. This is a landmark deal at 12.7 billion.
You have by a wide margin, the largest gaming acquisition in history.
Um eclipsing Tencent's by of Supercell for 8.6 billion in 2016.
Um so this is really a huge deal nearly doubling um
the size
of
nearly doubling the size of take to hear um adding 40% employee headcount.
Uh and basically creating an entire new division,
take two mobile games was just created last year
and they really needed someone to head it up and
frank Gibeau the ceo of Zynga is now going
to take the reins of this huge 2500 person studio
um and start putting out quality titles um
for existing Rockstar and two K properties.
Okay, so obviously take two now instantly becomes a major,
if not probably the biggest mobile gamer gaming player
in the industry right now. What does that mean?
Not just for the industry, but for this company in particular moving forward,
if this deal goes through here.
So I think this deal is more about having Zynga's
employees and intellectual property and expertise with freemium.
I think we're gonna start to see games like G ta online,
Red Dead redemption bioshock and the host of sports games under
the two K umbrella um really make their way to mobile
oh and be monetized on an ongoing basis.
What their uh take two strategy has currently been,
has been mainly pay to play games.
So for example, when you're buying a sports game,
you're paying an upfront sticker price,
but you're not necessarily being monetized on an ongoing basis.
Zynga has the expertise to bring them this sticky recurring revenue model,
which is something they need to compete with E A who um you know,
bought um glue and played Emmick in the last couple
of years as well as Activision which bought King.
Uh this is take two's for a into
first real foray into mobile
and gives them the best player to be able to compete.
Um It's interesting because this free to play business model
not uncommon, but it seems like it's becoming a huge,
huge game changer for a lot of companies and even take two.
Ceo
says he admires Zenga's sort of free to pay model
here where basically you download the app for free,
you're able to play the game for free,
but you're making in app purchases on things in this game.
Is this becoming an increasingly popular business model
for a lot of games out there.
Yeah, this is known as gaming as a service where you have now.
These games that have 789, even 10 year lifespans that are being monetized,
ongoing, updated on an ongoing basis.
And you're not seeing new iterations of those games be released,
but instead you're having uh that game received incremental upgrades over time.
I think the best example of this when you look at consoles is g ta online.
So this game remarkably came out nine years ago,
but every month is one of the top revenue generators globally.
It's the second best selling game behind Minecraft in the world.
Um
So you know,
this this is a revolution that we're
seeing enabled by faster internet speeds that allow
these types of upgrades to be delivered as
well as improvements in technology where you have
dozens if not hundreds of concurrent players on the server,
all able to interact with each other simultaneously Mario.
How how lucrative are these free to play games?
And I'm saying that if somebody my husband plays candy crush all the time
and I swear like he's spending a billion dollars a day on Candy crush,
how lucrative are these games?
It's it's very lucrative.
Whenever you look at the top of the IOS app
store or google play stores on any given month,
you're almost definitely going to see a freemium game there.
And this is something that is just absolutely necessary to compete.
Um E a has been doing it successfully with their properties.
Uh One of the most successful iterations of Call
of Duty is actually Call of Duty Mobile.
Um it's really a revolution spurred by
uh, the emergence of uh, gamers and emerging markets uh,
that have smartphones but don't necessarily have the means to afford consoles and
something that's going to be accelerated by the advent of cloud gaming.
So cloud gaming, meaning you can stream a game um,
from any device just using your latency rather than hardware,
you're gonna see a revolution in smartphones continue and you're gonna
see smartphones and tablets become on par with with consoles.
And what I think is the last major generation of console gaming
Mario, Stephanie is always good to have you here.
Thanks so much Mario for getting up early with us this morning,
he's the vice president over at Round Hill investments.