Startup Success Stories: OMGPOP's Lessons for Mobile

"It was a rare instance for us," Zynga chief executive Mark Pincus said during the company's April earnings call. "We saw a whole new phenomenon that is not only more exciting for mobile-social gaming, but we saw a property that is very quickly becoming mainstream. We thought that it would be synergistic to our network and infrastructure."

Logistics: OMGPOP's past

Founded in 2006, OMGPOP operates a portfolio popular social and mobile games including Balloono, Ballracer, Blockles, Booya!, and Draw Something, amongst others. 

OMGPOP closed a Series B round in January 2011, and in total, the company had $16.6 M in funding at the time of acquisition. Key investors included SoftBank Capital, Spark Capital, Bessemer Venture Partners, Rho Ventures, Baseline Ventures, Betaworks, and angel investors including Rob Conway, Kevin Rose, and Marc Andreessen.

Games are all about hits, but it's common to miss first

The game that caught Zynga's attention was Draw Something, "a simple Pictionary-like app that saw skyrocketing stats for adoption within days of its release," according to Jolie O'Dell at VentureBeat.

With 20.5 million daily active users, 37 million installs, and 2,000 drawings per second, Draw Something became "the most tweeted-about game ever" and even surpassed Zynga's Words with Friends.

As Dan Frommer wrote on ReadWriteWeb, Draw Something was far from OMGPOP's  first product. In fact, the company produced more than 30 other games. Similarly, Angry Birds was Rovio's 52nd game. 

"In a hits-driven business like gaming, stamina is as important an asset as creativity (And luck!) Be patient," Frommer wrote.

Audiences fuel both steady successes and one-hit-wonders

A recent Quora thread highlights how Draw Something's success comes from its enjoyable user experience. 

"It's the social interaction nuances that we homo sapiens love," Quora member Edo A. Elan explained.

The game appeals to both men and women in a socially meaningful way. It is fun for kids, grown-ups, and everyone in between. It's a classic game reinvented in a new medium. And simply, it's fun to play. 

Don't expect a $200 million precedent

More than one month after the acquisition, Draw Something's growth has begun to slow.

"A month later, the signs are ominous. On April 30, Draw Something had dropped to #5 in the paid iPhone app rankings. Is it worth paying $200M the day the game's rankings performance peaks? That is the question," Forbes columnist Tero Kuittinen wrote.

On the one hand, it's likely that Zynga was looking beyond Draw Something to make an investment in a company and creative team. After all, Zynga did distribute an additional $30 million in employee retention payouts. The slowed growth may have been anticipated and cyclical rather than problematic.

Media and investor skepticism from an acquisition standpoint, however, may put extra pressure on Zynga to make the acquisition pay off.

"Zynga's purchase of OMGPOP," Seeking Alpha contributor Jamie Smith wrote," Seems to have been a desperate attempt by a company who is desperate to find earnings somewhere."