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Looks Like Zynga Just Bought OMGPOP For $200 Million
- beatle 15y agoamazing. everyone i know loves draw something. congratulations.
- citricsquid 15y agoI think it's got a winning formula, whether or not it was intentional or an accident I don't know, but it does so many things right. It caters to casual players (I can pick it up, guess, draw and put it down) or hardcore players (draw + guess all day and all night), it forces people to provide value back to the player they're against (after guessing you have to draw to play another game) and it has a good micro transaction system. I've never played mobile games properly before but I find myself drawn into playing Draw Something along with all my friends, who like yours love it.
- dfxm12 15y agoWhat I like about is that everyone wins. Both & the person you are playing with get a reward (coins) for a successful guess. There's no cheating to worry about, no sore losers/winners, etc. Also, having a little bit of coins may or may not entice you to get more (which means bugging more friends to play, or busting out the wallet).
- dinkumthinkum 15y agoI actually don't really get the game that much. I've played, it's kind of fun, but half the time people can't figure out how to draw the subject and just write it out ... literally, this happens about 1/4 of the time. But kudos to them for their success. I do question the $200 million and I can only imagine, as another user said, Zynga would try to transition users to their other games in the long term.
- tkahn6 15y agoIs this a talent acquisition or an attempt to capture future revenues of Draw Something?
- Lewisham 15y agoIt's probably a bit of everything; talent, future revenue, and market consolidation, just like the With Friends purchase was.
- tptacek 15y agoA $200MM talent acquisition? This meme needs some suppression.
- tkahn6 15y agoPretty disappointed that I was downvoted, given that it was a genuine question. No need to be cryptic or condescending. I'm asking because this is shop that makes a lot of iOS apps with a hope that one hits. They don't have a singular product that they sell. So what is Zynga buying?
- webwright 15y agoWhat shop are you talking about? It's the #1 paid app, the #1 free app, and is king of the top grossing list, too.
- tptacek 15y agoHas there ever even been a "talent acquisition" in the (say) mid-8 digits? Since, say, 2006? Definition of a talent acquisition: you buy a company, and none of its offerings are available 18 months later under any brand. (The true definition would be "and all the members of the team are reassigned to a different project", but that's hard to know from the outside).
- tkahn6 15y agoI don't know. I'm not particularly educated or well-versed in these matters. 200MM for a talent acquisition seems high which is why I also wondered whether it was to capture future revenues from Draw Something. It was an innocent question.
- apawloski 15y agoBittersweet. Draw Something is a great game and it's good to see OMGPOP rewarded for that. But then I hate that it will now be controlled by Zynga.
- TazeTSchnitzel 15y ago"Play Draw Something now and earn Farmville points!"
- patio11 15y agoZynga points. You can use them across Zynga games to get e.g. exclusive pumpkins in Frontierville. There's a cap which resets every day, so you know when you can stop playing. What. [edit to add: Not currently playing any Zynga games. League of Legends pushes my buttons much better.]
- jianshen 15y agoAs one of my close friends said recently, "yet another Facebook token that Zynga will soon own."
- chimeracoder 15y ago> Now Zynga has scheduled a call for a “news announcement” for 3pm eastern. I’m going to go out on a short limb and assume it’s to formally acknowledge that they have bought the company. I'm glad the news seems to have been confirmed (?), but I must say that the headline is rather disingenuous, given that there was no actual confirmation. Even the lede makes it seem that there's no doubt; just confirmation of a previous rumor. I don't ask for anything major - just a single word (or two). (I originally posted this comment for the other submission a split second after it was deleted, but it still applies - glad HN at least chose the more responsible title).
- netvarun 15y agoIt doesn't make sense. The article mentions that OMGPOP makes 250 grand a day (that too after after all commissions). that equates to 91.25 million a year. IMHO, $200 million seems like a really small price.
- gkoberger 15y agoEventually they're going to run out of people to pay or play. Games don't tend to have a long lifespan, so it probably made sense for them to cash out while they're hot. There's no way they can sustain this rate for 2+ years, which is what they'd need to do in order to make $200 million.
- brandall10 15y agoThat's at this moment in time for one product, which is currently at the top of the iOS charts.
- untog 15y agoKind of sad. I mean, congratulations to OMGPOP, but I'd really like to see a decent competitor to Zynga out there. Their games are slow, buggy and overly instrusive, but no other company has the kind of traction they do. OMGPOP could have taken the hard route and built themselves up from the success of Draw Something. Oh well.
- bitsoda 15y agoThe hard route? OMGPOP was incorporated in 2006, Zynga in 2007. They've been trying their hand at online games for a while now. This isn't an overnight success.
