Youngspeak

A Former Videgame Developer's view on Tech + Media + Fine Arts

OMGPOP Cashed Its Lottery Ticket Too Soon??

On March 21, social/mobile gaming developer OMGPOP was sold to Zynga for $210 million. $180 million upfront and $30 million in employee retention. The acquisition by Zynga is portrayed in the media as largely tied to the home run success of OMGPOP’s Draw Something, a game where you draw stuff and have your friend try to guess what you drew. Its not a new concept, but who cares about that when it is doing $250,000 a day with a user base of 1 million users in just 9 days?

Now $210 million is quite pile of cash and Dan Porter and his (42 – 1 ) employees must be feeling really warm and fuzzy inside right about now, but could they have gotten more? Many in the media seems to think so.

One way to start look at this is: Draw Something makes around $250,000 a day in revenues or $91 million annualized

This means that Zynga paid about 2x revenues for not only Draw Something, but for the entire OMGPOP business, including its website and suite of other flash-based games. To put it in perspective, Zynga’s IPO price implies 9x revenue. Admittedly, Zynga’s valuation probably reflects that fact that it is in a later stage than OMGPOP, but a 7x gap is still significant. For instance, Facebook in it nascent, cash burning stage was trading lowest at around 7x.

Or one could look at it from the perspective of OMGPOP’s user base:

1 million users in 9 days

12+ million active daily users in 6 weeks

31 million MAU as of March 31th

This means Zynga is paying around $6.77 for each of OMGPOP’s monthly user – assuming OMGPOP does not spent an additional $$ on customer acqusition and just maintain its current user base that is.

A survey of recent acquisitions helps puts this figure in perspective:

Playfish – EA: $300 million | 50 million MAU – > $6 per MAU

Playdom – Playfish: $563.2 million | 42.5 million MAU – $13.25 per MAU

Popcap – EA: $750 million | 17.5 million MAU – $42.8 per MAU

Zynga cost per MAU: Sales and Mkting. / Chg. in MAU ’10 – ’11 -> $234 million / (233 – 216) million MAU – $14.60 (from 2011 10-k)

From these two data points – 2x revenue and $6.77 per MAU, or half of Zynga’s own escalating MAU of $14.60, OMGPOP definitely seemed like a sweet sweet deal. For Mark Pincus that is.

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Job Search Chinese Style!

Merry Christmas and holidays from yours truly! After taking in a truly sumptuous meal cooked by chef Mom, I am presently and pleasantly recovering in front of the TV watching a reality television series called – 非你莫属 (translated as “Only You”)

But don’t let the English translation deceive you, 非你莫属 is not a dating show but rather a similar one on job search (which admittedly is like dating). It is also one of the most popular shows in China, along with its sister show 非诚勿扰 (actual dating show)

The concept of the show is simple – bring job searchers from all walks of life and put them on a stage in front of a panel of 8 prominent Chinese CEOs, allow them to present their qualification, answer interview questions, and get a job.

There are three rounds for each contestant – 1) An initial career walk-through by the contestant and first round questions by the CEOs, 2) additional questions by CEOs and 3) job offer and salary negotiations. The CEOs are all seated on individually lit tiles, and at the end of the each round have the option of staying for the next round, or reject the contestant by pressing a button to turn off the light on their tile.

Survive 3 rounds on a game show and get a job in this economy? Seem pretty straight forward. Except the CEOs questions are often biting, invasive and often downright obnoxious towards unprepared contestants or ones with ambiguous work experiences. One contest was accused of lying on his resume because some of the sales figures don’t seem to match up with other metrics he described, and another contestant, an aspiring accountant (yes you heard me right) had to explain why he did not make it into one of the top four accounting firms (KPMG, PWC, EY and Deloitte) after college.

In other words, enough vitriol and negative energy to send all but the most resolute job seeker scrambling for the hills. But have no fear, the show is hosted by veteran CCTV presenter 张绍刚, who lightens the mood with his trademark one-liners and commentaries, deflects unreasonable questions/comments from the CEOs and generally moves the show along.

