Zynga's bid for Draw Something may top $200 million
What a strange story - a New York-based startup that began its life as a dating-gaming company, went through many incarnations has finally hit the jackpot. OMGPOP, the company behind Draw Something, a mobile and Internet game inspired by Pictionary …
Context & Ripple Effects
OMGPOP's five-year path to an overnight Draw Something hit turned a small, venture-backed game maker into an acquisition target. Reports a day earlier said Zynga was in talks, while stressing that discussions were not advanced.
The rumored price arrives as Zynga is expanding beyond Facebook distribution and has launched Zynga.com. A purchase would therefore fit a strategy of owning games and audiences across more than one channel, although neither the deal nor its valuation has been confirmed.
First-order effects
- The reported price above $200 million gives OMGPOP a concrete negotiating benchmark and raises the stakes around the still-unadvanced acquisition talks.
- Zynga faces an immediate capital-allocation choice: pay for a proven breakout title and its team, or keep pursuing its expansion beyond Facebook without OMGPOP.
Second-order effects
- A deal at the reported level would make sudden mobile traction more valuable to independent game studios and their investors, especially when a larger publisher needs new distribution channels.
- Zynga's social-game rivals would have a clearer incentive to monitor small mobile studios for breakout hits before their audience momentum becomes an acquisition premium.
Third-order effects
- If publishers repeatedly buy breakout mobile teams, social gaming may shift from building every hit internally toward using acquisitions to secure audience growth across platforms.
The trend: Social-game publishers are looking beyond Facebook for mobile hits, making independent studios with rapid user growth potential strategic acquisition targets.