Glu Mobile's CEO spills on why HTML5 isn't the future

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with Niccolo De Masi , CEO of Glu Mobile

Niccolo De Masi 

Glu Mobile is one of the largest and oldest players in the mobile gaming space. The publicly traded mobile gaming company has a vast number of titles across multiple platforms and devices. At the helm of Glu is CEO Niccolo De Masi, the company's chief for the past nine quarters. De Masi was previously the CEO at Hands-On Mobile, and at Glu he has worked to strengthen the company's own IP and move into creating more original content. In May, Glu became the first company to offer in-app subscriptions through Google Play. FierceMobileContent Associate Editor Sandhya Raman spoke with De Masi about Glu's relationship with Google and how to succeed in mobile gaming.

FierceMobileContent: Glu Mobile was the first company to launch in-app subscriptions in mobile gaming through Google Play. How does the subscription model differ from how users are already interacting with and paying for content for a flat rate?

De Masi: Glu has been arguably Google's closest partner--in Android Marketplace and now in Google Play--for the last three plus years. We were the first partner that launched a game using in-app purchases in March of 2011, and we're the first partner launching subscriptions in May of 2012. Glu puts out about 20 games a year--we've said 23 publicly in 2012--and our games are all free to play.

However, the two things that we have brought out that are exciting are the ability to use the same currency across all Glu games. We brought out a Glu credit currency and we brought out subscription billing. Now you don't have to subscribe to Glu credits, you can buy them individually. However, we're offering additional compelling value: exclusive sweepstakes [and] exclusive incentives if you do become a VIP member. We've got two tiers right now: silver and gold.

We haven't changed our business model so far as in its all being free to play. Your options for purchasing Glu credits have now multiplied so you are able to get deeper and deeper value into it. We're very bullish on this long-term. We obviously think the model benefits the consumer and of course for Glu the corporate entity it will bring hopefully a higher degree of earnings quality and revenue predictability over time.

FierceMobileContent: Glu Mobile has typically sold games in the freemium space. Do you plan to expand into the paid apps market in the future or will you stick with the freemium model?

De Masi: I've been at Glu now nine quarters, and I was hired largely by our board to execute a plan to become the world's largest and most successful free-to-play mobile developer and publisher. We've been executing on that plan very well by staying operationally diversified yet sticking absolutely to the freemium focus, having seen freemium success in China, Japan and Korea over the past decade, and the fact that it's been so successful online and for companies like Zynga with Facebook. This led me to a pretty firm conviction that it would work as well or better on mobile in developed nations and developing nations.

We've started to localize our content as well, so you've seen games like Small Street launch in Chinese and English, and games like Little Kingdom launch in Chinese, Korean, Japanese, French, Spanish, Italian and German.

One of Glu's long-term advantages is being able to capture a much broader and deeper chunk of the mobile ecosystem globally. We have over 600 employees. We are very efficient at making our games work across handsets and across platforms. We're the only publisher of our size, generating high 20s to a low 30s percentage of our revenue from Android in the past 2-3 quarters.

FierceMobileContent: Is there a lot of difference between designing games for the tablet vs. the smartphone experience?

De Masi: We try to generate as much synergy as possible in a development cycle. If you start up at the very start of the development process, you have a very unified concept of core game play mechanics. As you go down the path of building that, you start to have to branch.

Our first branch is for Android and Apple. Then further along the development process you start to optimize a bit more based on the different processor specifications. Glu is probably the best in the world at getting that branching right. There isn't a big different between the game play controls for tablets and phones, as they are both the touchscreen and swipe. There's a bigger difference in the long term, potentially to laptops and living room TVs, because the control scheme has to be modified.

FierceMobileContent: Your primary mobile platforms are iOS and Android, and I know you offer titles for platforms like BlackBerry as well. Is Glu going to have a bigger push in the future for Windows Phone and other platforms?

De Masi: We had something like three of the first 10 games on Windows Phone 7 last year. We're bullish on Windows Phone 8. In the long term I find it hard to believe that the three largest technology companies in the world, Apple, Google and Microsoft, will not be very significant market share leaders in the smartphone and frankly the laptop, tablet, living room platform wars.

We also have interesting amounts of confidence around Amazon. We were very early on partners for Amazon. They've got the merchandizing they've got the billing, they've got the brand they've got the traffic. The Kindle Fire is doing very well as a single device with regards to how much revenue can be generated from a relative small install base and a relative high amount per user.

We're also very close partners with the OEMs, and we always have been. Whether or not that's a Samsung or Lenovo or HTC, we think there's room for those guys to be continually successful given that they make hardware for mobile devices.

FierceMobileContent: Other than casual, you main focus at Glu is working with action/adventure games. Is there a reason that Glu is drawn to that category or genre more so than the other ones out there?

De Masi: Believe it or not, we've had most of our success in 2011 from action/adventure, but in 2012 and beyond we're certainly bringing out a higher percentage of our titles in the casual sphere. I suspect that by this time next year we'll be a pretty balanced company in both of those demographics.

The reason initially in 2010 we focused there was that we had a gap in the market. Everyone was banging their head against the wall about copying Farmville to mobile devices. A) So we thought why not go where other people aren't and B) why not focus on innovating. We were the first company to marry an action/adventure game with 3D graphics with a freemium business model on a mobile device. That made games like Gun Brothers and Contact Killer pretty iconic. They've had 20-30 million installs. They're building up good brand value long term for Glu and for our audience. We want to hold on to that leadership but we are also able to tack on increasing success with games like StardomSmall Street and Little Kingdom on the casual side.

FierceMobileContent:  What in Glu's eyes determines whether a game is successful? Is there a certain benchmark that you have to reach?

De Masi: It's a pure revenue guide internally. We haven't disclosed that. Things that make it in the top 50 grossing are successful; maybe even things in the top 75 are probably successful at peak. For a company like us that can put out 23 new games in 2012, and also have a half a dozen games from 2011 we're still supporting and generating success from, that's the first tier of success you're looking for.

We don't green light anything that doesn't have the opportunity to be top 10 grossing game. Games like Deer Hunter, Gun Brothers [and] Blood and Glory, these all make it in the top 10 grossing for a considerable amount of time, sometimes top 2 grossing. But ultimately we're pleased with anything that breaks the top 50 grossing.

FierceMobileContent: How do you see HTML5 playing into the market vs. native apps?

De Masi: It's very early days for HTML5. If you think about the order of it maturing, it's first going to mature for periodicals, magazines, newspaper-type applications. The Financial Times already moved there and the NYT already moved there.

A year or two beyond that you'll start to see other simple apps like the Bloomberg financial apps, weather apps, that kind of stuff all makes sense for HTML5. Beyond that, another year or two down the line, you're going to have simple casual games that are going make sense to be programmed in HTML5.

Glu's approach is to play at the exact other side of the spectrum here. We build apps that require 100-200-300 megabyte downloadable clients. Things like 3D FPS.

For our style of games, you're five years away if not 10 years away from being able to deliver a comparable bandwidth and hardware experience using an app model vs. an HTML5 model. We choose to partner and build a style of games that take advantage of the latest hardware.

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