Glu Mobile Gained 2007 Share in ‘Tough’ Market, CEO Says

The company was the No. 2 U.S. mobile game publisher in Q4, Ballard said, citing M:Metrics data. He didn’t say what its shares were for the quarter and a year earlier. But M:Metrics said Glu had a 12.6 percent share this time, behind only EA Mobile’s 26.6 percent.

Glu also made “significant” share gains in the U.K., according to the Entertainment and Leisure Software Publishers Association, Ballard said. It had “six out of the top 10 titles in October. and in November Glu had four out of the top 10 and eight of the top 25, the most of any mobile game publisher on the ELSPA chart,” he said. Glu also deepened its commitment to the French market, opening a new office with a local team that “moved us from well outside the top five a year ago into a position of number two,” he said, citing data from mobile carriers there. Glu made similar gains elsewhere in Europe, and in Latin America and Asia, said Ballard.

The company “significantly raised our market position” in 2007 “by securing world-class, long-term licenses, expanding geographically and consolidating market share,” Ballard said. But Glu said challenges remained in Europe. “Some of the problems that we had seen in the third quarter sort of corrected themselves,” it said, noting there weren’t any major changes at any of the carriers, there were “no outages of any of the platforms” and “the shifts that had taken place in outsourcing sort of calmed down.” But Glu predicted that Europe will “be a more challenging market” for an unspecified time.

Glu’s Q4 sales increased to $18.1 million from $14.3 million a year ago. The loss narrowed to $861,000 (3 cents per share) from $2.3 million (44 cents). Revenue for the year soared to $66.9 million from $46.2 million. The loss narrowed to $3.3 million (14 cents) from $12.3 million ($2.48).

The company’s top 10 titles represented about 52 percent of Glu’s revenue in Q4, vs. 53 percent a year ago, it said. Revenue per top 10 title was $950,000, up 26 percent from a year earlier, it said. New titles released in Q4 included the mobile version of Konami’s Pro Evolution Soccer 2008 and the mobile version of Activision’s Call of Duty 4. Glu released Pro Evolution Soccer in Europe, where it “generated remarkable results through our integrated marketing program with Vodafone, making it the most sold game on Vodafone ES in November,” Ballard said. It was also the top-selling title in France for SFR and Orange France in November and December and was in the top 10 with all major carriers in Italy and Germany, he said. But it was older games including Transformers and Zuma that “helped drive our record results,” said Chief Financial Officer Rocky Pimentel. For the year, revenue per top 10 title was $3.5 million, up 40 percent, Glu said. Other top sellers included Deer Hunter 2, Who Wants To Be A Millionaire 3 and World Series of Poker, Ballard said.

Industry trends favor continuing growth, Ballard said. “Many of the leading carriers continued to actively reduce the number of publishers that they work with,” and that was particularly evident in Europe last year, he said. “Even companies that are successful in the console businesses -- Sega, Konami and Codemasters -- discovered the difficulties of establishing a complete trans-European set of carrier relationships,” and have “chosen instead to work directly with us,” Ballard said. Now “several large U.S. carriers have recently taken steps to reduce the publishers that they will directly distribute.” These actions are expected to have the “greatest impact in the next several quarters, as some of the titles associated with smaller publishers begin to drop off the decks” of cellphones, said Ballard. He said the consolidation “is taking place against the backdrop of an evolving mobile games market.”

The company expects to report sales of $18 million to $18.4 million and a loss of $5.1 million (17 cents) to $5.4 million (18 cents) Q1, it said. For the year, Glu expects to report sales of $83 million to $87 million and a loss of $9.2 million (31 cents) to $10.7 million (36 cents).

Coming Glu launches will include a mobile exclusive title from Big Fish Games’ Mystery Case Files franchise. Games in that series have sold more than 1.2 million units online and the title is credited with creating the “hidden object” game genre, Ballard said. Also on tap is a mobile game based on the Warner movie sequel Batman: The Dark Knight, in June. Glu “will have a number of other key announcements about new licenses in the next several weeks” that Ballard said are “timed to coincide with several important trade shows.” He didn’t specify any shows, but one is likely to be next week’s Game Developers Conference in San Francisco.

Glu plans an announcement Monday on the acceptances it has received from shareholders of rival Superscape, Ballard said. Glu said last month it had made a tender offer to buy Superscape, which Ballard called “an important step in our strategy to become the one number mobile games publisher in the world.” Superscape ranked among the top five mobile game publishers in the U.S. during Q4, Glu said, citing a Nielsen Mobile report. The addition of Superscape “would solidify our number two position in the U.S., and put us much closer to the number one player, EA Mobile,” Ballard said. Calling 2008 “an important year for the industry,” he predicted that “the winners and losers will further sort themselves out as consolidation continues.