To paraphrase 50 Cent, Marissa Mayer loves acquisitions like a fat kid loves cake. Before the financial gurus finished breaking down Yahoo! Inc. (NASDAQ:YHOO)’s Tumblr acquisition, Mayer went ahead and snatched up the cross-platform gaming backend PlayerScale – the company’s sixth acquisition in May.
150 million users
PlayerScale, founded in 2011, provides tools and analytics to help some 2,600 game developers scale their games across multiple platforms such as iOS, Android, and the web. It also offers tools to manage an entire game ecosystem from profiles to payments to multiplayer matching.
So far, the service has 4,000 titles in its portfolio played by more than 150 million users. In the last four months, the company has increased its daily growth rate by more than 60%, and is adding an average of 400,000 new gamers every day.
Interestingly, this acquisition came just a week after Google announced better tools for Android game developers. Google Inc (NASDAQ:GOOG) announced new game-save utilities that allow users to save on one device, and resume on another (a feature previously seen in PlayerScale). Additionally, it added multiplayer, leaderboard, and profile tools to its developer platform.
While Google Inc (NASDAQ:GOOG) is, surprisingly, late to the game in adding these features, it benefits from the massive scale of its Android ecosystem. Google claims to have 900 million activated Android devices around the world.
Still, PlayerScale has accelerated its growth even in the face of similar features from Apple and Amazon’s gaming platforms. It remains ahead of the curve, and well ahead of Google Inc (NASDAQ:GOOG), in providing its developers with the most innovative features and important data.
Data, data, data
PlayerScale collects loads of data to provide to its clients. It has tools that help developers analyze user behaviors and track monetization strategies. These data are invaluable to the developers as it allows them to make their games more profitable, but also develop new engaging games more quickly.
As a result, PlayerScale’s portfolio of games is quickly expanding, which leads to more people playing the games it helps facilitate. That’s why Yahoo! Inc. (NASDAQ:YHOO) is leaving PlayerScale alone, adopting the same “We promise not to screw it up” approach it took with Tumblr. Shutting it down and fully integrating the company into Yahoo! would stymie its growth, just as its starting to accelerate.
The value Yahoo! Inc. (NASDAQ:YHOO) can unlock from PlayerScale, though, is in the same data it provides to developers. The data give Yahoo! feedback on in-game purchases and effective advertisements. As a company that generates its revenue through advertising, not just in games and apps, but throughout the web, Yahoo! Inc. (NASDAQ:YHOO) can use these data to better target viewers of its online content as well.
Integration with Tumblr
The average age of mobile gamers and Tumblr users correspond quite nicely. Both skew toward younger audiences aged 25 and under.
While Tumblr has stayed away from display advertisements, it has integrated native advertisements like promoted blog posts quite nicely into its product. Unfortunately, most companies balked at the opportunity, and Tumblr brought in just $13 million in revenue last year.
Part of the problem is companies simply don’t know how to use native advertising effectively to resonate with Tumblr’s young audience. Here’s where Yahoo! Inc. (NASDAQ:YHOO), and its hoards of new data on young people, can help. By providing companies with more information on what kinds of advertisements young people respond to, it can help build Tumblr’s revenue.
All over the place
Mayer has been criticized for acquiring businesses that are seemingly unrelated, and all over the place. What does cross-platform gaming have to do with blogging? It’s simple, Mayer is trying to reinvent itself, appeal to a younger crowd, and all of its acquisitions are targeted at growing industries. Even if they don’t all pan out, each can provide valuable data to improve the others, as is the case with the companies two most recent acquisitions.
The article Marissa Mayer: Gaming Acquisitions originally appeared on Fool.com and is written by Adam Levy.
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