Zynga Buys OMGPOP
Recently, Zynga’s hottest game, Words With Friends, has been overshadowed by Draw Something. It’s no surprise then -- to jaded Web watchers -- that the gaming giant has plopped down a reported $200 million for the maker of the mobile app, OMGPOP.
“Rest easy: Zynga once again owns the top game on Facebook,” AllThingsD jokes. “But in making the acquisition, Zynga may have inadvertently set the expectation that if it doesn’t create the No. 1 game on Facebook -- it will acquire it.”
“This is not the first time that Zynga has gone out and purchased the developer of a rival online game,” VatorNews recalls. “In December 2010, it acquired the Texas-based mobile game developer Newtoy, developers of Words with Friends, for $53.3 million.”
In the case of OMGPOP, “Zynga’s options were to spend some time and effort seeking to come up with a superior or at least comparable knockoff to Draw Something, or dip into the cash hoard supplied by its December public offering and make an offer for the whole operation,” writes The New York Times’ Bits blog.
“If Zynga lost [the deal], it was probably going to do a ‘Draw With Friends’ anyway,” writesTechCrunch. “That would have split the available market with OMGPOP, a situation we’ve seen when Zynga has launched titles like Dream Zoo, Dream Pet House and Dream Tower.”
That said, “What Zynga is picking up isn’t just a hit game, the team that built it, or even the 35 other titles that OMGPOP has created over the last six years,” according to GigaOm. “And it’s not just buying potential ad or in-game sales revenue from Draw Something users. What Zynga’s really buying is a huge engaged audience that it can funnel into its other social gaming properties.”
As for OMGPOP, some suggest that it undersold itself. According to Business Insider, Simon Khalaf, CEO of mobile analytics firm Flurry believes: "OMGPop sold way too early. They're leaving $800 million on the table.
$1 billion for OMGPop? “Is that nuts?!” asks BI. “Based on Draw Something's early growth, no, it's not nuts. In fact, it seems reasonable.”