The OMGPOP acquisition: 6 weeks later
Now that the dust has settled on Zynga’s purchase of mobile game developer OMGPOP, the outlook isn’t quite as rosy as it was just a month ago. Most Zynga titles take months before hitting their peak and then slowly decline. Draw Something has lost about five million users in a single month just weeks after the acquisition. That’s bad news for Zynga.
Zynga doesn’t simply dish out $180M for a team of 40 in New York. When they bought OMGPOP they expected their games to perform. Newtoy, the Texas-based mobile games developer, was acquired by Zynga for $50m. Their hit title Words With Friends has held in Top Grossing for over two years. Draw Something could be out in the next two months.
Zynga beat earnings estimate for Q1 this year, largely due to the OMGPOP acquisition. If the Draw Something studio can’t hold on to it’s DAU, Zynga could be hurting hard in Q2.