Glu Mobile vs Gameloft

[Music] [Applause] [Music] hello and welcome to pocket gamer. bus's Weekly News Digest for the week ending the 1st of May 2015 hi I'm John Jordan so as I say at least uh four times a year we're we're in a financial period reporting um situation um so this is the point it's normally normally actually have kind of three or four week period because different countries have different kind of recording um processes but basically any games company um that you can buy shares in in the world at some point for times a year has to report on its quarterly earnings um and so we're in the kind of situation now where everyone this week and the next couple of weeks are reporting on the three months ending the 31st of March 2015 um so that's not interesting for most people in the world but for people like like me who like numbers and people who write about business that's pretty interesting time because we get to see kind of which companies are doing better

which companies are starting to fall to which companies are starting to kind of pick up um steam so um two companies in particular this week and sometimes it kind of works out that um you get a nice kind of compare and contrast situation and to the degree that's going to happen this week partly because not many companies have actually announced yet so we normally find um the first companies to announce are tend to be um kind of Hardware companies so people like Ashley Apple announced this week very high very high profits as ever China doing really well for them people like Intel and Chip companies and that kind of stuff um but we've had um the majority of stuff kind of some of the big companies we look at kind of EA and King and Zinga that's what going to happen next next week and then the some of the Asian company sorry the Japanese and then the Chinese and the Koreans they'll be coming a bit later as well but um the first two we have that kind of work out quite well as a compare and contrast are um glue mobile which is we kind of San Francisco based uh freetop playay pure mobile publisher and that's um always an interesting one I've probably spoken about them more than any other company and also Game Loft so Game Loft is a um the biggest European mobile games

publisher it's French publisher um which means it tends the French accounting system tends to be quite opaque so they tend not to give away so many figures gloy the exact opposite they literally drown you in figures they give away so many Figures it's almost impossible to uh to kind of deal with them more very interesting though it is I keep doing it glue um so in the first first case we'll look at Game Loft so it's interesting that um both glue and Gameloft have been in the mobile games industry for you know a long period of time so they both from back in the days of java when you had Java paid games and the industry was very very different and you basically did Big deals with licensing companies um like films and and this kind of stuff and you made kind of small little Java Games people downloaded them onto their non iPhones because iPhone didn't exist in um and they they were pretty big companies you know they were the big companies um then freeto play um kind of smartphone games came along and completely changed the market and it's been interesting that and the contrast is Game Loft kind of hasn't really got that Game Loft um built a fantastic company basically with 6,000

people around the world particularly in in lowcost kind of countries developers places like India and China um and they got really good at making these kind of um kind of fairly simple paid games where there was no in in in purchases or or or kind of microtransactions and you've kind of paid $5 up front and gameel got very good at the processes involved in making those kind of games um which are quite different to what you need now for freet to-play smartphone game so gam Game Loft um you know it's all relative gameof is still a very successful company so it's let me just check my cheat sheet so it's um it's uh quarterly figures so it generated sales of $71 million which is you know pretty big you know it's actually still one of one of the one of the biggest um kind of public companies um just that just does mobile games and uh and actually it sales were up let's have a quick look 17% year on year so you still seeing kind of most companies in the world would be pretty happy with that kind of growth um but the kind of big problem for game LOF is it's kind of its whole history has been built on making um a different type of game it's still not

really got to grips with this kind of free-to-play model which is kind of different you're kind of um it's I guess I mean it's a more kind of a kind of agile way of making games it's a you you present a kind of a service approach to to your kind of players they download stuff for free and they want nice experience straight up and you want to keep them playing for months and start them paying you know quite a lot of money for things and gameof just it just doesn't seem like they they've kind of quite worked out how to do that you they do have some successful freeto playay games but not as successful as other companies so the interesting thing for um Game Loft is it announced that um it's one of its new games and dungeon Dungeon Hunter 5 is its most um is its best performing Revenue game at launch so it's been out for 6 weeks um and and that's been the best um it's ever seen in that kind of freet to-play model so we've actually had a look at this this the article will go live next week we've had to put it through our like our charal process where we just basically look at the top grossing charts around the world and and as we as we as GL has kind of said you know the game has done pretty well but in no major territories apart from China which admitt is a big

is a big you know a big Market but in the US it's not done very well in Europe it's kind of did okay at the start and dropped off and and so while it has done well relatively to kind of some other companies and their successes it's not it's we wouldn't call it like a a massive Global kind of hit and that's kind of where gameof kind of finds itself it's good enough it's kind of um still has you know $250 million of Revenue in a year it's still profitable Al though being French doesn't quite release it its um profit figures in the same way but it's just not doing as well as some other companies so I guess it's a half a glass half full half empty kind of scenario um which brings us on to to glue mobile so glue mobile was for a long period of time a a basket case so very much like Game Loft but not quite so efficient in in the Java space it kind of realized earlier than than Game Loft it wanted to get into free-to-play games and it basically tried to kind of re-engineer the company and basically you had to you know to do that process properly you have to kind of sack a lot of people and bring a lot of new people and set up new processes and yes this is

