A little more than a year ago, they were kings of the castle in the world of online gaming applications. Their small studio hit headlines when it was sold for £113million after its most successful game, Draw Something, was downloaded more than 35 million times in only seven weeks.
Today, however, developers at OMGPOP find themselves out of work after a shocking financial slide at Zynga, which bought the US company in March last year. Zynga, the developer of FarmVille and Mafia Wars, was forced to announce large-scale cuts.
Ali Nicolas, a former vice-president of the OMGPOP studio, posted on Twitter she had only learned via Facebook that she was out of work and her office, which became Zynga’s New York HQ after the buyout, was to be closed down. She wrote: “Thanks Zynga for again reminding me how not to operate a business.”
Both companies’ falls from grace are cautionary tales. Martin Bryant, managing editor of technology website The Next Web, said: “Zynga overpaid and that is self-evident in the short lifespan of Draw Something. It is difficult for these companies as social gaming is all about fads and the next hit, and you are only as good as your last hit. It shows how volatile the industry is.”
Mr Bryant said the only game app to buck the trend was Angry Birds, created by the Finnish developer Rovio Entertainment. He added: “That has gone from strength to strength. They have turned it into a huge industry with licensing deals.”
He said he believed Zynga’s strategy in buying OMGPOP was to capitalise on the large audiences for its Draw Something game but could not come up with another hit. Mr Bryant added, it would be “held up as an example of over-confidence in the potential of the social gaming market”. In a statement announcing the cuts, Zynga said its Facebook-based game FarmVille “continues to perform well” but admitted other games were underperforming.
The closure of OMGPOP was among the cuts, which saw 520 Zynga staff – 18 per cent of the workforce – lose their jobs. Zynga said it hoped the job losses and office closures would save it £52m. Even then, the San Francisco-based firm told investors it expected to make a net loss of up to £25m in the second quarter of 2013. About 250 million people play Zynga’s games a month.