Glu CEO: It's easier to compete with established franchises in mobile
Glu Mobile (NASDAQ:GLUU) CEO Niccolo de Masi acknowledged that it's very difficult to create a franchise in the mobile gaming space on the scale of Rovio Entertainment's Angry Birds. However, he said the sheer volume of new mobile games coupled with the fickle tastes of mobile gamers makes it easier for new mobile gaming titles to compete with established brand names.
"The half-life of mobile games is the shortest of any entertainment medium," de Masi said during the Bank of America Merrill Lynch Global Technology Conference, pointing out that music and movies are enjoyed for years, and sometimes decades, while console games for the likes of the Xbox and PlayStation have a lifecycle of 1-2 years. However, de Masi said that in the mobile gaming space there are 30,000-40,000 different games released each year, which makes it much harder to create a lasting franchise like Angry Birds in mobile.
"There are very few games, other than maybe Angry Birds, that have built a sustainable franchise value," he said.
On the reverse: "It's a lot easier to compete with an established brand" in mobile, de Masi said, explaining that mobile users generally move from one mobile game to another relatively quickly, mainly due to the fact that most mobile games are free to play. De Masi said that mobile gamers' variable tastes create openings for new mobile gaming titles and companies.
Along those lines, de Masi said Glu, later this year, will release new games under its Deer Hunter and Frontline Commando franchises. He said the company hopes these games will generate significant revenues through new features including asynchronous player-versus-player capabilities.
"We're excited by that," de Masi said.
De Masi's comments are notable considering Glu several years ago focused a significant portion of its business on purchasing the rights to high-profile franchises and then making games based on those franchises. In recent years, however, the company has focused on creating its own intellectual property, and currently is pushing games the company itself created.
Glu's strategy flies against the strategy taken by some other mobile gaming companies. For example, mobile game maker Gameloft recently released games featuring Spider-Man and Iron Man, though Gameloft also makes its own titles.
In a wide ranging discussion about Glu's business, de Masi also said that close to half of Glu's revenues now come from tablets, which he said represents a growth area for a company that previously focused on mobile games for feature phones but today primarily focuses on mobile games for smartphones.
In the first quarter Glu reported revenue of $19.1 million, down slightly from the $21.5 million it earned in the year-ago quarter. Glue's net loss was $5.5 million in the quarter, a slight improvement from the $6.8 million loss in the year-ago quarter.
In its non-GAAP smartphone revenue reporting, Glu said that iOS games generated 63 percent of its revenues in the first quarter, while Android generated 28 percent. Further, the company said that in-app purchases accounted for 73 percent of revenues, non-incented ads accounted for 9 percent of revenues and offers and incented ads accounted for 7 percent of revenues (with the remaining revenues falling under the "premium" category).
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