Games are fun. But they can be socially relevant too. Please share this. At Draw Something, by OMGPOP & Zynga, we just added the word HOODIE.

– OMGPOP CEO Dan Porter, via Twitter

I’m sorry for what I said on Twitter last night. No excuses.

– Former OMGPOP CEO Dan Porter, apologizing after describing Shay Pierce, a former OMGPOP employee who declined to work for Zynga, as “the weakest one on the whole team.” Among Porter’s many critics was Twitter CEO Dick Costolo: “Wow, what a nitwit comment that was.”

Yesterday, it acquired OMGPOP, the developer that suddenly unseated the social game giant after its overnight success with Draw Something.

Draw Something, which challenges players to guess what another person is drawing, much like Pictionary, has been downloaded more than 35 million times in the past six weeks.

In the words of OMGPOP’s CEO Dan Porter, that’s pretty “Drawsome!”

But in making the acquisition, Zynga may have inadvertently set the expectation that if it doesn’t create the No. 1 game on Facebook — it will acquire it.

In this case, that wasn’t a cheap thing to do.

Zynga declined to say how much it spent on OMGPOP, but our sources say it paid $210 million, including $30 million in employee-retention payments. 

The message Zynga is sending with this acquisition is that it is committed to having the most popular games — a difficult and expensive proposition, especially if acquisitions are always the answer.

Just ask Porter how difficult it is. It took him 34 attempts and six years to build a hit.

“You are always trying to figure out what everyone wants,” he said in an interview. “But a hit is a hit for reasons that are hard to understand. I’ve told investors before — if I could, I would only make those games, and not the other games.”

Porter likened it to the music business, where he started his career. While busy signing every hot band he could find, the unexpected runaway hit was the “Dirty Dancing” soundtrack.

Still, the stock market rewarded Zynga’s decision yesterday, sending the company’s stock up about 5.3 percent, to $14.45 a share, after getting confirmation of the acquisition at noon. However, by the end of the day, enthusiasm waned, and shares closed at $13.72 a share.

Since going public in December, it’s been a rocky ride for Zynga.

After raising $1 billion to make it the largest Internet IPO since Google, it has traded as low as $7.97 and as high as $15.91. Based on yesterday’s closing price, the stock is now up 37 percent.

Acquisitions are hardly a new strategy for the company.

Last year, it set a pace of buying more than one company every month, seeking both employees and new games to maintain its rapid growth rate.

In this case, OMGPOP’s 40 New York employees will join forces with Zynga’s existing New York office, and Porter will become the new VP and GM.

What really stands out about this acquisition is the price — at $210 million, it’s the most expensive company Zynga has purchased. Prior to this acquisition, Zynga’s largest buy was the $53 million purchase of Newtoy, the developer behind Words With Friends.

That’s not to say that Zynga hasn’t attempted other big purchases. In 2011, it courted Rovio, the maker of Angry Birds, and unsuccessfully bid for PopCap, which instead sold to Electronic Arts for $750 million.

Although Draw Something has been proven to be astonishingly popular in the short term, it doesn’t have the same kind of track record as Rovio or PopCap.

The mobile game sits atop the iTunes “top paid,” “top free” and “top-grossing app” lists, an unusual accomplishment. On iTunes, it beats every single Zynga title — including Zynga Poker, which is frequently one of the highest-grossing apps.

As mentioned at the top of this post, Draw Something is also the most popular game on Facebook. However, what’s interesting is that the game isn’t available on the social network. Instead, it uses Facebook credentials as a way for players to register on their mobile phones.

From what we’ve heard, it has also been generating a lot of cash, based in large part on in-app purchases made by players. People familiar with the company told my colleague Peter Kafka that it has recently been netting around $250,000 a day from the game — after Apple takes its 30 percent cut.

In an interview, Zynga’s Chief Mobile Officer David Ko said OMGPOP’s acquisition represents more than a hit game for the company.

“It was about the team and how well we connected,” he said. “We found a great leader in Dan, and an amazing team around him. I couldn’t be happier in partnering with the team.”