- untog 15y agoNo, it isn't. But up until recently OMGPOP was strangely hesitant to make mobile games (as relayed to me by a friend who used to work there). Look at their entries in the app store- they have three games. They went in a new direction and it paid off. I would have been interested to see them try to go further with it.
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- Reebz 15y agoThe OMGPOP team is probably reading this from their Ferrari's as they are parked outside the Yacht dealership.
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- omi 15y agoWho the hell plays this garbage?
- jamesjyu 15y agoPretty much everyone I know is addicted.
- matdwyer 15y agoIt's actually surprisingly fun. My girlfriend spends like 10 minutes drawing these elaborate pictures for strangers. The only thing that infuriates me is when people know what it is but can't spell the word and then give up.
- natesm 15y agoI get annoyed when the "hard" word ends up being some rapper/celebrity name instead of something that everyone knows.
- matdwyer 15y agoI've seen some hilarious Lil' Wayne & Tebow drawings though! Much more fun to me, but you're right, this is a world wide game.
- lusr 15y agoI've never played this (first time I've heard of it), but it sounds like a game I used to play about 5 years ago online with people on IRC/Kongregate chat. I used to love it and spend hours playing it. Boy do I feel dumb now not remembering it when the mobile app craze started!
- zinssmeister 15y agoDraw Something is everywhere and it's an awesome game. Good move for OMGPOP to cash out. It's a lot of money to throw at a studio that has basically only produced one hit game. Or maybe I am too old to recognize any of their other games ;)
- leoedin 15y agoI can't comment on their mobile offerings, but OMGPOP has been running a fairly unique web-based online gaming platform for years. They certainly had a fairly large userbase when I was using the site a couple of years ago, but I guess the facebook and mobile apps were the ones that really brought users. The web platform has made a number of moves to monetise in recent years, putting more and more features behind payment-based tokens. It'd be interesting to know what proportion of their income comes from the web gaming platform.
- pduan 15y agoIt is a lot of money in aggregate. But when you break it down, it looks like a pretty good deal. Revenue multiple: Based on the reported figure of $250,000/day = $91.25M/year. At a purchase of $210M, this represents a multiple of 2.2x, far below the price/sales multiple of Zynga and Glu Mobile, two publicly traded companies on the US exchange. Sure, OMGPOP probably won't be hitting $250,000/day for the entire year but even at a 50% discount, you're in the same range as Glu. DAU cost: Assume CPI of $1.50, install/DAU conversion rate of 10%. This equates to a DAU cost of ~$15. It's safe to say that OMGPOP has >10M DAU, which means ZNGA bought the company at <$20/DAU. Additionally, the above CPI and install/DAU conversion rate are quite low. I've been hearing that OMGPOP is seeing 1-day retention rates of 50-75% which is amazingly high. This means that with continued growth and similar retention rates, ZNGA got a pretty good deal in terms of DAU acquisition cost. The main advantage for Zynga is that they can leverage OMGPOP's DAU and cross-promote their existing titles. And with their experience in monetizing titles, it's safe to assume that ARPU will increase.
- joering2 15y agohow Zynga is going to make money (advertising on DAUs) off the users that ALREADY PAID for the no-ads Draw Something app? $250k/day with $0.99 per user == ~252,000 installs a day. That's almost 92MM installs per year. How many active users does App store have?
- ndespres 15y agoWow, good for them. I've been with them since they were "I'm In Like With You," a fun but pointless "social flirting" site (at least, that's my memory of what it was) before they turned to social gaming. I didn't think they were going to make it for a while. Congrats to Charles and the team at OMGPOP!
- antidaily 15y agoGreat for OMGPOP, even better for Zynga. Price seems low to me.
- j_baker 15y agoHere's more detail on the price: $180 million plus another $30 million or so in employee retention payments, Im told. Is this typical? It would seem that the employees are getting the shorter end of the stick on this deal.
- jpdoctor 15y ago> Is this typical? It would seem that the employees are getting the shorter end of the stick on this deal. Which deals do you think they get the long end of the stick?
- paul 15y agoNot commenting on this particular situation, but to answer your question in general: If a company has an IPO, there are no "employee retention payments", so it's better than that :) Employee retention payments are actually a way to give employees a somewhat better deal than investors, though typically they will be subject to vesting.
- jpdoctor 15y ago> If a company has an IPO, there are no "employee retention payments", so it's better than that :) The reverse split of common before preferred share conversions for IPO are often a big screw to the employees. Many are also unaware of it, as they don't dig through the S-1. (Atheros was the largest one I saw in this camp.)
- tomkit 15y agoIt was bound to happen -- Now they have to pay a premium for having failed to launch a game in this genre. The model was proven by Newtoy with Words with Friends (which they acquired) and Zynga has since launched a series of others based on the same model (Hanging with Friends etc.). All they need to do is look at the biggest existing markets for board games, console games, etc. and apply it to the WWF model. Pictionary should have been a no-brainer!
