Draw Something Loses 5M Users a Month After Zynga Purchase
We may be seeing the beginnings of a lesson as to why it's not always the best idea to buy your competition outright. Mobile giant Zynga's game development philosophy has always been, “If you can' beat 'em, buy 'em,” …
Context & Ripple Effects
Zynga's pursuit of OMGPOP moved quickly from a bid reported at more than $200 million in March to a completed purchase. The reported monthly user loss puts the value of that deal under immediate pressure because Draw Something was bought for its audience as well as its game.
Days before this report, Zynga was pitching branded prompts inside Draw Something to advertisers. A shrinking player base reduces the scale behind that proposed ad product just as Zynga seeks to monetize the acquired game.
First-order effects
- Zynga inherits a game losing 5 million users a month, making retention the immediate test of the OMGPOP acquisition.
- OMGPOP's Draw Something audience becomes less valuable to advertisers as the potential reach of Zynga's branded-prompt pitch contracts.
Second-order effects
- Zynga must weigh faster monetization against player retention: advertising and other revenue efforts have less leverage when the active audience is falling.
- Future targets of Zynga's acquisition-led expansion face closer scrutiny on whether a hit game's audience can persist after a sale, rather than on peak popularity alone.
Third-order effects
- If rapid post-acquisition audience declines recur, mobile-game acquisitions will be valued less as purchases of durable player bases and more as bets on a studio's ability to produce another hit.
- The episode points to a mobile-games market in which distribution and monetization cannot by themselves stabilize engagement after a viral game's peak.
The trend: Mobile-game consolidation is testing whether acquiring a breakout hit can preserve its audience long enough to justify the purchase price.