What does a single app that generates 20m downloads and $100,000 per day in revenue in five weeks? In the case of OMGPOP, the maker of the hit app Draw Something, it apparently gets you acquired in week six.
Today, social gaming giant Zynga announced that it has acquired OMGPOP.
While terms of the acquisition are not being revealed publicly, Peter Kafka of AllThingsDigital says his sources have indicated that the deal is worth in excess of $200m when employee retention is factored in. An astonishing exit for a company that just weeks ago few had heard of.
It’s not hard to see why Zynga, which has built a billion-dollar social gaming empire, would be interested in OMGPOP. According to Kafka, Draw Something’s popularity has continued to surge and the game is now reportedly netting $250,000 each day for OMGPOP.
That in and of itself is impressive to the say the least, but it’s even more impressive when you consider that OMGPOP is lucky to be alive. Although Draw Something is an overnight hit, the company that produced it is hardly an overnight success. OMGPOP was started years ago and has raised $16m in financing. Before Draw Something, it was struggling to find its place. As one investor in the company put it, “Things did not look awesome.”
For that reason, OMGPOP’s back story may raise questions about the price Zynga is paying for the company. Yes, Draw Something makes for an attractive addition to Zynga’s app/game portfolio, but is Draw Something alone worth $200m-plus? The OMGPOP team toiled for years without producing a major hit, and there’s no guarantee that it will produce another Draw Something under the Zynga corporate umbrella. Clearly, Zynga is hoping that’s not the case, but if it is, Draw Something may earn the distinction of ‘most expensive app ever.’
On the other hand, if the OMGPOP team is just getting its groove on with Draw Something, Zynga’s acquisition couild eventually prove to be a grand bargain. According to Simon Khalaf, the CEO of mobile analytics provider Flurry, OMGPOP sold “way too early” and may have left as much as $800m on the table.