- joejohnson 15y agoMaybe it will take less than half an hour for a move to be sent to my friend's phone. Hopefully it won't take too long for Zynga to move this game over to the zCloud and fix all the push notification bugs too.
- gutini 15y agoDoes anyone else question Zynga's growth model? http://www.fool.com/investing/general/2012/03/21/welcome-to-zyngas-downward-spiral.aspx http://www.fool.com/investing/general/2012/03/21/welcome-to-...
- gyardley 15y agoWow. Charles deserves a whole lot of credit for sticking it out over the last six years - my impression until recently was that they were having a hard time staying open. Congrats to all involved!
- jedc 15y agoThat rivals the Heroku for the biggest YC exit so far! (Heroku was ~$212million) OMGPOP would slot in at #2. https://docs.google.com/spreadsheet/ccc?key=0AkkhSN3vaY4jdF90b1l1Vnl5NmZjaTBNQWlJYVozMEE#gid=0 https://docs.google.com/spreadsheet/ccc?key=0AkkhSN3vaY4jdF9... This likely means YC gets about $3-5million out of the deal, funding even more startups in the future. :) (edit: Originally wrote Flightcaster for some reason; meant Heroku. Was thinking of Flightcaster earlier today and got confused.)
- wilfra 15y agoSo many great companies and so many early exits. Great for the VC's and angels - bad for the founders and early employees. And the users. Imagine if Heroku, reddit and others had stayed independent. Facebook got this part right. Reject buyout offers and use them to raise capital at ever increasing obscene valuations - and build your product exactly as you want.
- ootachi 15y agoFounders often don't have a choice as to whether to accept buyout offers. In the case of OMGPOP, which had received a ton of VC funding and struggled for years until finally finding some success, I can definitely see why VCs would want to force a sale. (In fact, I wouldn't be surprised if VCs generally think that "make games for iOS" is not a business model that is capable of the kind of returns they need anymore, and they want to avoid taking further risk on that model—hence they forced the sale.)
- abuzzooz 15y agoThere are always two sides for each story. You hear about a lot of successful companies that rejected a buyout, only to die in obscurity. I guess it all depends on the shareholders and what they want to do. Sometimes it's good to take home a good chunk of profit and look elsewhere.
- andywood 15y agoAll this says to me is that YC does not directly fund Googles and Facebooks. This is still very good for the founders. They can take their exit money and self-fund whatever they want.
- padobson 15y agoI'm dying to know the cash/stock split on this one. It will send signals about what a company like OMGPOP thinks of the social gaming space going forward. Considering they just spent 6 years working in the sector, what they think of Zynga's future is telling.
- jpdoctor 15y ago> I'm dying to know the cash/stock split on this one. It will send signals about what a company like OMGPOP thinks of the social gaming space going forward. It also signals whether znga thinks its stock is overvalued or undervalued.
- wilfra 15y ago"it has recently been netting around $250,000 a day from the game — that’s after Apple takes its 30 percent cut." $7.5 million a month at the very beginning of their hockey stick growth, and they are willing to sell for $200 million? Deal of the century for Zynga... They should have leveraged this into a massive funding round and started making acquisitions, growing etc. Nobody is ever going to compete with Zynga if people cash out to them the first chance they get every time.
- ido 15y agoHow do you figure it's only the beginning of a hocky stick growth? Draw Something might just start lose steam in a couple months, the game market is very hit-oriented and a lot of these games don't stay on the top of the chart for very long. The game industry graveyard is littered with 1 hit wonders that never managed to repeat their success after a single massive home run.
- pclark 15y agoA cowardly decision? Do you have any idea how stressful it is running a team of 30 employees and tens of millions of dollars in financing and not having a clear path to turn it into a successful company? OMGPOP made great video games for 5 years and none of them stuck. They deserve recognition for sticking to their vision and eventually finding one that is a hit, I can totally imagine why the team wants to sell and not have to worry about the next hit. It took OMGPOP over 5 years of concentrated efforts to succeed. http://en.wikipedia.org/wiki/List_of_games_on_Omgpop http://en.wikipedia.org/wiki/List_of_games_on_Omgpop Stop being so unbelievably rude.
- wilfra 15y ago"They deserve recognition for sticking to their vision and eventually finding one that is a hit" They absolutely do. But they are now the latest example of what not to do the second you finally gain traction. As I said in another comment, Facebook got this right. So many others do not, and it is really a pity in the social gaming space as there is a huge need for somebody to compete with Zynga.
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- methoddk 15y agoOMGPOP are sellouts. Buyouts like this kill me. I hate seeing good companies get gobbled up by others...
- andrewhillman 15y agoAnother single founder success for YC. Obviously the entire team deserves credit. Kudos to all.
