Zynga shuts down OMGPOP, estimates say company lost $528,000 per day

As part of Zynga mass layoffs totalling 18 percent of its workforce, the struggling San Francisco startup appears to have shut down OMGPOP, the New York company that originally created the smash hit Draw Something.

Zynga acquired OMGPOP just over a year ago for a cool $200 million. Late in 2012, Zynga took a write-down of $85 million to $95 million on the value of OMGPOP—nearly half of what Zynga paid for it earlier. (In other words, Zynga drastically overpaid for the smaller gaming company.)

On Monday afternoon, OMGPOP tweeted, “While this is the last day at @zynga for many @omgpop staff, we want to thank you for all love and awesomeness over the years!”

At least one OMGPOP vice president said she was alerted to the firing via Facebook late Monday. “I learned via Facebook I was laid off today and @OMGPOP office is closed,” Ali Nicolas tweeted. “Thanks @zynga for again reminding me how not to operate a business.”

In a filing with the Securities and Exchange Commission on Monday, Zynga revised its second-quarter 2013 earnings estimates to be a net loss “in the range of $39 million to $28.5 million.” The company added, “While our Farmville Franchise continues to perform well, other games are underperforming.”

A gaming consultant calculated that Zynga lost nearly $528,000 per day on OMGPOP—dividing its $200 million purchase price by the 379 days that Zynga owned it. “What can be said?” Brian Blau, an analyst with Gartner Research, told Ars. “A colossal waste of money on a company and people that were not a fit, and possibly because the acquisition [of its] games just didn’t perform.”

“Overall, the news from Zynga on their layoffs of more than 500 people is not good,” Blau said. “In fact, its news is very telling about the state of the company. Despite their success on the Facebook platform, they have yet to prove they have a sustainable game business outside of that ecosystem. While Zynga appears to have to resources to weather this storm at least in the short term, if it does not better engage players and convert them to paying players, they just won’t have a future in the game industry. But because of Zynga’s spotty long-term track record, I would expect them to have continued technology and business troubles through 2013 and beyond.”

Zynga declined to comment beyond its press release and blog post from yesterday.