Interview

Glu boss: 'We view this as a three-company industry'

Greg Ballard bullish on what's needed to grow the mobile games market

Glu boss: 'We view this as a three-company industry'
The idea of the mobile games industry's Big Three – EA Mobile, Gameloft and Glu Mobile – is well established, but is that how those companies see it? Glu CEO Greg Ballard certainly does.

"We view this as a three-company industry," says Ballard. "It's dominated by three companies, although there are other important players in this business doing good work, who we fully respect. But if you look at the market share and who is really driving the agenda for the industry, it's those three companies."

Feeding on the smaller fish

Ballard says Glu is less focused on capturing market share from EA and Gameloft as it is from smaller publishers, however, with words that might raise an eyebrow at some of those mid-tier firms.

"Every point of market share that moves from the smaller players to the bigger players is good for the industry," he says.

"We can spend more dollars on marketing for one thing. So rather than focusing on what Gameloft and EA are doing, it's about how do we make the business bigger for all of us – and how do we convince the carriers that it's okay for the top three guys to get more market share?"

That said, Ballard isn't entirely above the market share arguments that have kicked off in recent months between EA and Gameloft. He claims that Glu is "substantially" ahead of Gameloft in the US, and ahead of both its rivals in parts of Asia.

Glu recently announced 1Q 2008 revenues of $20.6 million, up 31 per cent year-on-year, although that includes $2.7 million of revenues from recent acquisitions MIG and Superscape.

Is that US claim correct, though? 51 per cent of Glu's first-quarter revenues came from North America, accounting for $10.5 million.

Meanwhile, 29 per cent of Gameloft's $39.6 million Q1 2008 revenues came from North America, making $11.5 million. Assuming Gameloft isn't making a significant proportion of those in Canada, Gameloft appears to be still number two in the States, although Ballard is likely counting Superscape's projected Q2 revenues in his reasoning.

Crucial consolidation

Getting back to that 'convincing the carriers' point though, how is Glu doing that? "We have encouraged them to consolidate their business and go from 25 publishers down to 10," Ballard says.

"And we have told them we'll step up by producing more titles ourselves, or we'll become the licensors of the companies dropping out of the business. If you have 25 companies all competing, you'll have less money being spent on product and marketing than if you have ten companies bidding for the same amount of dollars."

Glu has certainly been hoovering up deals with companies who have dropped out of (or failed to secure) direct relationships with the operators, particularly in Europe, with deals with the likes of Sega, Konami and Codemasters. On a global basis, Glu's deal with Warner Brothers also illustrates this.

"This time last year they were a competitor of ours, and frankly they weren't making any money," says Ballard. "Now they're making money – we've been sending them cheques from the beginning of the relationship!"

So, to that recent acquisition of Superscape, and the thinking behind it. Ballard says the primary reason was to absorb extra titles and revenues in the US market, increasing Glu's market share and putting it in what he calls "a dominating number two position".

Besides adding Superscape's revenues to Glu's bottom line, other benefits included the publisher's strong US sales force, and its 80-strong Moscow studio, which Ballard says has experience of creating original 3D IP for mobile.

"That was an area where we wanted to get better, so we're continuing to use the studio in that way," he says. "And beyond the 3D technology we inherited from Superscape, even more importantly there's the tools they had developed for that platform, which were substantially more evolved than our own."

The appeal of the Superscape deal was such that it even delayed Glu's plans to expand onto other games platforms, as outlined in our earlier story.

How is the US market performing though? At some recent industry conferences, there have been mutterings that the US had a tough time in 2007, in terms of mobile games revenues.

This was partly down to technical gremlins at certain carriers, but it's also been suggested that the US market saw a slowdown last year. Ballard doesn't agree.

"We didn't see the same issues that some others had. Gameloft has clearly had a more difficult time in North America than we have, and continue to talk about it on their conference calls," he says.

"I don't know the reason for that, maybe it's because they've always been a bit less adept at BREW than they are at Java, which in the US market is an issue. But some of the other folks who have said negative things about the US market are maybe some of the smaller guys who've been experiencing difficulties everywhere else, not just the US."

Racing ahead

For now, Glu is pressing on with a busy second half of the year – Ballard says the publisher's roadmap for the last six months of the year has twice as many games as for the first half. Alongside several own-IP games, Glu is continuing to sign deals for big movie licences, with Speed Racer being the latest.

Are movie games worth the risk, though? Ballard freely admits that if the film itself isn't a hit, the mobile game's commercial potential is stunted, no matter how good it is. And Speed Racer (the film) has been hit by stinking reviews and a disappointing opening weekend at the box-office.

"Kingdom of Heaven was a really fine game that we did, but it was not a very successful movie, so the game was consequentially not a success either," says Ballard. "On the other hand, Robots was one of the least good games we produced in our history, because we only had two months to produce it, yet because the film was a hit, so was the game."

That implies the omens aren't good for Speed Racer, although Ballard maintains that signing these kinds of movie licences is worth the risk.

"When they are successful, they are really successful," he says. "We make a lot of money on our movie brands, and we're very selective, so we don't do movies that we don't think will be successful. Of course, we'll undoubtedly have a few down the line that aren't."

He describes the best movie mobile games as a "perfect storm" between a studio marketing the film, a mobile operator promoting its own services on the back of that, and then Glu sitting in the middle with a mobile game rolling out across as wide a handset base as possible.

"When that happens, and you can get 25,000 SKUs onto the market in a couple of weeks, then you can have a hit movie that also yields a hit title," he says. "And not many companies have the ability to do that."
Contributing Editor

Stuart is a freelance journalist and blogger who's been getting paid to write stuff since 1998. In that time, he's focused on topics ranging from Sega's Dreamcast console to robots. That's what you call versatility. (Or a short attention span.)