Pulse2 Technology and Social Media News » Zynga

Zynga Answers Questions About Whether OMGPOP Acquisition Was Worth It

Amit Chowdhry — Thu, 24 May 2012 15:01:29 +0000

When Zynga acquired OMGPOP back in March, “Draw Something” was hitting 3,000 drawings per second. OMGPOP’s “Draw Something” was the most downloaded application and the highest grossing. However their position has dropped to #18 and now the app has 7.6 million daily active users versus the 14.5 million that they were seeing before. Zynga is preparing to sign a deal with animation studio DreamWorks Animation to place ads into the game though. Zynga believes that this is the start of new revenue-generating possibilities. This is important for the company because their stock has dropped to nearly half in the past two months, primarily because of their dependence on Facebook.

Zynga is defending their purchase of OMGPOP by pointing to Draw Something’s extraordinary growth and argued that the millions of customers that still play the game makes it a strong franchise that the company can build on. “We think of it as a game that’s an evergreen franchise,” stated Zynga COO John Schappert. “It’s a game that will live on for years.” Draw Something has a free version that is supported by ads and there is a paid version of the game. Players can buy virtual coins that they can use to get additional drawing colors. Zynga has integrated social features into the game that allows players to send messages to each other. They are going to translate the game into 10 languages because half of the game’s players come from outside of the U.S..

DreamWorks will have banner ads, video trailers, and puzzle words related to the studio’s new movie “Madagascar 3: Europe’s Most Wanted” for a week leading up to the movie’s launch. The agreement was for between $250,000 and $500,000.

“This is the largest place where we can have this type of interaction,” stated DreamWorks head of marketing Anne Globe. Globe said that she was interested in “Draw Something” because she saw her 10 year old daughter playing it recently. “It seems as though everywhere you go, everyone is drawing something.”

New American Express Prepaid Debit Card To Reward Users With FarmVille Cash

Amit Chowdhry — Tue, 22 May 2012 17:12:17 +0000

American Express and Zynga have partnered on creating a new prepaid debit card that rewards users with a rewards program. The users would be able to earn virtual currency when spending money in the real world in a way that similar to consumers earning free airline miles for every dollar spent on an airline miles card. The rewards will start with FarmVille and it will eventually be expanded to CityVille and CastleVille.

“It opens up tremendous opportunities to address segments of the market that we weren’t able to address with traditional credit or charge products, including the youth or underserved markets,” stated AmEX President of Enterprise Growth Dan Schulman.

Zynga and AmEx started the program five days ago. About 500,000 people have already liked Serve, AmEx’s alternative payment service, on Facebook and received a virtual tiger. FarmVille is one of Zynga’s oldest games, but it still has 4.5 million unique users per day.

When FarmVille fans visit the Serve farm, they are prompted to plant a virtual Serve Money Tree on their farm. Users can then register to receive Zynga Serve co-branded prepaid card in the mail. After that, they will have to link the card to a bank account, debit card, credit card, or cash through a GreenDot MoneyPak account.

AmEX will initially reward a consumer’s first five purchases of $25 or more, but the program will be expanded beyond those types of transactions soon. Zynga CMO Jeff Karp said that the program will not be replacing the current rewards programs, but will be an extension instead.

Zynga’s Stock Gets Hammered After Facebook IPO

Amit Chowdhry — Sat, 19 May 2012 17:46:56 +0000

On Friday when Facebook had their IPO, Zynga took a massive hit on the stock market. Since Facebook’s stock did not do too well on opening day, Zynga’s stock fell 13% before they suspended trading. They were able to recover when the stock was down 5.5% before they suspended trading again. Then it finished at 13% down for the day.

The traders were using algorithms that agreed that the stock was hugely overvalued, then undervalued, and then overvalued again according to The Atlantic. The algorithms kept saying “SELL” and “BUY” as the stock price went north and south at a rapid pace. Trading then started resuming at a normal pace again.

The reason why Zynga is directly affected by Facebook news is because the company would not be as big as they are without Facebook. Zynga’s Q1 revenue of this year was $321 million. Even though Zynga has a large mobile presence, a bulk of their revenue comes from Facebook.

On Friday Facebook’s shares had almost tanked, but the underwriters prevented it from happening. What happens to the stock price for both companies on Monday will be very interesting.

Twenty Percent Of Zynga’s Traffic Handled By Amazon

Amit Chowdhry — Wed, 09 May 2012 17:31:59 +0000

Before Zynga launched FarmVille in 2009, they did not have much trouble dealing with servers. When the game really gained popularity on Facebook, the company had a hard time maintaining their servers. “We couldn’t get power fast enough. We couldn’t get servers fast enough. We just couldn’t scale our infrastructure to match the needs of FarmVille,” stated Zynga CTO of infrastructure Allan Leinwand in an interview with Ars Technica. Zynga became dependent on Amazon’s cloud services to keep things running smoothly, but eventually they had to build their own data centers to have more control of their infrastructure. Zynga’s own data centers now handle 80% of their gamers and the remaining 20% is run by Amazon. Zynga would not have been able to scale without Amazon’s help like when Alec Baldwin revealed that he was addicted to “Words With Friends.”

