Zynga Defends Acquisition
Amid Criticism of Deal for OMGPOP, Game Maker Points to Revenue Streams Zynga Inc. has faced plenty of questions after buying the maker of “Draw Something,” a mobile game that was released only six weeks earlier and has since lost popularity.
Context & Ripple Effects
Zynga’s purchase of OMGPOP follows March acquisition talks and reports that the bid might exceed $200 million. The completed deal puts Zynga in control of a game whose popularity had already drawn scrutiny, including reports of steep user losses.
The immediate argument is no longer whether Zynga can acquire a breakout mobile title, but whether OMGPOP’s Draw Something can produce enough revenue to support the purchase price as its audience cools.
First-order effects
- Zynga takes responsibility for monetizing and sustaining Draw Something while defending the economic case for the OMGPOP acquisition.
- OMGPOP’s value inside Zynga becomes tied more directly to Draw Something’s revenue streams than to its initial burst of popularity.
Second-order effects
- The deal shifts Zynga’s acquisition test toward retention and monetization: falling engagement makes the purchase price harder to justify through a single hit game.
- Other mobile-game studios seeking buyers face closer scrutiny of whether a rapid download surge can translate into durable revenue after acquisition.
Third-order effects
- If hit-driven mobile acquisitions continue to be priced on short-lived audience momentum, buyers will face greater pressure to value game portfolios and repeatable revenue systems rather than one breakout title.
The trend: Mobile-game consolidation is exposing the gap between buying breakout audience growth and owning a durable revenue business.