AppLovin is set to snap up Machine Zone.
Put another way, a mobile ad startup is acquiring one of the largest mobile gaming companies in the world.
Terms of the deal, announced Thursday, were not disclosed, and the acquisition is subject to approvals. MZ’s valuation was reportedly around $6 billion in 2015.
Machine Zone has multiple top-grossing mobile games under its umbrella, including Mobile Strike, Game of War: Fire Age and Final Fantasy XV: A New Empire. AppLovin will continue to use the Machine Zone brand and MZ will remain the publisher of record for all of its current game titles.
The plan is for AppLovin to combine its talent, games and tech with MZ’s to publish new titles and help developers market and monetize their games.
AppLovin is also getting a “massive and very sophisticated user acquisition team that allows them to expand the scope of their services,” said Maor Sadra, former CEO of app marketing platform Applift.
But the benefit will be mutual. Machine Zone was forced to shut its homegrown demand-side platform, Cognant, in 2018. Part of the reason they were unsuccessful at the time is because they didn’t have the right skill set in house, Sadra said.
“AppLovin has that skill set,” he said.
AppLovin has been on a spending spree since private equity firm KKR bought a $400 million minority stake in 2018, raising AppLovin’s valuation to around $2 billion.
In addition to a couple of ad tech-focused acquisitions – in-app header bidding solution MAX followed by SDK management platform SafeDK – AppLovin has been investing in game studios like it’s going out of style, including strategic investments in Supercell-backed Redemption Games, PeopleFun, Clipwire Games, Firecraft Studios, Geewa and Belka Games.
AppLovin also has its own in-house publishing division called Lion Studios, which helps game developers publish, promote and monetize their apps.
Part of the strategic value in AppLovin owning a game publisher is that the closer AppLovin can get to the actual gameplay experience, the more it can optimize that experience for existing players and use that intel to develop other appealing games.
And the more games that get introduced into the mobile ecosystem, the more monetization opportunities there are to meet increasing demand.
With that in mind, the best way to bucket AppLovin is as a hybrid creature, part game publisher, part monetization platform.
“We are one of the fastest-growing mobile game companies in the world, [and] we own and operate game studios as well as provide capital to grow,” an AppLovin spokesperson told AdExchanger. “We are also a leading monetization and marketing platform for game developers everywhere.”
But AppLovin is something else on top of that: as close to a competitor to Facebook as you’re going to get outside of Google, in the app space, at least.
“I don’t know if anyone can truly compete with Facebook,” Sadra said, “but AppLovin is almost there.”