Zynga Inc., a pre-eminent social games presence on Facebook, is buying Toronto mobile applications developer Five Mobile Inc. to expand from desktop and laptop computers to mobile devices.
“The Five Mobile acquisition fits with Zynga’s strategy for world domination,” London-based analyst Carmi Levy said.
One of Five Mobile’s latest products is an application for the BlackBerry PlayBook that gives sports fans real-time scores, news, live blogs and original video.
It has also developed products for Walt Disney Co., Sony Pictures Entertainment and MapQuest.
Five Mobile was formed in 2008 by five employees of another app developer that went under during the Wall Street financial crisis.
It has about three dozen employees, who are expected to be retained following the takeover.
Five Mobile officials wouldn’t talk Friday, referring all questions to Zynga — which also remained tight-lipped. Financial terms of the deal haven’t been disclosed.
Zynga, founded in 2007, has 2,000 employees and filed an initial public offering earlier this month. The offering seeks to raise anywhere from $1 billion to $2 billion.
It has grown meteorically, from $19.4 million in revenue in 2008 to $597.5 million in 2010.
It has developed games like FarmVille, in which participants cultivate a virtual farm and invite Facebook friends to help out with the chores, or co-operate to grow crops and raise livestock.
Zynga has been on an acquisition tear: Five Mobile is its 15th acquisition in 13 months.
While relatively small, Five Mobile can help boost Zynga in two ways, Levy said.
Zynga’s strategy to date has been to hook users using Facebook on their laptop or desktop computers.
Instead of simply visiting Facebook a few times a day to check up on their friends, the games keep users on the site for hours at a time.
That’s a great thing for attracting advertisers, says Levy.
“Facebook doesn’t just get more users, it gets more engaged users which it can sell to advertisers and charge more for.”
But the laptop market is mature, so future growth is likely to come from mobile devices, where Five Mobile operates.
Five Mobile also gives Zynga some cachet, says Levy.
Games like Zynga’s FarmVille don’t give the players high status, he said.
It’s something of a guilty pleasure, like watching soap operas — lots of people do it, but they don’t necessarily admit to it.
While small in size, Five Mobile has done “some really impressive work with some really impressive clients,” Levy said.
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