RealNetworks, Inc., has announced that it has acquired Zylom Media Group BV, a premier distributor, developer and publisher of high-quality PC-based casual games throughout Europe, adding to a stable of "casual" computer games that is contributing a steadily growing share of the company’s revenues.
The transaction valued at up to $21 million or euro 17.2 million; acquisition of Zylom Media Group will push RealNetworks heavily into the European market, matching a similar casual game push in the United States during the past two years. Real is the leading provider in the U.S. of downloadable PC casual games.
We are delighted to bring Zylom into the RealNetworks family, said Rob Glaser, Founder and CEO of RealNetworks, Inc. Games is very serious business at Real. By combining Zylom’s broad-based European distribution and strong titles with our RealArcade, GameHouse, and Mr. Goodliving properties, we will be able to deliver more fun to more consumers around the world than ever before.
The casual game market remains financially a small sector of the broader video game business, attracting a demographic that is coveted by many other game sectors. The proportion of woman in particular who play these fast, a simple games such as "Hearts or Solitaire" tends to be much higher than is true for console or retail PC games.
RealNetworks has achieved the leading position in downloadable PC casual games by delivering games that consumers love, said Michael Schutzler, Senior Vice President of Worldwide Games at RealNetworks, Inc. Zylom has an outstanding track record of delivering high value to consumers and partners, and we are delighted to join forces.
This combination of companies will create the largest source of high-quality games localized for the European market, said Erik Goossens, COO of Zylom. We are committed to aggressively expand our local content and customer support for all of Europe.
"By teaming up with Real, we will be the strongest casual games company in Europe," said Rutger Peters, CEO of Zylom. "Our combined strengths will allow us to deliver the very best games and services to our portal and ISP partners throughout the European market."
Because of all the competitive dynamics, our music business gets more attention, but games have definitely ascended in importance, Glaser said. We are thrilled to join forces with the Zylom guys. Glaser said that his company’s games audience tends to be about 65 percent female, and up to 70 percent in some countries.
RealNetworks has expanded its game business through acquisitions in the past, purchasing Seattle production studio GameHouse for $35.6 million in 2004, and the European mobile-phone game company Mr. Goodliving for about $15 million in 2005.
It also plans to distribute the games to Xbox 360 users in the future, as part of last year’s antitrust settlement with Microsoft.
The company provides some games for free through its RealArcade site, but charges a $7.99 monthly subscription for access to its broader game catalog.
The company made more than $40 million from its downloadable games business in the first three quarters of 2005. It will announce its year-end results shortly.
Based in Eindhoven, the Netherlands and founded in 2001, Zylom has been delivering exceptional casual games throughout Europe and was recently recognized as The Best Fun and Games website in the United Kingdom, Germany, and the Netherlands by www.websiteoftheyear.co.uk.
The company’s library includes 70 fully localized games in 7 languages including the popular Mirror Magic and Hotel Solitaire as well as hit titles from leading game developers including PopCap’s Bejeweled and Iwin’s JewelQuest. Zylom currently distributes these games through its own direct-to-consumer web site www.zylom.com and through premier European distributors that include AOL, Wanadoo, and Yahoo.
In 2005, Zylom generated approximately euro 6.65 million or $7.98 million in revenue and approximately euro 620,000 or $750,000 in net income. “We expect Zylom to be slightly accretive to 2006 earnings with contributions to earnings increasing in future years.”
Zylom co-founders Rutger Peters and Erik Goossens, as well as the rest of the Zylom team will stay in Eindhoven to lead Real’s PC casual games business in Europe.