Where boo.com failed, Zynga can succeed
$180,000,000 is a lot to pay for a company. Especially one which has only really been popular for 6 weeks.
OMGpop, a small network of largely flash based games released ‘Draw Something’, a game for iOS and Android where you draw a picture and your friend guesses it. It may sound extremely familiar, but its incredibly addictive. [1. Which you can download for iPhone here.]
As usually accompanies runway hits on the social web, the app achieved multi-million numbers of active users and downloads, and (reportedly) billions of drawings shared. After 6 weeks of this success, OMGpop were bought by Zynga, the current doyennes of the 'social gaming’ world, and publishers of FarmVille, Words with Friends. [2. As per Techcrunch]
When I first started working with the web, the dot-com bubble was in full deflate mode. [3. March 10, 2000, when the NASDAQ peaked at 5132.52 in intraday trading before closing at 5048.62 ] Acquisitions like OMGpop’s were unheard of. The story instead was of companies like Boo.com; painting themselves into a corner with insane valuations, ruinously expensive offices and no revenue. [4. A must read is Boo Hoo, an incredible chronicle of boo.com’s journey. Amazing book]
In the last 10+ years the landscape which both of these companies operates in has changed dramatically, but what are some of the key reasons why one succeeded, and the other failed?
Boo.com was attempted to innovate in an established market. Zynga has created an established market entirely from scratch. Why did the innovation fail and the creation ofnew market succeed?
- Simplicity of route to market.Boo.com had to build an international logisitics network. Zynga publishes a game directly to its customers pockets through the app store.
- We know what is shit. Boo.com needed to hire smart people with no experience of running a technology business (because almost no-one had). Zynga can hire from the pick of the people with the last 10 years experience.
- Quality of product. Boo.com required two things most people didn’t have: a fast modem and a fast computer. Zynga can rely on the fact that it’s customers have a powerful and highly connected device to consume their products.
- Price point. Boo.com sold luxury products with a premium price tag. Zynga sells games with an average price of around £1.69
