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Was Zynga's Deal To Buy OMGPOP That Disastrous?
1) should focus on bookings not revenue, revenue is non-cash. who cares when people actually consume the digital trinkets they purchase?
2) based on the midpoint of the guidance update, looks like zynga paid roughly less than 3x forward annual bookings for omgpop ($180mm / $62.5mm). that seems pretty cheap to me.
May 11 04:30 PM
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OpenTable: Ready For A Big Gain
As an OpenTable user, I don't think all of the commentors are giving the company a fare shake. In my view, there are three major use cases for OpenTable and its competitors:
1) The customer has a specific restaurant in mind and is only interested in dining there;
2) The customer has a specific restaurant in mind, but would accept alternative restaurants if the first one doesn't have availability;
3) The customer doesn't have a specific restaurant in mind, and is seeking available choices for a given place and time.
I agree that OpenTable is a pricey solution to restauranteurs with lots of customers who fall into bucket 1. The restaurant will book most of these customers anyway and does not need to pay per diner fees.
However, I believe a significant amount of business is being generated by cases two and three. One of my least favorite things about making a restaurant reservation is the process of calling several places to inquire about availability. OpenTable is a great alternative to this arduous process by facilitating the selection of a restaurant with an "open table." (Heh). So, restaurants who weren't the "first choice" of a diner may benefit from OpenTable participation if they are "discovered" by virtue of their competitor being full.
Finally, there's option 3, which could be called "the business traveler use case." I was recently on a business trip and finished a client meeting with my colleagues in the late afternoon. On our way back to our hotel, we wanted to find a restaurant reservation but didn't know the area well. A quick search on OpenTable found us a nearby restaurant with high reviews and availability. To that market and at that time we were highly valuable customers - a $150 check, looking for someone to take us. OpenTable, by virtue of its aggregator role, facilitated a restaurant earning our business (along with probably $50-$75 of gross profit) for a $3 seating fee.
Until its competitors have comparable scale, OpenTable isn't at risk of losing its leading position serving use cases 2) and 3). The value of the company isn't the bells and whistles of its software, it's the network of diners that follow it. That's why I don't think Eveve and/or other competitors that don't offer a consumer-facing end-to-end solution will not pose a long-term threat to the company.
Apr 2 05:39 PM
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