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#1: Glu Mobile Prepares to Strike Deals
Back in June, Glu Mobile raised $151.8 million in a secondary offering. It's hard to blame them. For one reason, much of the company's historic growth stemmed from acquisitions and acqui-hires, which required healthy capital. Chris Akhavan from Glu pointed out:
"Going back to 2011, we acquired Blammo Games. They went on to create the Kim Kardashian game. In 2012 we acquired the Deer Hunter IP from Atari and went on to have a very successful franchise with that IP. We have the next version of Deer Hunter currently in development.
"In 2013 we acquired a small studio that's now become our sports studio, with the MLB Tap Sports Baseball franchise, one of our top games. In 2014 we acquired PlayFirst, which made the Diner Dash franchise. Tom Hall was part of that. And then obviously in 2016 we had the CrowdStar acquisition, which brought us a phenomenal studio with Covet Fashion and Design Home."
Second, a quickly rising stock price (thanks again, COVID) after a tough 2019 made selling shares a more favorable means of fundraising. As of March 31st Glu had $115 million in net cash, so adding $151.8 million means Glu will have meaningful firepower.
Glu is only a $1.5 billion business, so that capital can make a serious dent. As the interview with Chris shows, Glu is willing to strike deals of varying sizes, but it's pretty obvious that the company hopes to nail down a larger deal that can move the needle in a more profound way.
In fact, there's a decent chance that Glu will end up making its largest acquisition yet. It's only a matter of time before we hear an announcement.
#2: Rocket League Goes Free-To-Play
It’s been over a year since Epic Games acquired Psyonix, the studio behind Rocket League, and we're finally getting some major announcements. One announcement is that the game is going free-to-play at some point this year.
That's not surprising given Epic's success with Fortnite and where industry trends are headed, and the change should result in an expanded audience.
It also sets the stage for Rocket League to launch on mobile. There's no official announcement about that yet, but given Epic's cross-platform ambitions it seems close to an inevitability. No matter how you look at it, Rocket League's upside in terms of attracting more players remains high, even though the game is five years old.
It's also worth noting that when the game goes free-to-play it will turn into an Epic Games Store (EGS) exclusive on PC. People who play the game on Steam will still be supported, but all new players must play through the EGS.
Sure, some players won’t like the reduced choice, but exclusives are the best way to increase store engagement, and Rocket League going free-to-play should catalyze lots of new EGS users. It also means in-game sales bypass Steam's 30% cut, which Epic is on a crusade to lower. It's a shrewd move that sets Rocket League up for larger success on terms that are more favorable to Epic.
#3: Is Nintendo Adjusting Its Mobile Strategy?
Even though Nintendo's mobile gaming attempts have mostly underperformed, the company still recognizes the importance of mobile as a platform. Remember these charts?
Unsurprisingly, instead of making several new mobile games, it seems like Nintendo is shifting tactics. Under relatively new leadership, the company has increasingly prioritized licensing… for theme parks, merchandise, movies, and more.
There's a chance that licensing will also lead to content collaborations that put Nintendo's IP in other games (like Fortnite). While nothing is confirmed, we think that's wise and increasingly likely, especially for mobile games.
Nintendo should also consider working with co-development partners (like how The Pokemon Company is working with Tencent's TiMi Studios on Pokemon Unite) or even sell out to Apple Arcade at generous terms. After all, even if mobile isn't how the company chooses to prioritize its internal development resources, finding alternative approaches should only lead to upside.
Master the Meta is a newsletter focused on analysing the business strategy of the gaming industry. It is run by Aaron Bush and Abhimanyu Kumar. To read this week’s entire meta, visit www.masterthemeta.com!