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Is The Draw Something Franchise Worth $183 Million? Tapjoy's Mihir Shah Counts The Ways

When Zynga bought OMGPop, the company behind Draw Something, it had it’s eye on much more than a strangely addictive game. Zynga was after the big brand and franchise potential, says Shah. Draw Something 2, anyone?

Draw Something, the Pictionary-like smartphone game, rocketed to 50 million downloads in its first 50 days on the market. It flew to the top of the iTunes rankings, becoming the No. 1 downloaded and highest-grossing app. With roughly 3,000 drawings being submitted on the service per second, Zynga soon realized the game’s value and promptly scooped up its maker, OMGPop, for $183 million.

But then Draw Something began slipping down the charts. Monthly active users, according to third-party metrics firm AppData, dropped significantly. And worse still, daily active users plummeted from a peak of roughly 14.5 million to 5.9 million--a 60% drop that’s forced Zynga to defend its acquisition in the press. Was Draw Something really worth its price, or was it just an overnight OMGPop sensation?

That’s the question shareholders are likely asking, but as Mihir Shah tells me, fatigue on Draw Something--like with most hit games--was almost inevitable. Shah, the CEO of mobile-advertising startup and Most Innovative Company Tapjoy, has worked with and advised many mobile-gaming startups, including OMGPop, and has watched many top-selling apps fall from the rankings. "I think there’s fatigue for mobile consumers--like, 'Not another farming game.' Even if it’s faster, or better, or gives rewards quicker, we just don’t want to do another farming game: no thanks; give me something new," Shah says. Asked about Draw Something, Shah acknowledges, "You’ll burn out on it."

Image: Flickr user Marco Colin

Shah explains this all matter-of-factly, displaying little discernible concern for Zynga’s acquisition or OMGPop’s future. From Shah’s perspective, Zynga didn’t buy Draw Something, the game. It bought Draw Something the brand and franchise. "Everybody knows it’s a hits business," he says, ticking off big titles such as FarmVille and Angry Birds. "What’s going to happen is you’re going to have Angry Birds 2, and Angry Birds 3, and 4, and 5--with that, you’re building a brand. Zynga’s 'With Friends’ is, in effect, just a brand--like Words With Friends and so forth. I mean if Zynga could have, they would’ve called it Draw With Friends instead of Draw Something."

In order to avoid being a one-hit wonder, the hits have to keep coming, and startups must learn how to grow and expand their franchises because app fatigue is inevitable. Shah points to Glu Mobile, another game publisher Tapjoy has worked with, which turns out about 25 titles per year. "They basically churn out two titles a month, and they’ve learned the model for when title A, B, and C are going to fall off," Shah says. "There’s just a physics to it--a sine curve--it goes up and it goes down."

Angry Birds has become the archetype for ballooning one’s game into a sustainable franchise business. The game’s sequels have continued to sell--recently hitting 1 billion cumulative downloads. Its company, Rovio, has expanded into merchandise, releasing everything from toys to clothing to board games. An Angry Birds retail store has opened, and another is on the way. The company has been exploring doing TV shows and movies and amusement park rides. Last week, I even saw Angry Birds candy being sold at the grocery store.

That’s the aim of Zynga’s acquisition--to bolster its brand and franchise. It’s not about the purchase of a one-off title. "We think of it as a game that’s an evergreen franchise," Zynga COO John Schappert said last month, adding that he expects it "will live on for years."

"It’s just actually not that dissimlar to cinema and the way movie franchises work," Shah says. "You need a huge amount of content flow in the film business generally. Think about how much content goes through Hulu, through cable, through broadcast, through theaters: the amount of content, and the amount of crap content, and the amount of great content. Content needs to be really really fresh, and constantly be coming out."

"And that’s what you’ll have with the the large studios like Zynga, EA, and Disney--cranking all that out," he adds.

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2 Comments

  • Words With Friends WIN

    Draw Something is still a success, but perhaps not as big of a success as some investors first dreamt of. I'd like to see Draw Something 2 with an evolved game. The app hasn't changed since the purchase with the exception of more adds.

  • Really?

    Terrible article. You ignored your own question, and instead wrote a response that a PR of Zynga would happily release to the media. You say that the purpose of the acquisition was to bolster its brand, but you stop there instead of exploring whether that "bolstering" is worth the $183 million.