After Greg Ballard’s announced and Jill Braff’s fairly sudden exits and the persisting rumours of financial frailty, many were waiting for Glu Mobile to fall.
However, at least in revenue terms, they seem to be doing OK: according to reports, Deloitte has put them at #129 in the fastest-growing US technology firms in their “Technology 500″ list. The results, alas, are based
on fiscal reports between 2004-2008, during which time Glu grew by 1,000 per cent.
All good but let us remind ourselves what happened in those years: Glu acquired Macrospace (which was founded by Kristian Segerstrale, now of Playfish fame), iPhone, Superscape, MIG (did I forget anyone?). They went public, splashed out on licenses (much to the dismay of competitors who often felt priced out of the market) and only just managed to achieve positive cash-flow in Q2/2009 (i.e. not in the period covered by Deloitte and on decreasing revenues and with negative US-GAAP results).
What does it tell us then? That this strategy worked in terms of revenue growth? Yes, certainly. And I have often paid tribute to that. That it is a good company in terms of putting its working capital to good use? This is – although I truly and sincerely wish them really well – at best doubtful. What more? Ah, well, that Deloitte’s Technology 500 list is probably as trustworthy as the banks they audited… Ouch, did I just say that?
Now, I am rarely (ever?) writing about personnel changes but this one probably deserves a note: Greg Ballard, Glu Mobile‘s CEO, is stepping down.
Here’s a man (and a company) on whom many in the sector have an opinion: Ballard leaves a lot of burned cash, big losses, huge inflation of license fees offered to rights owners, etc, etc. The comments on some blogs are not all complementary However, this is also the man (and the company) that went from what many perceived as an ailing publisher (back then when they were Sorrent) that bought other ailing publishers (first Macrospace, then iFone), were in the ropes a couple of times (ahead of their IPO, late last year) and yet so far always managed to pull through. And not only that: coming from a contested group of publishers that fought for the #3 behind EA Mobile and Gameloft, Glu now is firmly occupying that spot.
Is it healthy? Not (yet?). Is it all good? Is it to stay? That’s a tough question and I would need to gaze into a crystal ball I do not possess. Glu had started to pull back on cost (anecdotally, they “re-sized” fairly significantly; Hong Kong sea-front office closed, posh London location shrunk, …). As per their CFO, “the company remains committed to being cash flow positive from operations during FY09″. There you have it.
Anyway, I wish Greg well!
Birds (sic!) do it, bees do it, even educated fleas do it, and now even Oprah (have you been there before her? Check here)… so: what about mobile games companies tweeting? Now, there’s many of them already out there (see list below) but how much sense does it make (that it makes sense for your business I demonstrated recently)?
It had been announced previously and now it seems to be confirmed: Vivendi Mobile Games, the mobile games publishing arm of what now is Activision Blizzard, has closed its doors in Europe (after it apparently already did so in the US two weeks ago).
We seem to be having another successful showcase of mobile advertising: this time, mobile ad firm Greystripe and research firm Dynamic Logic have produced a report that confirms that mobile ads are uber-effective: they report about a case study for a mobile advertising campaign for The Golden Compass (which was broadcast during load times for certain mobile games). The campaign brought about a 19.3% increase in awareness of the film’s title a 9.5% increase in interest in seeing the film among all respondents. The ad apparently also outperformed a typical online advertising campaign by 52% in terms of brand awareness.
The case study also states that results showed that WAP sites were effective in influencing
a highly-engaged audience, particularly when advertising new movies:
- Among overall respondents, 35% say they use their mobile phones for “finding theater and movie times,” and 29% “watch movie trailers.”
- Frequent movie-goers — those who have seen at least two movies in the theatre in the past two months — use the mobile Internet more often than non-frequent moviegoers (79% for frequent movie-goers vs. 58% for non-movie goers).
It would have been interesting to know if the game was actually the mobile game for the Golden Compass (published by Glu, which was surprisingly absent from any mention) or if it was just more or less random games selected. There was also only little to read about the details of the survey, etc, etc. As Greystripe has somewhat of a vested interest in this, one might be querying…
The naked numbers from above are in themselves impressive. However, I am calling for more information here as this is per se not substantial enough to merit a whole big new world… I am inquiring for more details… Fingers crossed.
It is the conference season, so I am falling a little behind but this is one that needs to be recorded here: The good folks from Glu announced that they would acquire AIM-listed 3D games specialist Superscape for $36 million (which however includes $11m in cash Superscape is still having in its savings account). On $7.2m revenue for the 6 months ending July 2007, this would equate to a revenue multiple of c. 1.7 (based on flat sales and a purchase price from which the cash at hand is deducted) which should be substantially higher than Glu’s c. 0.6 (awaiting the announcement of their 2007 results).
Glu has been hit brutally following their announcement of their Q3 results, falling from somewhere around $10.40 per share to $4.19 tonight based on worse than expected growth and earnings. They had recently announced expansion into China – a market with numbing growth numbers but also hard commercial parameters – through the up to $40m acquisition of MIG, which however failed to help their share price.
Now, Superscape adds market share in more familiar pastures, namely in the US where 98.4% of its revenue are generated, and this may well have been the main reason for the buy: it will cement Glu’s position in this key market. I am however not sure if there is more to this deal than that because the remaining parameters of Superscape do not look too good: the company focussed on the niche 3D sector, which did not fly as predicted (or should one say demanded) by the carriers. It is loss-making (and has been for a while if not forever). It grows less than Glu (as remarked by an analyst (report courtesy of MoCoNews).
Even if the deal rationale was synergies (reducing headcount as all they would really need from Superscape is their Moscow development facilities [which are a rather impressive operation as I could learn a few years back during a visit] and shut down their US and possibly UK offices), one would have to ask if this was the right deal. Superscape lost more than $2.8m on $7.2m revenue, so it is rather questionable if they could swing this into profitability quickly. I would posit that Glu would be rather capable of fighting for revenue and market share if it would not have to look at cost (their roster of titles is pretty impressive and they have been on an aggressive growth path), so would they not have been better advised to look for a profit-boosting acquisition as this seems to be their Achilles heel? Prove me wrong, Greg, please!
Oh, the bliss of creditor protection… US mobile publisher Oasys emerged from Chapter 11 after defaulting on a rather sizable $8m debt earlier this year. They had $2m in assets versus $11.8m in debt. Not good. Now they apparently managed to persuade investors to convert debt into equity and off they go again. It was all – more or less – pre-arranged: their investors Associated Partners and Rock Hill Partners had apparently agreed to swap debt for equity, and agreed some interim funding, which apparently allowed them to continue product development. Sitting tight in the interim, they now managed indeed what they had told, namely to emerge as the Phoenix from the flames. For how long? Heaven knows. They have announced a couple of titles but will find arguably not find it easy to compete against the ever tightening battlefield that is mobile game publishing. They had been quick to assure that they would continue “business as usual” and – in particular – would pay licensors pre- and post-restructuring, which will be crucial if they want to see the light of day.
UNO and Phil Hellmuth poker are good titles. Will they be enough though? Their investors seem to think so: the restructuring plan, which the investors apparently supported, foresaw to turn away from their attempts in the D2C market and want to run as a “normal” ASP and publisher. If they can win the carrier decks, this might just work. However, in the poker category, my dear employer’s WPT Texas Hold’Em and Glu’s World Series of Poker titles go strong, and Oasys will face an uphill struggle with their title. UNO could be cool though it won’t be a home run either. Nonetheless: competition is good though! Go on, guys!
