Zynga Just paid $180 Million for OMGPOP, a gaming company that had one main hit: draw something. For whatever reason, they felt that the almost 15 million users that Draw Something had was worth that ridiculous amount, and bought the company making the owners overnight very, very rich.
Anyone in the performance marketing industry can tell you that 15M people isn’t worth that much, let alone $180 Million. With the ability to sign up anyone to products including downloads, through companies such as GuppyGames, for as little as $1.00 per user, it amazes me that anyone is still paying ridiculous prices for companies based on their user count.
Well, I think the people who recommended the purchase, may be looking for new jobs. According to AppData, since April, the Draw Something has lost over 33% of its base. That has to be some record, because based on that current loss of users, the game will loose most of its users by next year, if not sooner.
Companies need to pay attention on how easy it is to get users, and thus just as easy to lose them. The cost per acquisition on users in a performance-based market is cheap, which is why it works – but it also, without proper knowledge of how to monetize them, is a dangerous gamble.
Sill, paying $180M for any game that has only been around for a blink of the eye, hasn’t made any money is just plain stupid.