Following the release of solid Q3 2011 revenue numbers, Glu Mobile CEO Niccolo de Masi is in bullish mood.
"We've beaten guidance for the seventh consecutive quarter, surmounted the challenges of CPI business on iOS, and are about to release our most games ever in a quarter," he explains.
It's justification for the transition de Masi has been pushing through the loss-making company since he joined at the start of 2010, slowly changing it from a carrier-focused Java publisher to a freemium smartphone outfit.
All change
Indeed, this quarter has been the first time that more than 50 percent of Glu's revenue came from free-to-play smartphone games compared to its legacy business.
It's a change that's impacting the rest of the industry too, with French mobile publisher Gameloft recently revealing 34 percent of its Q3 revenue came from smartphones.
Because it's much bigger than Glu, its absolute smartphone revenues are much higher - around $19 million to $9.7 million - although it's not operating heavily in the freemium market.
Thinking big
When it comes to its freemium rivals, companies such as Zynga, Capcom, Storm8 and Pocket Gems, De Masi reckons Glu has competitive advantage as it's the only publisher that can deliver cross-platform high quality 3D games.
"This is the area in which our success has come, and it's the way the industry is evolving," he explains.
"Our games take advantage of the available hardware: we'll be making the most out of the quad-core iOS and Android devices released in 2012. Games such as Contract Killer: Zombies are 300 MB and I think we're going to see the quality and file size rise to 400 and 500 MB in future."
That doesn't mean Glu won't also be releasing more casual titles; the first release from recent acquisition Blammo Games is the celebrity-focused Stardom.
But it's still not had much success in that area. Maybe that's why the other games to be released in Q4 are male-centric: Frontline Commando, Infected, The Nightworld, Blood & Glory, and Rogue Racing.
A lot to play for
Now operating with around 500 development staff spread across more than 20 teams, De Masi is looking to Glu's scale to accelerate its performance in 2012.
The first games from its other studio acquisition Griptonite are due from the middle of the year, with Glu expected to hit breakeven in early 2013 when all teams are operating at full steam.
In that timeframe, De Masi is certainly ambitious in terms of the potential market size, and Glu's ability to gain a decent share of it
"We're large, we were early into the market and we can scale. Those are the companies that win in the longterm," he argues.
The prize is the $2 billion of net sales in 2012 that de Masi calculates is the total of "global, developer-accessible gaming revenues" that it, as a US-headquartered company, can access.
"No single company has more than 10 percent market share yet, and there's lots of growth in the market," he says.
Neatly, he also suggests that breakeven for Glu would be annual revenues of around $100 million; a number it expects to reach or exceed in FY13.
Still, for the time being, with Glu expecting to post annual sales in 2011 of around $68 million, and continue to be loss-making throughout 2012, there's plenty more work before the CEO, and the company's shareholders, can bask in a completed turnaround.
Feature
Contributing Editor
A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.
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