this is you know in kind of academic circles this is called the the the innovator dilemma and innovator dilemma is you make a very successful company doing one particular thing and something else comes along which may look like you should be able to do it but because you've been so focused on making this company that's 100% brilliant at doing this one thing something comes along and you just find you can't do it as well as new entrance coming into the market and I guess for gameel that's kind of it's been quite jarring that it's been making mobile games for a long period of time then it's seen seen the likes of super for sell you know it's a great example come along and just basically take you know $2 billion of of of of annual revenue out the market that kind of gameof perhaps thought it should be getting a cut off so for um so Glo mobile obviously isn't isn't a super cell isn't quite that level but what's interesting is it it it for years it kind of like was loss making and but it was trying it was making good free to-play games just wasn't having a massive breakout hit it had like a a semi breakout hit with this Deer Hunter game and de Hunter is actually a game that's probably done about $100 million of revenue for them um but very us focused is deer hunting simulator so

it's doesn't really appeal to a wide group of people but it appeals to enough people in certainly in the US and it monetizes very highly so they do quite well on it but obviously as we've kind of suggested before the big kind of hit for glue has been Kim kardashi in Hollywood and that's something a bit they locked into um it's a they spent all their time making games High you know high in 3D games for guys and then they had a very one single Studio making trying to make games for I mean sounds like a prority thing making games for girls but making games that were clearly aimed at different Market um and and they bought these two things together with Kim Kardashian and you actually blew it blew blew it out the water and Kim Kardashian is now um a that single game makes a third of glue's Revenue so glue announced its Revenue figures as well so let me just check this so glue's Revenue was actually 600 600 glue's revenue for the quarter was $695 Million so it's actually less than than gameof by by a little bit um but its profit it's um sorry year- on-ear growth was up by 56% year on year so glue was only up by 177% so you can see

there's a quite a disparity of growth there um the other thing we get with with glue is it announces its profit figures so its profit was it wasn't massive it profit was $.1 Million but that was up from um $100,000 a year ago so that's up um depending on your math a th% or you know up up an enormous kind of of some so you can kind of see when the whole free-to-play kind of Market at the moment is when you have a big hit and certainly a big Global hit um you kind of go from from from a zero to a hero very quickly and that's kind of what the company like kind of Game Loft hasn't managed to kind of hook up yet and what glue kind of has done and just basically on the basis of one game I mean it had a solid underlying um business to it to to um to kind of build on although that was loss making but Kim Kardashian is a game that's basically totally kind of revolutionized it it as a company and it as a profit making kind of um concern and it's kind of interesting it's kind of like people people say you make your own luck so um so Kim kashian has been hit now will have been out for a year um in two months time so it's not even a year um so in the last quarterly figures

they announced they' signed up Katy Perry to do a very similar game bit more about music um and then to kind of kind of fulfill another niche of of uh kind of audience segmentation I suppose they've now Ann announced they've signed up Britney Spears um for a an up to an 8-year deal so they've got um it's very interesting why glue's done this obviously it's a different Market in different segmentations of of fans will like these different kind of um celebrities but equally they're seeing it as a kind of a cheaper user acquisition proposition because obviously all these people have massive amounts of Facebook fans and Twitter fans and obviously Kim Kardashian has a TV show and Katy Per releases albums and I don't know what Britney Spears does these days but um you know so glue is now saying between these three it has 400 million um social um kind of connections now with its Brands and it's looking to get more so I think we'll see more kind of celebrity games from glue and just as part of that it's also signed a deal with um 10 cent so 10 cent is the biggest games company in the world invested in Epic and uh and right games and some of these other massive companies and also is is the um biggest

single games company in China it owns about 50% of the Chinese mobile market so it's it's it's um invested effectively it's bought about 15% of glue shares uh that gives glue about 120 $125 million have been invested into glue so glue now is profitable anyway it doesn't need that money particularly but now it has that money to go out and buy licenses it will go probably go out and buy new Studios it will go out and just you know acquire the things it needs to make it success even bigger so you're kind of seeing I guess the disparity now is between the game off which which is kind of growing nicely at 17% and now glue mobile which is growing at like 50% and getting all this investment and house as Britney Spears and we'll kind of see I guess in the next three months how that is continuing on so that's the world of numbers um probably be more numbers next week um and I hope to see you then [Applause]