

Did Draw Something by Omgpop really cost $140,000? - andgarzon
http://pricetaghq.com/blog/correct-price-draw-something-140000

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johnla
I like these series of product breakdowns that you do! It's sort of like the
teardowns that some sites do to show the total cost of the product like when a
new iPhone comes out and they see that it has like $200 worth of parts or
something.

Really interesting. I do feel there are a lot more intangible costs that are
not taken into account. It is more like the cost to recreate an existing
product. Building a product is like looking for gold in the woods. It will
require a lot of blind walking until finding the gold. And then others can
just take shortcuts to follow. The original cost is much higher.

So I guess the question is that since Zynga could've recreated Draw Something
for about $140,000, should they have just done that instead of buying OMGPOP.
:-)

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AVTizzle
Hey Andres - really dug the graphic. As far as the value of Draw Something, I
think it's important to note the difference between cost of production and the
value of the app.

Namely, cost of production /= value.

Social graph, brand, talent, assets, parternships. There's a huge list of
intangibles, the details of which the public isn't necessarily privy to, that
Zynga acquired along with OMGPOP. To simplify it down to just cost of
production is an easy way to make any acquisition seem foolish (ie Instagram),
but isn't fair justice to the deal.

There's more at play than code and design.

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jpatiaga
It is possible that they overpaid based on the success of Draw Something, but
they could release another star app with the Omgpop team, or even improve
their existing apps! I guess we'll find out later...

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johnla
They definitely did NOT overpay. Zynga bought them for $200 MILLION US
Dollars.

The cost of building that game are also the lessons they learned along the
way. Also, for a team of developers, server administrators, project managers,
I'd imagine their salaries for their services alone not including office space
, computers and services would've cost way more than that.

I think this is a great article. OMGPOP didn't have the advantage of hindsight
in building their product. I really doubt they knew what they were doing.
Their advantage was being agile and adjusting their game and business model to
how the crowd was playing the game.

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andrefy01
Interesting, other deal that seems to be overpay, furthermore with that much
downloads I am wonder that is the key to make a product of $140.000 be sold at
$180 millions

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johnla
The amount Zynga bought them for is not so much for the game, but for their
users and also to eliminate a competitor. It is possible that OMGPOP could've
grown and become the eventual company that would overtake Zynga. It's good
defense by Zynga!