Indeed, that’s Drawsome.

Until this month, when it released Draw Something.

The game is essentially a mobile version of Pictionary and, for whatever reason, it’s a huge hit. Maybe it touches on some of the same things that Words With Friends mines, except it doesn’t require spelling.

In any case, it’s currently atop both the free and paid charts at the iTunes App store. And because it’s the kind of game that gets better as more people play it, it’s probably going to stay there for a while.

CEO Dan Porter says Draw Something, which didn’t exist a month ago, is now averaging two million active users a day. So how does a start-up ride that kind of rocket growth? Bigger question: Now what?

I asked Porter to jot down some thoughts about what he’s learned over the last few weeks, and what he thinks happens next. This is an edited version of his email replies:

All Hands On Deck
Two weeks ago there were five people working on the game. Now there are 40 people. We redeployed resources from a ton of other projects, and with the growth even those people are maxed out. If we were a 10-person company now instead of a 40-person company we would be dead. It causes disruptions when people are quickly moved from one thing to another, but everyone likes being associated with a winner.

Self-Reliance
We started out heavily reliant on Facebook and Amazon S3. We started making too many calls to S3, and almost took down one of their data centers. They throttled us and it took us a while to figure out what was going on; for a while our numbers cratered as users could not connect.

We had to move completely off of Amazon and host everything ourselves. As soon as we did that, our growth exploded again. Going from the 25th to the 1st most popular app was as much about performance as anything.

We also use Facebook to log people in. When Facebook is slow our app is slow, except that users don’t blame Facebook. They blame us.

A Tale of Two App Stores
The hardest thing about navigating the iTunes App Store is that there is a process for submission and approval. I understand why — it’s how Apple keeps things nice. But when you find a problem in the game, you fix it in a day or two but then have to wait a week to get approved. It is stressful. And very different than operating on the Web, where you can push live multiple times a day.

Android accounts for about 15 percent of our installs. The pro is we can push changes to the game live immediately. The challenge is that with their algorithm and so many different app stores, we are low in the charts. It’s hard to believe the game could be blowing up as big as it is and be somewhat invisible on Android, but that’s how it is.

Meanwhile, no single Android device makes up more than 3 percent of the downloads. In other words, we are on more than 50 devices, and not one of them is larger than 3 percent. That is really difficult to support.

Hot Ticket
With the success of the app, investors, celebrities and brands have all come out of the woodwork looking to get involved. The first inclination is to say yes to everyone, especially when you haven’t had that type of attention. But you have to protect the brand and make very strategic choices.

Attack of the Clones
You always feel like as soon as you are successful other folks are going to come after you. Cloning is inherent in the games business. So you need to think long and hard about how to maintain your advantage against well-funded, well-run companies.

Draw Something is about building the network for the game. When all your friends are in the game, as Zynga has proved with Words With Friends, then the network is the value of the game. Now we have more than two million players using the game daily. That’s a powerful network. Great offense, and great defense too.

Thanks, Norway! You Too, Instagram.
We’re huge in Sweden and Norway. We’ve been #1 there from day one and I have no idea why. And the activity on Instagram, as people share their drawings, has been tremendous. Spreading the game on Instagram would never have been on my radar in a million years.

The New York-based company is still closing the round, but I’m told existing investors Bessemer Venture Partners and Spark Capital will re-up, and that Softbank Capital NY will also come aboard. There’s at least one other significant investor likely to join, but I don’t have their name (feel free to tell me, though–I keep all correspondence anonymous: peter@allthingsd.com).

OMGPOP has raised $6.5 million during its four-year history, which saw it start out as a sorta-dating site. But for the past few years it has focused squarely on free-to-play casual games, and has recently been trying to generate revenue via a freemium model, as well as some forays into advertising.

And like many casual games start-ups, it is getting a big boost by integrating its games into Facebook. It integrated with the social network this summer, and CEO Dan Porter says that move has doubled the company’s user base from three million to six million. Porter declined to talk about funding news.

