Market Insight

Glu hopes to shake off negative Q4 with Taylor Swift mobile games deal

February 08, 2016

Jack Kent Jack Kent Director, Media and Advertising

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US-based mobile games publisher Glu Mobile reported $61m Q4 2015 revenues, down 16.3% on the same period in 2014. Profitability also took a hit as it ended Q4 with a $3m net loss compared with $1.4m net income in Q4 2014.

The publisher’s full year results are more positive. Its $249.9m 2015 total revenues were up 12% on 2014. IHS estimates that the overall mobile games market grew by 27% year-on-year in 2015, so Glu is being outpaced by the rest of the market.

Glu has also made two investments in new games developers and extended its roster of celebrity mobile games partnerships.  The new deals include:

  • An agreement to invest up to $7.5m in Iceland’s Plain Vanilla Corp developer of the  popular but as yet not monetised QuizUp trivia app, with an option to make a full acquisition.
  • An investment to take a minority stake in US-based Dairy Free Games.
  • New partnerships with celebrities Taylor Swift and chef Gordon Ramsay.

Our Analysis:

Mixed results from brand and celebrity partnerships

Glu’s line-up of celebrity and brand partnerships now includes: Katy Perry, Kim Kardashian West, Jason Statham, Kylie & Kendall Jenner, Britney Spears, Nicki Minaj, Gordan Ramsay, and the mobile games rights to the James Bond character. Its Kim Kardashian title continues to perform well, contributing $70m revenues in 2015, 30% of its total. But other partnerships have seen mixed results. The Katy Perry Pop mobile games was not the roaring success the publisher hoped for despite the US-singer’s almost 200m social media followers (the aggregate across Facebook, Twitter, and Instagram). Glu’s celebrity partners claim an aggregate social media following of more than 1.5bn and this has been a major metric the publisher uses when agreeing partnerships. But its Katy Perry experience shows that a large following is no guarantee of success.

Advertising is becoming more important

Glu reported record non-GAAP advertising revenues of $12m in Q4, 21% of its Q4 2015 total compared with 15% in 2014. Some Glu titles now report more than 30% of revenues from advertising.  Mobile games at the peak of the app store top grossing charts have tended to eschew advertising in favour of driving in-app purchases. However it can be a significant revenue generator for the mid-tier of publishers. Glu has achieved significant scale from games with a broad user appeal and most free-to-play games struggle to convert more than 2% of their free users into to paying customers. Glu is aiming to pursue further brand partnerships to grow its advertising revenues in 2016.

User decline is concerning but acquisitions could help

Glu ended Q4 with 49.4 monthly active users, 21% lower than its 62.6m Q4 2014 total and its lowest audience since early 2013. Glu’s investment in Plain Vanilla, should it lead to a full acquisition, would be an important boost to its audience. Plain Vanilla’s QuizUp trivia game has 40m registered users and the company has partnered with US broadcaster NBC to develop a TV spin-off. Glu will also need to see an improved performance from its 2016 new release line-up to stem its user decline.

 

Geography
USA
Organization
Glu Glu Mobile
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