- andrewhillman 15y agoOMGPOP was smart to do this deal. They really had no choice. It seems really difficult to come up with new games. If they didn't do the deal, Zynga would have cloned the app and introduced it to their huge network of "_____ with friends" players for free and OMGPOP would have lost market share and revenue.
- hipsterelitist 15y agoIt actually wasn't single founder when YC funded them, Dan Albritton was the other founder. Really nice to work with them back in the day.
- lazerwalker 15y agoGiven that Draw Something fits within the same asynchronous turn-based model of the With Friends games (owned, of course, by Zynga), I'm curious to see where Zynga moves with branding. There's something to be said for unifying all future OMGPOP/With Friends games under the With Friends blanket for cross-promotional purposes, but the "X Something" brand does have some measure of brand appeal.
- k-mcgrady 15y agoI would guess they will probably go with 'Draw Something With Friends'.
- digitallimit 15y agoBetter yet, Draw With Friends.
- pointpointclick 15y agoAnyone remember when OMGPOP was iminlikewithyou.com before they made the pivot to social games? 2007ish, if I recall correctly...
- rdl 15y agoBack then it was a weird dating site where most of the users were actually VCs checking it out :)
- badclient 15y agoCredit to VCs. I've been guilty in past of noting how raising VC money may take away reasonable exits possible with no funding or just angel. In this case, it is very clear without VC money this company would have been dead pooled many many years ago.
- dkrich 15y agoI don't understand Zynga's strategy. Are they trying to establish themselves as the De Beers of mobile gaming? This seems like an unsustainable strategy. If they just buy out every gaming company as it begins to exhibit growth at insane valuations, they are going to run out of money. There are virtually no barriers to entry in the market, and there is no point at which there will be no emerging competitors. This is not a stock I would want to be a part of.
- rwhitman 15y agoIt seems like they are hedging against allowing the mega gaming companies (EA etc) from getting too much of a foothold in the mobile / social space.
- dkrich 15y agoBut $200mm for a company that built the electronic version of Pictionary that was released six weeks ago? That is insane! The gaming industry is not one that can be controlled by a single company. I don't mean to sound harsh, but it is pretty clear to me that Zynga has too much money and very little vision. The numbers just don't make sense.
- hendzen 15y agoThe network effects of Draw Something's user base add immense value. Think FB vs. G+. If Zynga had made their own Pictionary game, it would have been a graveyard.
- dkrich 15y agoI'm not disputing that it is a wildly successful game. I am stating that a $200mm valuation of a single game is insane. I know the argument will be made that they bought the whole company, but this acquisition would not have happened if not for Draw Something. Given the number of developers working on producing the next big hit in games, there will be a Words With Friends or Draw Something released on an ongoing basis. Why would Zynga get in the business of buying up these companies after the hits have been produced? Seems like a losing business model.
- alaskamiller 15y agoEverything old is new again. Or maybe I'm just old. It's interesting how 2 years later we're vilifying Zynga (http://news.ycombinator.com/item?id=1041604 http://news.ycombinator.com/item?id=1041604) It's interesting how iminlikewithyou after 5 years finally sold out. It's interesting how gaming of all forms became the big hits big business Hollywood vainly wish it could still be. Think about what would happen in another 5. Then do it.
- nixle 15y agoThis is great news. OMGPOP would have headed in that direction anyway and now their talented, hardworking employees will see their careers boosted a bit earlier (maybe even a nice little payout?) All the value OMGPOP might have ever had ( which besides Draw-something, they really didn't have * ) will evaporate into the creativity-destructing teeth of soul-grinder Zynga, leaving a big piece of the market available for Indie game-devs <3 that are awesome and actually give a d * mn. * ) OMGPOP has actually been struggling for any kind of success in the casual/social game scene.
- ivankirigin 15y agoCongrats to Charles and team! I've loved their games for ages, and hopefully their focus on quality will spread at Zynga. I have some friends at another game company that was bought, and after a recent chat recently, I'm FAR more excited by what they are building now than what they had before. So to all those that are worried about this, I think the studio nature of gaming companies means that their acquisitions don't necessarily kill innovation.
- phil 15y agoI believe that -- and in particular, Newtoy seems to still be doing good work after being bought by Zynga.
- ThePinion 15y agoWell this sucks. I just got into Draw Something yesterday and have been a fan of OMGPOP since Iminlikewithyou (hipster), but a company like Zynga does not deserve this game, or my attention to it. Zynga is well known for being theives and gathering as much possible data as they can about their users to sell off to ad companies and such. Looks like I'll be uninstalling this Draw Something once the switch takes place.
- k33n 15y agoIminlikewithyou was way ahead of its time and I'll always remember it as the site that made me realize rich real-time user interaction was possible on the Web.