Interest in casual games has sparked a flurry of deals in the past year, including Electronic Arts’ purchase of Playfish, Disney’s purchase of Tapulous and DeNA’s purchase of Ngmoco. But the big player remains Zynga, which is both tightly integrated with Facebook and often described as an obvious IPO candidate.

Alas, the Foursquare conference, hosted by the Quadrangle PE fund, is an invitation-only affair. And the event, which kicks off tomorrow, is closed to the press except for reporters onstage to interview the stars. And those conversations don’t get released to the public.

That’s a particular bummer this time. Because the Quadrangle guys–who have had a rough year–had the foresight to get a lineup that includes GE (GE) CEO Jeff Immelt, who appears to be in the final stages of selling NBC Universal to Comcast (CMCSA) CEO Brian Roberts, who will also be onstage. Sure would be nice to hear what they say.

Another panel that piques my interest, if only because of the title: “Are Popularity and Profitability Correlated?” It features Twitter’s Stone, LinkedIn founder Reid Hoffman and YouTube co-founder Chad Hurley. And would-be moguls are represented by a start-up pitch panel that includes Dennis Crowley of Foursquare, the superbuzzy mobile service whose name has nothing to do with Quadrangle’s conference.

So once again, here’s the complete list of those you won’t be hearing from this week as they gather at the Plaza in Manhattan. Unless, perhaps, one of my more ambitious colleagues sneaks in–I’m thinking of you, Bobby MacMillan–and gets us a first-hand account.

2009 SPEAKERS
EMILIO AZCÁRRAGA President, Board of Directors and CEO, Grupo Televisa
DENNIS CROWLEY Co-Founder, foursquare
BARRY DILLER Chairman and CEO, IAC; Chairman, Expedia, Inc. and Ticketmaster Entertainment, Inc.
BRIAN DUNN CEO, Best Buy
CHARLES FORMAN Founder, OMGPOP
REED HASTINGS Founder, Chairman and CEO, Netflix
REID HOFFMAN Executive Chairman and Founder, LinkedIn Corporation
CHAD HURLEY CEO and Co-Founder, YouTube
JEFF IMMELT Chairman and CEO, GE
PAUL JACOBS Chairman and CEO, Qualcomm Incorporated
OLLI-PEKKA KALLASVUO President and CEO, Nokia
JASON KILAR CEO, Hulu
LESLIE MOONVES President and CEO, CBS Corporation
ANNE MULCAHY Chairman, Xerox Corporation
JAMES MURDOCH Chairman and Chief Executive, Europe & Asia, News Corporation
BRIAN PHILLIPS CEO and Co-Founder, Thread
DAN PORTER CEO, OMGPOP
BRIAN ROBERTS Chairman and CEO, Comcast Corporation
PAUL SAGAN President and CEO, Akamai
ERIC SCHMIDT Chairman and CEO, Google
IVAN SEIDENBERG Chairman and CEO, Verizon Communications
BIZ STONE Co-Founder, Twitter
HOWARD STRINGER Chairman, CEO and President, Sony Corporation
BEN VERWAAYEN CEO, Alcatel-Lucent
DAVID ZASLAV President and CEO, Discovery Communications

MODERATORS
MARC ANDREESSEN General Partner, Andreessen Horowitz
KEN AULETTA Author and Writer, “Annals of Communications”, The New Yorker
MARIA BARTIROMO Anchor, Closing Bell; Host & Managing Editor, Wall Street Journal Report, CNBC
JAMES CITRIN Co-Leader, Board & CEO Practice, North America, Spencer Stuart
DAVID FABER Anchor, Reporter, CNBC
MICHAEL HUBER Co-President and Managing Principal, Quadrangle Group
BECKY QUICK Co-Anchor, Squawk Box, CNBC
GEOFFREY SANDS Director & Leader, Global Media, Entertainment & Information Practice, McKinsey & Co.
JOSHUA L. STEINER Co-President and Managing Principal, Quadrangle Group
GEORGE STEPHANOPOULOS Anchor, This Week; Chief Washington Correspondent, ABC News

Turns out the majority of those new Twitterers won’t be back in May.

