Puzzle game

Why the hell did the New York Times buy the Wordle free puzzle game?

There was no marching band and by early November 2021 less than 100 people were playing daily. But Wardle noticed that some were posting their efforts on Twitter.

To facilitate this process, Wardle and Shah created a share feature with an intriguing and elegant score summary, and the growth of the hockey stick began.

Too beautiful to resist

Wordle doesn’t reveal the usage, but a developer named Robert Lesser used Twitter posts as a proxy. Wordle-related Tweets grew exponentially in December 2021, from a few per day to tens of thousands, thanks to the sharing feature. Growth continued to accelerate in January 2022, with celebrities like Succession’s J. Smith-Cameron posting their gambling tips.

At the end of January, Wordle was attracting 300,000 players per day. Despite the complete lack of advertising or other revenue, and even no app, The New York Times Company found this audience too good to resist.

The group, whose main assets are its namesake US and international mastheads, has agreed to buy Wordle for a cash amount “in the seven figures”.

To put that multimillion-dollar payout into perspective, in 2021 the NYT-listed company generated $2.1 billion in revenue with a profit of $300 million. It has a market capitalization approaching $8 billion and 150 million readers worldwide.

But despite its inconsequential size, the New York Times Wordle transaction provides a window into the incredible transformation of the newspaper economy in 20 years.

Perfect storm

For most of their modern history, newspapers have relied on advertising revenue and particularly classified ads. The sale price, including subscriptions, was much less.

This began to change with the growth of the Internet in the late 1990s, and niche websites eventually suppressed demand for newspaper classifieds, while Google and social media eroded advertising dollars. display. At the same time, free and easy access to information online has led to a drop in newspaper subscriptions.

This perfect storm meant that by 2012 newspaper advertising revenues were back to 1950s levels and the industry faced an existential threat. The NYT suffered with the rest, and 12-month revenue fell 42% in the 3 years from June 2010.

Desperate for revenue, newspapers placed content behind a paywall, with the NYT being an early mover in 2011.

With all the attention focused on Big Tech’s negative impact on sustainable independent journalism, it has largely gone unnoticed that the paywall strategy has worked. Today, major mastheads derive most of their revenue from subscriptions, and a study by the Pew Institute concluded in 2020 that US newspaper subscription revenues had returned to 2006 levels for the first time.

Cross-sell opportunity

However, advertising continues to fall and represents only 45% of revenues, compared to 80% in 2006.

The NYT has benefited from this shift with group revenue exceeding $2 billion for the first time in a decade and subscriptions now accounting for two-thirds of revenue. Over the past three years, the total number of subscriptions has grown from 4 million to 10 million, with a target of 15 million by 2027.

This explains why Wordle was such an attractive acquisition. Many commentators speculated on whether the game would remain free-to-play. But for the NYT, a much more logical approach is to focus on the cross-sell opportunity.

At a purchase price of $3 million, Wordle’s cost could be recouped in a year if less than 10% of daily gamers add an NYT subscription. Wordle gamers who don’t want a full membership might still be attracted to the NYT’s Games package for US$40 per year.

Anything near that cross-sell rate makes the deal a bargain for The Times. The small outlay has brought the property a social phenomenon and introduced another great global community to its product universe.

There is a key risk. In the month following the acquisition, Wordle’s Twitter mentions dropped 40%. Indeed, the deal seems to have taken place at the zenith of these tweets.

A round of tougher words likely curtailed some Twitter bragging, but participation in online puns may not maintain its pandemic momentum.

The NYT will almost certainly derive more value from Wordle than it paid for the investment. But it’s less certain whether the game can have a long-term future alongside the beloved Crossword, or become a forgotten relic of the pandemic era.