OMGPOP’s resurgence draws interest from investors, acquirers abound

A couple months ago, OMGPOP CEO Dan Porter had his speaking proposal rejected by Game Developers Conference, the big industry conference this week in San Francisco.

This week, he’s practically swimming in term sheets and meeting requests from would-be suitors.

The company’s Pictionary-like game Draw Something has been an unbelievable home run, delivering 10 million daily active users in a matter of weeks to a company that never really took off as a social gaming company on Facebook. In another promising sign, Draw Something is also retaining 60 to 70 percent of its users after seven days. For perspective, Zynga last said it had 15 million daily active users on Android and iOS and that took the $53.3 million acquisition of Newtoy and well over a year to do.

Now Porter and the company won’t confirm any of this, but I am aware of exploratory talks with EA as a buyer and a term sheet for $25 million from Institutional Venture Partners.

“I just came out to GDC to go to some panels,” Porter said. “I would consider raising again, but the game has been so strong financially that we’re in a position where we don’t have to raise money.”

He’s clearly considering his options — as he should. Porter has had a quixotic and eccentric enough career not to care that much about what other people think. (The career highlight reel would include being the president of Teach for America for the four years after the non-profit’s inception and working for RCA around the time of the “Dirty Dancing” soundtrack.) Hopefully, his investors, which include Spark Capital, Baseline Ventures and Softbank, and who have put a collective $16.6 million into the company, will agree.

After years of running its own teen-centric site and a little over a year of being on Facebook, OMGPOP launched Draw Something about a month ago as a pair of paid and free apps. The game is a simple draw-and-guess game where players compete against each other to create pictures based on stimulus words. Unlike early competitors, it’s asynchronous. There are a couple other Pictionary-like titles like Charadium, but none have found the chart-topping success that Draw Something has with 17.5 million downloads so far.

However, it’s not totally fair to call the game an overnight success because this is the third time OMGPOP has done the title, after versions on Facebook and its own site.

“Every decision you see in the game is based on things we had learned,” he said. “We are super blessed but we’ve done iterations of this game since 2008. We learned how to manage real-time and semi real-time engagement with our first multiplayer online game site. That’s why game feels the way it does.”

Draw Something has a three-pronged monetization strategy. Players can either pay for the premium app or get the free version that’s ad-supported. Then there’s virtually currency, which can buy “bombs,” that let players skip difficult words, or additional color packs to allow for more detailed pictures. The company’s chief revenue officer Wilson Kriegel says half of revenues are coming from people who upgrade to the premium version and then the rest is split 50-50 between ads and virtual currency.

The game quickly went from 0 to 200 million advertising impressions per day, as of a few days ago. But those advertising dollars aren’t yet adding up in the way that the company hoped, reflecting weakness in the mobile advertising ecosystem given a glut of inventory and a lack of premium advertisers.

“eCPMS are disappointing,” Kriegel said. “Our partners aren’t used to dealing with explosive growth versus a more natural process. I feel like we could double our ad revenues and be making more than six figures a day from that if it were managed well.”

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