Zynga Readies for Major International Expansion With $147M SoftBank Investment

A rumored investment in Zynga by Japan's SoftBank, first suggested by VentureBeat in April, has finally come to light. The Japanese conglomerate has put $147 million into Zynga, as reported by Nikkei.com and confirmed by Bloomberg. [Update: However, a source tells MediaMemo that the deal hasn't quite closed yet -- but is expected to.] The investment adds to an already-bulging war chest for Zynga. Its last round was $180 million from a consortium led by Digital Sky Technologies, late last year. As usual with Zynga's investments, money is not the sole object. A number of American game developers are looking to break into the Asian market, especially larger companies like CrowdStar and Playdom. Zynga has been quiet about its plans in the region until recently, although it is rumored to have made small, unannounced talent purchases. For example, it may have bought GoPets, a casual gaming company with close ties to South Korea, last fall. It has been getting more public with its efforts, though, announcing the purchase of Beijing social game developer XPD Media last month. It also made an unplanned gain of a Chinese investor when top internet portal Tencent bought a stake in DST in April. For SoftBank, the dominant story in the press now is that the company is trying to break into the Chinese market. An investment with Zynga could help there, but non-Chinese gaming companies are limited from running games in the country. In fact, the Japanese market, in which there are fewer customers but a much higher average revenue per user, looks promising for both companies. SoftBank has obvious strategic advantages at home. One is that it's the sole distributor in Japan of the iPhone -- and Zynga just ported FarmVille onto the popular device. Both companies stand to benefit from bringing the game to mobile users. And, although it has not yet been widely reported by Western press, Yahoo Japan (a partially-owned subsidiary of SoftBank) is working on a social network for gamers. Yahoo and Zynga separately just signed a broader syndication deal; it's not clear how tightly Yahoo Japan and Zynga are working together, but Zynga's games could attract new users to the fledgling network. The conglomerate has been on a tear with new investments, with CEO Masayoshi Son telling the New York Times, “Before anyone knows it, SoftBank will be a step ahead.” It is likely willing to pay more than most rivals. Zynga is worth up to $4.5 billion, according to recent regulatory filings; while filings may not reflect this investment, they suggest the new money only got SoftBank a small piece of the company. SoftBank's appetite is not limited to Zynga, either. The company has also invested heavily in RockYou over the past six months, putting a total of $60 million into the company. Although RockYou's total monthly active user base on Facebook has fallen below 50 million in recent months, the company reports over 200 million users worldwide across all social networks. [Image via Flickr / Altus]

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Zynga Readies for Major International Expansion With $147M SoftBank Investment

Chris Morrison

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