As of June 2011, 非你莫属 has a 1.14% viewership during its time slot and a 3% market share. This compares with 非诚勿扰, which has a 3.42% viewership and 10% market share. For April to June 2011,  非你莫属 grew 21% in viewership and 17% in market share. During the same period, 非诚勿扰 declined in both metrics.

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Stop Online Piracy Act

Hey guys thanks for tuning in – hope holiday preparations are proceeding smoothly!

The Situation

So by now I think everybody probably heard at least a little bit about SOPA, or the Stop Online Pirate Act, a bill introduced by House Representative Lamar Smith (R- TX), a former ranch manager whose congressional district spans the farmlands between San Antonio and Austin accoding to CNET writer Declan McCullagh.

But that’s okay! This is modern day America and politicians are not expected to know everything about the legislation they are passing. Essentially the key provisions within Stop Online Piracy does is make a whole lot easier for copyright holders like NBC or Disney to sue websites like Youtube or Google, and gives the U.S. government the right to create and enforce a blacklist of online sites

The bill has rapidly polarized the EMT sectors, all traditionally left-leaning and strong supporters of democrats. Content producers like NBC, Time Warner, as well as firms with large brand equities like NBA, Nike, Pfizer and L’Oreal are proponents. They are joined by institutions across  the political spectrum, namely the U.S. Chamber of Commerce, MPAA, RIAA and the AFL-CIO

Opponents are predictably internet firms whose revenues are dependent upon ad spend and content circulation – google, facebook, yahoo, ebay. They are joined by the American Heritage Foundation, a traditionally right-leaning institution, as well as the Center for Democracy and Technology, which keeps a list of companies and individuals with concerns for SOPA

Proponents of the bill argues that it will create jobs by drastically reducing enforcement costs to copyright holders, and points to diversity of industry proponents as an indication of the widespread problem of intellectual property rights infringement.

Opponents argue that the bill will drastically alter the operation of the internet, leading to reductions in GDP (3.4% comes from internet/e-commerce), and a catastrophic effect in terms of investments into the sector. On November 16 Booz & Company released a survey of 200 venture capitalist indicating most will stop investing in internet/digital media if the SOPA bill becomes law.

In addition, grass roots opposition to the bill has been both vocal and numerous. Today GoDaddy, a domain provider, was forced by public pressure to pull its support of SOPA.

Currently more than 31 House Representatives are currently in support of the bill, while prominent House detractors include Nancy Pelosi, Darrell Issa and Ron Paul.

Now What

The house judiciary committee held a hearing for the initial SOPA bill in November 16, after which it was submitted for mark up. The committee  will resume debate on the bill when the House comes back from winter recess, so stay tuned!

In the mean time, here is a chart from Maplight that might very well do a better job of explaining why a ranch manager from Texas would be interested in protecting consumers from online piracy…

Courtesy of maplight.org

And here is another chart from an article in Politico

Courtesy of Politico

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Hello!

Hi there! Thanks for taking time to visit Youngspeak, an opinion blog on all things that intersects technology, media and occasionally – fine art.

Now a little bit about myself – I am currently a second year business school student studying at NYU Stern, majoring in entertainment, media and technology. Prior to school, I was a game developer on product teams that developed and launched console franchises such as Bioshock and Homefront. In summary, it was really a lot of fun.

However, after a few year, I wanted to broaden my perspective, learn a bit about how the business side works and see what other opportunities are out there. Thus, in 2010 I made the decision to enroll at NYU Stern, a program known for the strength of its Entertainment, Media and Technology (EMT) program.

Now in my second year, I can honestly say Stern has delivered beyond my highest expectations. Not only am I getting new nuggets of wisdom from my professors and classmates on a daily basis, but the strength of the Stern program has opened doors to a variety of opportunities in the EMT chain. For instance, this summer I interned at an investment bank, where I helped to advise on and structure transactions for fortune 100 tech companies, and got to see the critical role that banking plays in the EMT sector. Further, this fall, I am interning at a tech start-up, as well as a investment fund that provide specialty financing for lower-to-middle market players in the entertainment and media sectors.

In short, a tremendously robust experience that is fully worth the admittedly rich price of tuition!!

Wow I got carried away there! Didn’t mean to give the life story, but thanks for staying with me…

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