Draw Something Loses 5 Million Users a Month After Zynga Purchase

Social network fatigue started a couple of years ago. That doesn't mean people are ready to ditch social networks outright, but it means that the stupidest abuses are going to leave a sour taste in peoples' mouths, and Zynga is so well associated with these behaviors that, even if people like some of their games, no one likes them.

Zynga's asset is that they understand addictive behavior and are probably the world's leading experts in a specific niche, which is the online delivery of addictive (not always high-quality) games through social media, and the monetization thereof. This knowledge is going to be valuable no matter what happens in social media over the next 5 years. Their brand and reputation are decidedly NOT assets. The opposite, actually.

If Zynga's executive team is smart, they're going to stop being a primary publisher and acquirer and start working behind the scenes, like a consultant, using their knowledge without doing brand-damage to the games they work on, because even though 90% of people don't care about a game company's reputation, the people who set trends do, and by 2014 no one will play Zynga games.

The console and PC gaming business has largely been a franchise business, largely because of single-title burnout. And, in fact, it makes little economic sense to keep gamers playing your same, single title for years on end (unless they're subscribing to it, a la World of Warcraft). Big studios typically desire burnout, so that they can sell you a new title or sequel for $50, or a piece of DLC for $5-10, or what have you. EA doesn't want to sell you one game that you'll play for 12 months straight; EA wants to sell you 12 games that you'll play for a month apiece.

The iOS/Android app market has been different, though, and I think it's important to dissect why. First, a title like Draw Something will remain on the "shelf" on App Stores indefinitely. Nobody's holding physical inventory on limited shelf space that they've got to clear at the end of the month. Second, console gaming burnout is often the product of fairly direct substitution in the marketplace -- i.e., I'm going to stop playing UberSoldiers 25 because a very similar title, L33tSoldiers 14, just came out and has better graphics and features.

In the iOS app market, we don't see such direct substitution effects[1]. Nobody's burning out on Draw Something because Paint Something just came out with hotter features. In this sense, burnout on Draw Something might actually mean something interesting. It can't be accounted for purely by basis of comparison to the console gaming market and its standard-issue burnout rates. This is where I think the Halo analogy (really, the standard-issue gaming business analogy) doesn't quite hold up.

[1]Unless, of course, we do. A strong argument could be made that any casual iOS app titles are substitutes. So Draw Something competes with Angry Birds, the same way that Modern Warfare competes with Battlefield -- even though Angry Birds and Draw Something have fewer superficial similarities.

Might seem like a trivial comment, but this is a classic case reflecting inability to service player wants. If they kept their word list updated and used a better algorithm to filter out repeat-words, they probably could have mitigated their user churn rate.

Yes, perhaps a larger word list was part of their monetization strategy - but Zynga should've realized that was a bad idea when it acquired the company. When users pay for something, there needs to be an instant sense of reward, and a noticeable lasting sense of reward. A larger word list doesn't really fall into either of those categories.