Facebook buys Instagram for $1 billion in cash and shares

Pays more than twice more per user than Zynga paid for OMGPOP

Facebook buys Instagram for $1 billion in cash and shares

Nothing to do with mobile games, but everything to do with acquiring mobile users, Facebook has announced it's buying Instagram for approximately $1 billion in cash and shares.

The transaction, which is subject to customary closing conditions, is expected to close later this quarter.

Instagram had previous raised $47.5 million in funding, valuing it at around $500 million during the last round in March.

Longterm value?

The iOS and Android photo sharing service is thought to have around 30 million users, valuing the deal at around £33 per user.

This compares to the $16 per active user Zynga spent acquiring OMGPOP.

However, while Instagram has a better track record - it's been operating successfully since October 2010 - it's a free app without any direct means of monetisation.

This comparison also involves some disconnect in terms of how activity is measured over a multiplayer game and a photo sharing app.

In addition, Facebook isn't acquiring Instagram primarily for its users, but to stop it becoming a competitor to Facebook.

Man behind the plan

"For years, we've focused on building the best experience for sharing photos with your friends and family. Now, we'll be able to work even more closely with the Instagram team to also offer the best experiences for sharing beautiful mobile photos with people based on your interests," said Facebook CEO Mark Zuckerberg in a statement.

He added Instagram would maintain its independence.

"We think the fact that Instagram is connected to other services beyond Facebook is an important part of the experience," he stressed.

"We plan on keeping features like the ability to post to other social networks, the ability to not share your Instagrams on Facebook if you want, and the ability to have followers and follow people separately from your friends on Facebook."

[source: Facebook]

Jon Jordan
Jon Jordan
A Pocket Gamer co-founder, Jon can turn his hand to anything except hand turning. He is editor-at-large at which means he can arrive anywhere in the world, acting like a slightly confused uncle looking for the way out. He likes letters, cameras, imaginary numbers and legumes.