Someone should have seen this coming. Someone should have said something. After forking over $200 million to buy OMGPOP for the singular purpose of getting control over Draw Something, Zynga is wondering why 5 million daily active users (around 1/3rd of the total) abandoned the game last month.
It’s a lesson in size and scope. People did see this coming. Zynga was told. They didn’t heed the warnings and saw something that they thought would have staying power. They thought of a clever advertising model that would have users drawing brands for a price to the brand. They had to do something because it doesn’t fit in with their standard “virtual goods” model that they sell on most games.
In short, it had all of the ingredients of a fad and they felt the massive popularity would spread virally, gaining more over time than it losts.
They were wrong.
It’s the type of mistake that does not bode well when you’re public, but all-too-often companies with a fresh burst of cash like Zynga make decisions based upon sustaining innovation levels rather than planning for the future or expanding on the existing. They feel that they need to be in the news to help stock prices. Someone at the companies sees new challengers as threats and they focus their attention (and in this case, a large sum of money) on it to turn a threat into an asset.
In reality, all they had to do was wait for the fad to end. It’s a $200 million lesson that they’re learning the hard way.