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A $200MM talent acquisition? This meme needs some suppression.
Pretty 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?
I 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 n…
It 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.
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.
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.
Draw 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 ;)
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 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.
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Really sad actually. The only reason why Zynga bought them is because Draw Something is so high profile, that there was no way Zynga could steal it. As I said over on Quora, this really sucks as Zynga is a despicable company. Surely, the folks at OMGPOP had been worried that Zynga would try to steal this game, as they have done every one else -- and I would be interested to know what they thought of Pincus' character…
Why do you think Zynga is a despicable company?
http://www.businessinsider.com/how-zynga-is-just-like-micros...
Don't forget Tiny Tower http://www.forbes.com/sites/insertcoin/2012/01/25/everything...
If Mark Pincus was more open about it and said "We're better marketers, business builders, and job creators than the original game creators. Yeah we copy their games, we might not be original and creative but we're a lot more valuable for the market, and for the consumer." we'd see Zynga in a different light. It's the fact that he's completely delusional about it.
Here's a quote from Mark Pincus, "I am proud of the ethical and fair way that we've built this company.". That's what makes Zynga despicable. And Pincus a scary person. He's obviously an intelligent businessman but he's so caught up in his own bullshit that he actually believes it. That's what makes it frightening.
Kind 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.
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All 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.
The biggest companies in the YC portfolio are independent and getting bigger all the time. It still remains to be seen whether a Facebook or Google will come out of YC.
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What shop are you talking about? It's the #1 paid app, the #1 free app, and is king of the top grossing list, too.
Has 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).
Another single founder success for YC. Obviously the entire team deserves credit. Kudos to all.