Draw Something Starts Losing 5 Million Users Per Month

Amit Chowdhry — Sun, 06 May 2012 20:09:29 +0000

The app Draw Something may have seen their best days since being acquired by Zynga. OMGPOP’s Draw Something skyrocketed and became a top Apple game for about a month or so before social game powerhouse Zynga acquired them for $200 million. According to a new report, Draw Something has lost almost 5 million daily active users. This brings Draw Something down to 10 million from 15 million. Earlier this month Zynga found a creative way to monetize Draw Something. They encouraged users to draw pictures that are related to certain brands like Doritos, Pepsi, and The Avengers.

Zynga Monetizing Draw Something With “Draw This Brand”

Amit Chowdhry — Thu, 03 May 2012 20:36:53 +0000

Zynga has come up with a clever way to monetize “Draw Something,” the mobile game developed by OMGPOP. Zynga has announced a new game called “Draw This Brand” within the app. You pick a word from a list of three and then create a drawing so a Facebook friend can guess what it is. If they get it right, you win points. The words may include Colonel Sanders or Doritos. The NHL was one of the first ads and they bought terms related to hockey like puck, Zamboni, hat trick, and slap shot.

Zynga acquired OMGPOP for roughly $180-$200 million in late March. Before Zynga acquired Draw Something, OMGPOP made money by offering a paid version of the game and placing ads in the free version of the game. They had 50 million downloads in five months since launching.

Zynga Is Sitting On $1.8 Billion In Cash

Amit Chowdhry — Tue, 17 Apr 2012 16:29:48 +0000

Zynga recently went public and now they are sitting on a cash pile of $1.8 billion. Zynga CEO Mark Pincus and M&A chief Barry Cottle told Bloomberg that they are looking for the next OMGPOP and they plan to do several big deals of the next few years.

“We love finding great, accomplished teams that share our mission and vision,” said Pincus. “If we ever see breakout opportunities that massively accelerate social gaming at Zynga, we’ll aggressively pursue those, too.”

Cottle was poached from Electronic Arts where he helped the company reach a deal for Playfish. Zynga hired Cottle for $25 million. Zynga has been doing very well integrating teams that have been picked up through acquisitions. To convince startups that Zynga is a friendly place to work, Zynga CEO Pincus is usually dispatched in order to help shake off their “evil” image.

Zynga CEO: I Think Failing Is The Best Way To Keep You Grounded

Amit Chowdhry — Fri, 13 Apr 2012 04:25:13 +0000

Mark Pincus is an inspiration to startup entrepreneurs that are in the social gaming market. He recently had a conversation with Brad Stone at BusinessWeek to discuss how his shortcomings made him the man he is today.

Pincus launched two companies in the 1990′s and ended up not doing so well on both of them. He was running a social networking startup in 2003 called Tribe.net. The take-away from that experience is that when running Zynga, he pushes to fail fast, look at the data, and move on. He failed to do that at Tribe.net. They had come up with ideas based on intuition and it would take three to six months to launch.

Tribe hit the point where investors gave up and resigned from the board. The company ended up being Pincus, his team, and a creditor. They ended up selling the company to Cisco and paid back all of the debt.

One thing I learned is that while your vision should never change, you should keep trying different strategies until one works. If you can fine-tune your instinct and have confidence in it, then you can keep taking different bites of the apple and keep approaching the problem in different ways until you get it right. I did that with Tribe, pursuing the social opportunity from multiple angles. I invested in Twitter and Facebook and bought a social networking patent in 2004.

I think failing is the best way to keep you grounded, curious, and humble. Success is dangerous because often you don’t understand why you succeeded. You almost always know why you’ve failed. You have a lot of time to think about it.

OMGPOP Makes Zynga’s Daily User Traffic Go Up 25%

Amit Chowdhry — Sun, 01 Apr 2012 20:16:15 +0000

Late last month, Zynga acquired OMGPOP, the makers of “Draw Something.” Now Zynga’s total daily active user base is up 25%. About 14.6 million people are actively playing Draw Something per day, which gets added on top of Zynga’s existing 55 million players.

Draw Something shot up from 1.7 million to 14.6 million in the month of March. Zynga has been running off of games like FarmVille, CityVille, Mafia Wars, and Words With Friends since they launched. Zynga spent around $210 million to acquire OMGPOP.

Zynga Acquires “Draw Something” Game Developer OMGPOP

Amit Chowdhry — Thu, 22 Mar 2012 04:27:10 +0000

Zynga has acquired OMGPOP, the game developer behind the popular Pictionary-like game for mobile devices called “Draw Something.” Draw Something has been downloaded over 30 million times and every second, three thousand people draw something in 84 countries in the world.

Since launching in 2006, OMGPOP has developed over 35 multiplayer social games even though Draw Something seems like an overnight success. Some of their other games include Blockles, Puppy World, and Aim For The Nuts.

Although the terms of the deal were undisclosed, the price was rumored to be over $200 million in cash and employee retention. Draw Something launched 6 weeks ago and over 1 billion drawings were created since. OMGPOP is going to keep running as they have been before, but under the Zynga name.