Does A Zynga/Yahoo Deal Make Sense?

By Matthew Lynley

Pascal Lauener/Reuters

Yahoo Inc Chief Executive Marissa Mayer

Zynga’s stock is up 10% today on some speculation from analysts that Yahoo would pick up the ailing social games maker.

There are some good reasons to make this kind of speculation: it’s a natural content fit with Yahoo, and the company would be a cheap purchase — if only to pick up mobile engineers, for which Yahoo has made a priority.

We don’t have any extra inside insight on whether a deal like this could happen. But, based on some existing evidence we have, it’s something that Yahoo CEO Marissa Mayer is likely to shy away from given some of her previous comments.

First, it doesn’t necessarily fit Mayer’s definitions of “daily habits.” Gaming is certainly a large and significant part of many peoples’ lives — and there’s always a potential that it could grow. After all, Zynga CEO Mark Pincus constantly talks about how he wants to see “play” continue to grow.

But here are her comments from her last public speaking appearance:

It’s searches on the Internet, checking finance, doing your email. All of those are things I’d classify them as daily habits. At Yahoo, there’s about a dozen or so, those are what we’re focusing on.

We’ve seen Mayer gradually tick the check boxes — Yahoo Mail got a redesign, as did Flickr, and we still have a few more coming likely in the form of search and sports. Nowhere mentioned is gaming — even though that would likely be a top priority if it were considered a “daily habit.”

Yahoo’s mobile games presence is basically non-existent today. Yahoo does have a presence in games — it has a whole section of the site devoted to it. But signs suggest that as users increasingly shift to mobile, a Web gaming presence is no longer worth what it was before.

Much of Zynga’s struggles have been associated with its Facebook and Web gaming empire shrinking. Zynga is in the process of moving from a FarmVille-dominated era to one where Web games are a priority.

To buy Zynga in its current form would be to essentially buy an aspiring mobile gaming company — whose games don’t monetize as well as the old Facebook ‘Ville games — and a company in transition that’s still trying to figure out the rest of its business, like its own platform for connecting players. Unless Yahoo has a master plan when it comes to mobile games, there isn’t a lot of utility here.

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