So says Nielsen Online, which estimates that 60 percent of Twitter’s users leave after a month. That makes sense on a gut level to me: Twitter is easy to use, but it often takes a while to make sense, and if you’re not a professional self-promoter–or someone with a lot of friends who are already on Twitter–it may never make sense.

It’s worth noting here that Nielsen is likely overstating the churn because it is only measuring visits to the Twitter.com URL. The majority of Twitter use happens away from the site, on mobile phones and apps like Tweetdeck, and it’s theoretically possible to be an avid Twitterer but never visit Twitter.com after you sign up. I’ve asked the Twitter folks for their take on the stats and will update if they respond.

But let’s assume, for argument’s sake, that the Nielsen stats are correct, or close to being correct. Is that a problem? Obviously, every Web service attracts new users who never come back after they try it out, so churn in itself isn’t a problem. The question is the rate.

The good news is that Twitter’s 40 percent retention rate is higher than it used to be. Prior to the Oprah madness of this month, Twitter’s rate was closer to 30 percent, Nielsen says.

But the measurement company argues, via a fancy chart and equation, that 40 percent retention makes it mathematically impossible for Twitter to achieve significant penetration with Internet users. The simple version is that if Twitter loses three out of five users a month, its growth will be capped at about 10 percent of the audience. Fancy version below (click chart to enlarge):

And here’s how Twitter’s retention rate compares to that of Facebook and MySpace (again, note that Facebook users and MySpace users more or less have to visit the those sites to use them, so the numbers are likely slightly skewed):

So what if Twitter really is a service that appeals to no more than 10 percent of the Internet audience? Is that such bad thing? Not at all. That’s an awfully big number.

And “retention” may end up being the wrong metric to measure a service like Twitter, anyway. See this perceptive post by Andrew Chen (thanks to OMGPOP’s Dan Porter for the link).

But a lot of the Twitter sales pitch–to investors and would-be partners like Google (GOOG) and Microsoft (MSFT)–is contingent on the service’s eventual ubiquity. The appeal of Twitter’s real-time search capabilities, for instance, is less seductive if you’re only searching what a sliver of Internet users are Tweeting about. And knowing that growth is capped could make that impressive hockey stick chart a little less so.

[Image credit: Weegee via the International Center of Photography]

Today’s example: OMGPOP, the casual gaming site formerly known as iminlikewithyou, which has raised a $5 million round led by Bessemer Venture Partners. Previous investors Spark Capital and Ron Conway’s Baseline Ventures re-upped, but not Netscape/Ning/“Project A” investor Marc Andreessen, who took a flier on the company last summer.

The site has raised a little more than $6.5 million to date. A conservative valuation would still make the company worth north of $10 million.

Why is it worth anything? The company, which began life in 2006 as a dating site, has a dedicated user base that logs some three hours a month on the site. But it’s still pre-revenue, as they say.

CEO Dan Porter, who took over for highly visible founder Charles Forman earlier this year (Forman is still at the company, cranking out games), says that will change this spring. He will be selling “premium” accounts/subscriptions, most likely for $5 a month, along with virtual goods (think collectible items, power-ups, etc.).

It’s possible that the site will roll out some kind of advertising at some point–Porter says he’s been testing some ad units with Google (GOOG)–but those would be ancillary dollars (or dimes).

Can that work? Maybe. Casual games–free or low-cost Web games that take little time commitment–appear to be doing well so far in the recession, even as traditional videogame sales falter. And a lot of people are hopeful that the  market for virtual goods–big in Asia, but limited in the U.S. to a handful of games and a few oddities like Facebook’s “gift” items–will finally take off.

Not interested in thinking this one through? Fair enough. Try playing the site’s “Balloono” game, a knockoff of the Nintendo classic Bomberman. I’m waaaaaay older than the site’s core 15-25 demo, but I’ve spent an embarrassing amount of time on this one.