"Halo 3 looses 5 Million Users 1 Month After Release" ... well of course it did, because most games get old pretty quickly.
To understand if Zynga overpaid, you'd need to know if they bought OMGPOP for a single hit title, or if they see them as a creative group with many hits to come, like Blizzard or Valve.
What you're failing to consider here is that every user Halo 3 had paid approx. $60 up front to become a user in the first place. The problem with these free-mium games is that the average revenue per user is so much lower.
Exactly. There's no loyalty. Users won't hang around unless they've put something in the pot. Zynga knows this though, since it's the whole premise behind their initial success.
Halo is an incredibly powerful brand in it's own right, with lore and characters that can be exploited in multiple markets. I don't think it's a fair comparison.
Replace "Halo 3" in that example with any title (fictitious or real), and the broader point still stands: even big titles mostly have quick burnout rates. The analogy wasn't so much about Halo 3, specifically, vis-a-vis Draw Something. It was about any hit game vis-a-vis Draw Something.
The console and PC gaming business has largely been a franchise business, largely because of single-title burnout. And, in fact, it makes little economic sense to keep gamers playing your same, single title for years on end (unless they're subscribing to it, a la World of Warcraft). Big studios typically desire burnout, so that they can sell you a new title or sequel for $50, or a piece of DLC for $5-10, or what have you. EA doesn't want to sell you one game that you'll play for 12 months straight; EA wants to sell you 12 games that you'll play for a month apiece.
The iOS/Android app market has been different, though, and I think it's important to dissect why. First, a title like Draw Something will remain on the "shelf" on App Stores indefinitely. Nobody's holding physical inventory on limited shelf space that they've got to clear at the end of the month. Second, console gaming burnout is often the product of fairly direct substitution in the marketplace -- i.e., I'm going to stop playing UberSoldiers 25 because a very similar title, L33tSoldiers 14, just came out and has better graphics and features.
In the iOS app market, we don't see such direct substitution effects[1]. Nobody's burning out on Draw Something because Paint Something just came out with hotter features. In this sense, burnout on Draw Something might actually mean something interesting. It can't be accounted for purely by basis of comparison to the console gaming market and its standard-issue burnout rates. This is where I think the Halo analogy (really, the standard-issue gaming business analogy) doesn't quite hold up.
[1]Unless, of course, we do. A strong argument could be made that any casual iOS app titles are substitutes. So Draw Something competes with Angry Birds, the same way that Modern Warfare competes with Battlefield -- even though Angry Birds and Draw Something have fewer superficial similarities.
To understand if Zynga overpaid, you'd need to know if they bought OMGPOP for a single hit title, or if they see them as a creative group with many hits to come, like Blizzard or Valve.