Glu Mobile has proved a something of bellwether for the mobile industry during 2010, as the publicly-owned company has tried to transition from its carrier deck featurephone business into a smartphone freemium business.
It's still got a long way to go, but following on from its
first successes with the release of freemium games
ToyShop Adventures and
Gun Bros. - both of which have been downloaded over one million times - it seems to be headed in the right direction.
We caught up with CEO Niccolo De Masi to get his take on the situation.
Pocket Gamer: You must be happy with the one million downloads of Gun Bros.?Niccolo De Masi: The fact we've had one million downloads is good, but what's better is that
Gun Bros. is in the top 25 Top Grossing chart so it's monetising very well.
There have been questions over whether Glu's strategy was correct, whether we could make original IP that was valuable, or whether what Glu has done historically would be relevant in the future
I'm delighted to say that we have vindicated the strategy and shown that Glu can come up with the chops in terms of our own IP for freemium games.
Gun Bros. is our best selling iPhone game, and that's pretty exciting.
It's not a typical freemium FarmVille-style game either, which is significant.We're trying to make freemium and social games that are great games first. We're not trying to make grinding, farming, monetising experiences. I don't think that will be the direction the industry will be going the longrun.
I'm feeling fairly confident that what Glu is doing in terms of freemium has caught up to where the industry is now and is also pushing ahead in terms of where the industry needs to be in future.
You're planning a diverse range of titles. Do you think this will have a negative impact in terms of the potential for cross promoting them?You're right that you can't cross promote the
ToyShop Adventures' audience with the
Gun Bros.' audience easily but we're big enough to able to sustain both demographics, and we'll be crossing selling very well between the more casual and the hardcore.
We recognised early on that in order to be $100 million smartphone business, you have to be able to tackle both sides of the business.
In particular, it's exciting that we can show we're competing with social games such as
FarmVille. I think that audience has only partially been translated into the mobile space, but our mobile expertise provides a competitive edge for us, even though there continue to be more entrants from the online space and console space.
Is it a worry that your freemium revenue is currently only 4 percent of your overall sales?Well, it was 25 percent of our smartphone revenue in Q3 2010, and that grew by 98 percent compared to Q2. You're going to see this sector grow explosively given that we're now focused on launching freemium games.
Also, you need to compare apples to apples. For example, ngmoco did $3 million of iPhone revenue in 2009, and Glu did $3 million of iPhone revenue in 2009 too.
People seem to find it okay to complain that only 15 percent of Glu's revenues are from smartphones while ngmoco's are 100 percent. Sure, but it's 100 percent of $3 million overall revenue; the same as our 15 percent in absolute terms.
The fact is that Glu did
$79 million of overall revenue in 2009, so to grow our smartphone revenue from $3 million to $79 million will take some time. Globally, there's an upgrade cycle going on, so it will take two to three years for everyone to upgrade to smartphones.
But companies such as
DeNA in Japan point to the future in terms of what can be achieved with smartphone gaming once the market matures, and we're really well positioned to capitalise on this.
What's your feeling on the differences between in-app purchases and ad-supported games?We're agnostic as to the source of monetisation is, but IAP and ads cater to different audiences. We saw this pretty clearly when we were retrofitting such features to our existing games.
Over time, I think ads will take a larger share, converging with the web advertising model, but I don't think it will be the majority of our freemium revenue.
How big will Android be for Glu?Google is ramping up Android very quickly. It was one or two years behind Apple at the start of 2010. By the end of 2010, it will have closed the gap to three to six months.
Google's fixing billing and the store. Remember, it's trying to do this differently. It's trying to enable carrier billing globally. It's also trying to improve discoverability and the monetisation of the store.
Glu is a very close partner to Google. We have one board member that's also on Google's board, and we have two board members on Nvidia's board, and it is shipping a lot of chips for Android devices. I don't think you're going to find a company better primed from Android growth than Glu.
Will you be planning simultaneous iOS and Android releases?Our 2011 Q1 titles will be simultaneous on iPhone and iPad, with Android following on four weeks later. We will shorten this over time, and, if we want to, we can always hold the iOS releases back.
However, Android and iOS are currently separate user bases and we find we make more money overall to release iOS earlier.
You had some server issues with the launch of Gun Bros. What was the problem?Launching these games is never trivial. Just look at the problems
ngmoco has had with its games. It still has far worse issues than
Gun Bros.One issue is supporting people using older devices, especially when they're running a 150 MB game like
Gun Bros..You can never be flawless in these cases.
The other is that we've experienced phenomenal popularity globally: in particular there's been a lot of traffic outside the US.
We expected our traffic spikes to be within normal US hours, but we've had spikes in South Korean and Chinese times, so we've had to deal with more of a round the clock loading.
We've learned how to optimise for these situations, and I think we've broken the back of 80-90 percent of the issues. We're also preparing for Thanksgiving and Christmas traffic, so we won't have those sort of problems again, although I can't promise we'll never have a snafu again.
Thanks to Niccolo for his time.
