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January 31, 2014

Zynga to acquire game developer NaturalMotion whilst slashing 314 jobs

NaturalMotion will support its mobile gaming segment as 15% of workforce goes.

By CBR Staff Writer

US-based gaming firm Zynga has signed a deal to acquire the UK-based game developer NaturalMotion for $527m.

The move is expected to give a boost to its games portfolio and expand the company’s presence in the mobile gaming segment.

NaturalMotion was founded in 2001 and has approximately 260 employees across Oxford, London, Brighton and San Francisco, while some of its popular mobile games include CSR Racing and Clumsy Ninja.

The company has also announced a cost restructuring programme for the year, under which it will slash about 314 jobs representing 15% of its employees.

Zynga chief operating officer Clive Downie said NaturalMotion significantly expands the company’s creative pipeline and accelerates its mobile growth.

"They are not an acquisition to fill a gap but one to expand our capabilities," Downie added.

Zynga Chief Executive officer Don Mattrick said brining Zynga and NaturalMotion together is the right step at the right time.

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"Our acquisition of NaturalMotion will allow us to significantly expand our creative pipeline, accelerate our mobile growth and bring next-generation technology and tools to Zynga that we believe will fast track our ability to deliver more hit games," Mattrick said.

"Their creative portfolio aligns perfectly with our content strategy as Zynga will now have five top brands and capabilities in the Farm, Casino, Words, Racing and People categories."

The gaming company has reported net loss of $25.2m during the fourth quarter, while its sales dropped to $176.4m from $311.2m during the period.

Mattrick said the category growth in mobile, with smartphones and tablets is just substantial.

"We imagine we can achieve better results with smaller teams," Mattrick added.

"Over the last 7 months, our teams have been working with a sense of urgency. We finished 2013 in a strong position and expect 2014 to be a growth year."

"The investments we are making to grow and sustain our franchises are beginning to bear fruit, particularly in Zynga Casino and Words With Friends.

"We are committed to refining our skills in the art and science of building new hit games and in 2014, we will move aggressively into new genres that align with the timeless, entertainment categories that consumers care about."

The company is planning to streamline its product development to make sure that about 75% new games are developed for mobiles that is expected to decrease its infrastructure spending and reduce the number of servers by 50%.

Zynga is expected to launch first, new title under its FarmVille franchise during the second quarter 2014.

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