Zynga bets $200m that Draw Something will become its next big franchise

Is Zynga hopelessly exposed to the hit-driven nature of the games business, or do its scale and business model give it a sustainable competitive edge?

Depending on your point of view, its acquisition on Wednesday of OMGPOP, maker of the red-hot game Draw Something, could be used to support either side of this argument.

Draw Something counts as a phenomenon by any measure you care to take. Launched little more than six weeks ago, it has already been downloaded more than 35m times.

Players have to draw simple pictures for their friends to identify, but the clever weaving-in of pop culture references has made it more than simply an online version of the board game Pictionary. More than 1bn pictures were drawn in the latest week.

At a price that we hear reached $200m, that makes the deal look like a very expensive purchase to keep Zynga at the top of the fad-driven app store download charts. After all, it’s not as though OMGPOP notched up much of a track record in its first six years of existence: it had attracted a combined 20m registered users for its 35-odd other games before Draw Something hit the jackpot, according to CEO Dan Porter.

Needless to say, David Ko, head of mobile at Zynga, rejects this characterisation of the deal. Rather, he says, the purchase is about bringing in a talented, 40-strong team based in New York that can keep churning out hit multi-player games.

With its broad platform and more than 240m users, Zynga should at least be in a good position to support Draw Something as it tries to go from overnight sensation to lasting franchise. That is one reason that Mr Porter gives for the deal: handling millions of online interactions is not an easy thing for a small company that suddenly finds itself the subject of global interest.

Precedent suggests Zynga can make deals like this work. Its purchase 15 months ago of Newtoy, maker of Words with Friends, for a price of $53m, brought it another blockbuster of the casual games world, and one that it has been able to build on. Wall Street certainly liked what it saw on Wednesday: Zynga’s shares rose around 2.5 per cent on news of the OMGPOP deal.

But the price is going up. Zynga had better hope that the new talent it has just hired becomes a hit-factory capable of making Draw Something more than just a flash in the pan.