You’ve got to wonder what employee happy hours are like in the legendarily intense environs of Zynga. (We’re gonna guess testy.) A couple days ago, the company announced the departure of New York GM Dan Porter, and former employees are already dishing to Fast Company. A lot of former Zynga staffers, it seems, are ready to trash talk the OMGPOP acquisition, which cost Zynga a $95.5 million write-down.
One former employee complained to Fast Company, ”They bought it at the peak [of Draw Something], and people got tired of the gameplay quickly and the usership dropped. We got the timing wrong.”
Exit This Way
Dan Porter, the former CEO of New York-based gaming company OMGPOP which was purchased by Zynga in March of last year, has left the company, according to a release obtained by Betabeat.
UPDATE: Yesterday evening after our post went up, Zynga’s What’s the Phrase moved from no. 3 to no. 1 for top free games in Apple’s App Store and is currently holding down the top spot.
Zynga New York hasn’t always had the chummiest relationship with Zynga’s corporate office back in San Francisco. The East Coast outpost was formed a year ago after Mark Pincus acquired OMGPOP and its mobile juggernaut Draw Something–installing OMGPOP CEO Dan Porter as general manager.
Things started to sour last fall when Zynga blamed a $95.5 million write down on its $183 million OMGPOP acquisition for a bad quarter. But after a round of office closures, Zynga New York remained open, which is in line with gaming giant catching the all-mobile-all-the-time bug from Mark Zuckerberg. COO David Ko (Mr. Pincus’ no. 2 man) also continues to speak highly of Draw Something and the upcoming, Ryan Seacrest-approved Draw Something 2.
Soon he may have even more to crow about to wary Zynga shareholders.
Celebrity revelations rarely arrive without some behind-the-scenes orchestration, which is what we imagine happened this afternoon when Ryan Seacrest “gave away Zynga’s secret,” by outing the launch of Draw Something 2 on Twitter.
After all, Mr. Seacrest’s production company RS Productions also happens to have acquired the rights to the Draw Something game show.
Place Your Bets
After two big blows in succession–downgraded earnings forecasts, followed by 5 percent layoffs and the end of its studios in Boston, Japan, and the UK–Zynga’s third quarter earnings report exceeded the Street’s “rock bottom expectations.” That might explain why after hours trading is currently up 13.6 percent.
Zynga had predicted a net loss of $90 to $105 million for the third quarter, but only reported a net loss of $52.7 million. The company attributed part of that loss on a $95.5 million impairment charge on its acquisition of OMGPOP, the New York City-based makers of Draw Something. Zynga also said that a 28 percent sequential decrease in monthly unique payers (MUPs) from the second quarter (4.1 million) to the third quarter (3 million) as “largely driven by Draw Something.”
Social gaming company Zynga has endured a rough couple of months. After its acquisition of the NYC-based company OMGPOP–producers of the fad-friendly game Draw Something–Zynga has experienced a downward spiral. Earlier this month, it reported an estimated net loss of $90 million to $105 million for its third quarter, sending its already-low stock price into a tailspin. Now, The Next Web reports that the company has laid off 100 staffers from its Austin headquarters, and may even be shuttering its Boston office altogether.
Exit This Way
It looks like the Cinderella story that was Zynga’s $183 million acquisition of the long-suffering (and then suddenly desirable) startup OMGPOP may not have a fairy tale ending. The social gaming giant released ”preliminary financial results” this afternoon, ahead of its third-quarter earnings report and the downgraded forecast sent the stock price down 19 percent in after-hours trading.
The results say that Zynga expects a net loss between $90 million and $105 million for the third quarter. One reason for their lowered expectations? Zynga said it expects an $85 million and $95 million write-down on its purchase of New York City-based OMGPOP, the makers of Draw Something.
Zynga is trying its best to present its $180 million acquisition of OMGPOP, the New York City developers behind Draw Something, in a good light–despite dwindling usership. The Guardian obliges today by quoting a bunch of Zynga execs trying to explain how not having a sustained hit was actually part of their plan all along.
But even when given an opportunity to explain itself, Zynga reps sound, well, less than convincing.
Today, Zynga is hosting the press (and their dogs) at its San Francisco HQ for something called “Unleashed,” where the company will presumably be “unleashing” some new games. Let’s hope they’re a little more entertaining than that pun, because, as the New York Times points out, the company could use some help.
It’s not like Zynga’s woes are a secret: Shares are currently at $6.07, having debuted at $10 and spent time under $5. More people are gaming on mobile devices, and Facebook’s growth is slowing. The company shelled out $180 million for Draw Something, which is currently cratering. That just goes to show you how quickly games fall out of fashion, which makes planning awfully hard.
Also, just yesterday, EA launched the open beta of its social take on SimCity, which was previously announced with a trailer proclaiming “more city, less ville,” to the sounds of Best Coast’s “The Only Place.” Ouch, guys.
Be Like the Virus
Are the OMGPOP developers the luckiest team in tech? It certainly seems that way. Gaming behemoth Zynga snapped up the tiny game company back in March just as Draw Something’s daily active users hit its peak of around 15 million. Since then, users have steadily declined. Zynga has made big moves to attempt to Read More