Report: Zynga refuses to sell OMGPOP assets to former team
Zynga (NASDAQ:ZNGA) has finalized plans to shut down OMGPOP.com, the gaming portal behind the hit Draw Something, which it acquired for $180 million in early 2012. But multiple sources told TechCrunch that Zynga has rejected offers from former OMGPOP staffers seeking to buy back the site, games and related intellectual properties.
Zynga laid off the OMGPOP team in June, and said Monday that on Sept. 30 it will shutter OMGPOP.com, which was reportedly generating a profit and attracting more than 30,000 monthly active users. While the social gaming company will continue to support Zynga-branded mobile versions of Draw Something and Draw Something 2, it will terminate at least four OMGPOP titles--including Cupcake Corner, Gem Rush, Pool World Champ and Snoops--on Aug. 29. Players of the affected games are being offered compensation packages headlined by Zynga titles like FarmVille 2, Hidden Shadows and Bubble Safari.
TechCrunch reports that multiple OMGPOP team members have contacted Zynga to buy back the site, agreeing to purchase whichever assets Zynga would agree to sell, even if the deal didn't include the lucrative Draw Something brand. Other employees offered to work on OMGPOP.com for free. But Zynga has rejected all overtures, maintaining that any OMGPOP sale poses more legal headaches than it's worth. Zynga declined requests for comment.
At the time Zynga went public in late 2011, it was the largest gaming publisher across the Facebook (NASDAQ:FB) platform thanks to hit titles like FarmVille and Mafia Wars. But the company has struggled to maintain its initial success while transitioning its efforts to the mobile platform, losing a string of high-profile executives including former OMGPOP CEO Dan Porter, who stepped down a year after the acquisition closed. Zynga CEO Mark Pincus stepped down last month, replaced by Don Mattrick, previously head of Microsoft's (NASDAQ:MSFT) Xbox business; Pincus continues to serve as Zynga's chairman and chief product officer.
Zynga recently reported second-quarter earnings that showed decreases in virtually all of the company's key metrics. Zynga's revenue clocked in at $231 million, down 31 percent year-over-year, and its monthly active users decreased from 306 million in the second quarter of 2012 to 187 million in the second quarter of 2013, down 39 percent year-over-year. In mobile, Zynga recorded 16 million mobile daily active users and 57 million mobile monthly active users.
In tandem with the dismal earnings report, Zynga said it will not pursue a license for real-money gaming in the United States, and will instead refocus on its existing free-to-play social gaming business. Speaking on Zynga's quarterly earnings call, Mattrick said the firm anticipates two to four quarters of "volatility'' as he evaluates its business and product line and formulates a new strategy.
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