In a deal months in the making and first reported by VentureBeat, Zynga has raised $147 million from Japan’s SoftBank, according to Bloomberg.
The investment by SoftBank shows that the breakaway growth in social gaming may have taken a breather. But the companies making social games are still red-hot.
San Francisco-based Zynga is the biggest maker of social games on Facebook, and it’s now expanding internationally. Its move to enter the lucrative Japanese market for mobile social games is part of a broader strategy to diversify the company’s revenue base away from its U.S.-heavy Facebook base.
SoftBank can help Zynga distribute its games in Japan and Asia through its mobile-phone services and its deep reach in the region. So far, the companies have not confirmed the transaction, but we have heard the same information about the alliance, minus the precise amount of the investment. A corporate filing revealed in April showed that Zynga was preparing to raise a large amount of money in new shares and warrants. Warrants, a form of stock options issued to corporations, are often used in strategic partnerships.
The sheer size of the deal is impressive. Last fall, Zynga raised $180 million from Russia’s DST, which is also an investor in Facebook. Zynga needs to show investors that, despite its dependence on Facebook for much of its current revenue, it is a business with a big future. To position itself for an initial public offering, or just further investment, Zynga has had to make its business have a variety of growth engines — not just the army of digital tractors humming away on FarmVille.