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May 10, 2012 08:00 am GMT
Draw Something, the game that could do no wrong now seems like it can do little right, at least according to the blogosphere. There’sbeen a string of stories from virtually everyone saying that the OMGPOP acquisition is “haunting” Zynga because Draw Something’s daily active usage is down to 9.1 million daily active users from its peak of 14.6 million daily active users. It’s funny how the press turns (and we know this too well). On the day we broke the story that Zynga was about to buy OMGPOP for what turned out to be $180 million, Business Insider said that our rumored price range was way too low. When the company sold, they then wrote a story citing Flurry’s CEO that OMGPOP had left $800 million on the table. But now, the story is totally opposite! “Interest is fading!” The deal was a debacle! This chartbelow from AppData is getting rehashed over and over again. It looks dismal.But while Draw Something’s decline seems a little scary (as it should be), there’s a lot of context to keep in mind – 1) Zynga raised its bookings guidance by around $50 to 75 million for the year, mostly on OMGPOP. Zynga said late last month that bookings for the year would come in at between $1.425 billion to $1.5 billion, up from $1.35 to $1.45 billion. They said on the earnings call that the $50 to 75 million bump was mostly because of Draw Something. While that seems high, it’s not out of line if you look at other comparable company monthly revenues. Funzio was making $5 million a month at the time of its sale to GREE. Glu Mobile, a publicly-traded company, did $17 million in Android and iOS gaming revenues in the first quarter. 2) Games usually peak and then taper off in usage. But revenue sometimes goes in the opposite direction with optimization and improvement (like with Farmville). Zynga probably knows the natural lifecycle of freemium game better than most other companies.Games peak early and then taper down over long stretches of time. Even hit games often contribute the majority of their revenue to the company after they peak.Farmville wasstill Zynga’s top game by revenue last quarter even though it’s several years old. It made up 29 percent of the company’s online game revenue, followed by Cityville which had a 17 percent share, according to an SEC filing today.
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/njaP2KqZmhI/
Was Zyngas Deal To Buy OMGPOP That Disastrous? Heres Some Perspective.
Draw Something, the game that could do no wrong now seems like it can do little right, at least according to the blogosphere. There’sbeen a string of stories from virtually everyone saying that the OMGPOP acquisition is “haunting” Zynga because Draw Something’s daily active usage is down to 9.1 million daily active users from its peak of 14.6 million daily active users. It’s funny how the press turns (and we know this too well). On the day we broke the story that Zynga was about to buy OMGPOP for what turned out to be $180 million, Business Insider said that our rumored price range was way too low. When the company sold, they then wrote a story citing Flurry’s CEO that OMGPOP had left $800 million on the table. But now, the story is totally opposite! “Interest is fading!” The deal was a debacle! This chartbelow from AppData is getting rehashed over and over again. It looks dismal.But while Draw Something’s decline seems a little scary (as it should be), there’s a lot of context to keep in mind – 1) Zynga raised its bookings guidance by around $50 to 75 million for the year, mostly on OMGPOP. Zynga said late last month that bookings for the year would come in at between $1.425 billion to $1.5 billion, up from $1.35 to $1.45 billion. They said on the earnings call that the $50 to 75 million bump was mostly because of Draw Something. While that seems high, it’s not out of line if you look at other comparable company monthly revenues. Funzio was making $5 million a month at the time of its sale to GREE. Glu Mobile, a publicly-traded company, did $17 million in Android and iOS gaming revenues in the first quarter. 2) Games usually peak and then taper off in usage. But revenue sometimes goes in the opposite direction with optimization and improvement (like with Farmville). Zynga probably knows the natural lifecycle of freemium game better than most other companies.Games peak early and then taper down over long stretches of time. Even hit games often contribute the majority of their revenue to the company after they peak.Farmville wasstill Zynga’s top game by revenue last quarter even though it’s several years old. It made up 29 percent of the company’s online game revenue, followed by Cityville which had a 17 percent share, according to an SEC filing today.Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/njaP2KqZmhI/
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