If anyone is going to buy Zynga, it's Amazon.
Zynga's continued struggles just make the case for the deal more urgent.
- Amazon wants to get into the games business. Just as Amazon didn't wait around for digital music and movies to kill its CD and DVD sales, it's not waiting around for Web-based games to supplant its existing games business.
- In fact, it's already in the games business. Not many people are paying attention to this development, but Amazon has been buying gaming startups, hiring gaming talent, and launching social-gaming titles.
- Amazon solves Zynga's biggest problem: mobile distribution. Facebook was the engine for Zynga on the Web. But Zynga hasn't found an equivalently strong channel in the mobile world. Amazon has mobile hardware in its Kindle tablets; a curated app store where it can highlight titles of its choosing; and a huge number of consumers who can buy things with one click.
- An Amazon-Zynga combination has more leverage with Facebook. Facebook is desperate to build up its e-commerce revenues. Amazon is a natural partner in those efforts. And owning Zynga, which is still an important source of revenues to Facebook, gives it even more clout. To the extent that Zynga needs to lean on Facebook to boost traffic to its legacy Web games, Amazon will be a big help.
- Zynga solves an important problem for Amazon: content for Kindles. Owning Zynga means ensuring a steady supply of popular games. Amazon might even give away premium versions to members of its Amazon Prime loyalty program for free, since Kindle owners and Prime members are more likely to shop on Amazon.com, and that's what Amazon really cares about.
- An Amazon deal saves face for Zynga CEO Mark Pincus. Since Pincus controls more than half of Zynga's voting shares, it's vital that he feel good about the deal and can present it as a win. Amazon's focus on "customer delight" pairs well with Zynga's "mission of making the world a better place through play." And Amazon has been relatively hands-off with its Zappos acquisition, which might lead Pincus to believe he'll continue to have a free hand running Amazon's expanded gaming business. Wall Street likes to think these deals are all about numbers, but these fuzzy factors matter a lot in Silicon Valley.
- Kleiner Perkins will like the deal. The venture-capital firm was an early investor in Amazon and Zynga. They share a board member, Kleiner partner Bing Gordon. And lead partner John Doerr has lent his personal support to Zynga, showing up at big launch events. The firm's blessing isn't required, but it can't hurt—especially when it comes to Pincus's assent.
More From Business Insider
- Zynga's Executive Exodus Is In Full Swing Now That Its Stock Has Cratered
- Why Amazon Should Buy Zynga
- Facebook Quietly Rolled Out A New Feature That Could Revive Zynga And Other Facebook Games
- Arts & Entertainment