Zynga Inc., the world’s biggest developer of Facebook games, has gained a foothold in Toronto’s booming technology community with the purchase of mobile-apps developer Five Mobile Inc.
Zynga announced Friday it is acquiring Five Mobile for an undisclosed amount, and re-naming the firm Zynga Toronto. Five Mobile has developed mobile applications for several big-name customers, including Rogers Communications Inc. and Cineplex Inc.
The purchase is San Francisco-based Zynga’s 15th acquisition in the past 13 months, as the company continues to expand rapidly ahead of its expected initial public offering, which could raise anywhere between $1-billion and $2-billion (U.S.).
Zynga’s meteoric success is largely due to the popularity of its social games for Facebook, which have given it a user base of almost 300 million. Zynga is the creator of the single most popular game on the social network, CityVille, which boasts 85 million active monthly users, as well as other games like FarmVille.
The Five Mobile purchase gives Zynga access to several important new customers, as well as a chest of intellectual property and engineering talent. Perhaps more importantly for the company, it now has a base for its Canadian operations. According to sources, Zynga had been on the lookout for possible Canadian acquisitions for some time, and last year made a serious attempt to purchase Canadian mobile-gaming startup SocialDeck, ultimately losing the sale to Google Inc..
Zynga’s move comes at a time when Toronto is competing directly with Waterloo, Ont., (and, to a lesser extent, Montreal) for Canadian technology and engineering talent. For years, Waterloo has been the epicentre of the Canadian startup community, thanks to the presence of major tech players – chiefly, Research In Motion – in the region.
A number of entrepreneurs have tried to recreate that ecosystem in Toronto, hoping to leverage the city’s larger population and its role as Canada’s financial hub. For those involved in Toronto’s burgeoning tech community, Zynga’s presence in the city will help move the process forward.
“It's incredibly exciting because Zynga is recognizing the immense talent we have here,” said Valerie Fox, director of Ryerson University’s Digital Media Zone, a workspace for small tech startups. “We started the DMZ because we knew the talent was here, but we’re now seeing more and more talent coming to Toronto.”
Among the major global companies looking for acquisition opportunities in Canada and elsewhere, the focus in recent months has mainly been on startups working on projects that combine the social and mobile Web. Much of the investor frenzy surrounding Zynga’s IPO is traceable to its position as an indirect way to capitalize on the success of Facebook’s social networking platform.
Five Mobile’s senior management team will continue to run the newly christened Zynga Toronto, the company said. The Five Mobile team is led by managing partner Ameet Shah, who will now report to the division run by Zynga’s head of mobile operations, David Ko.
Mr. Shah did not respond to a request for comment. A Zynga spokesman would not comment beyond the contents of acquisition announcement. Zynga did not disclose the acquisition price.