Zynga appears to have wasted the $200m it was understood to have paid last year for OMGPop – with the Draw Something maker’s New York office being reportedly shut down as part of the restructuring announced this week.
It had already written down the March 2012 acquisition by around $90m last October as the drawing game’s popularity waned. Zynga is laying off 18 per cent of its global workforce – around 520 people – as it tries to shift the focus of its business away from Facebook to mobile games. One alleged victim of the cuts has been sounding off on Reddit over the past few hours about his experience at Zynga’s San Francisco headquarters.
Zynga has acquired the Silicon Valley game developer A Bit Lucky as it tries to attract players more eager to spend money on its social games.
Rivals such as Kixeye have been monetising at much better rates than Zynga by making games that appeal to hard-core gamers. Zynga has focused on casual players to date, but it described its acquisition as a “mid-core” (whatever that means!), “multi-platform games developer”. No financial details were released, but Zynga described the deal as “small”.
Two more executives have left Zynga, the leading social gaming company whose stock has lost 70 per cent of its value since going public in December.
There has been a string of departures this month after the San Francisco-based company issued disappointing quarterly results and its stock price continued to slide. The latest to leave are vice presidents Bill Mooney and Brian Birtwistle.
Zynga has announced the resignation of John Schappert, its Chief Operating Officer (pictured left as his Zynga character), in a sign that the social gaming company is wrestling to recover from its poor financial performance.
Mr Schappert quit on Wednesday, with the company stating in an SEC filing that his resignation was not because of any disagreement over Zynga’s operations, policies or practices.
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.