Glu Mobile has seen ups and downs with its celebrity mobile games, and now it’s on the ups again thanks to its release of Kendall & Kylie, which is based on the lives of reality stars Kendall and Kylie Jenner.
Founded in 2001, Glu toiled away for years in mobile gaming until it scores a huge success with the launch of Kim Kardashian: Hollywood in 2014. That game generated more than $146 million to date. The revenue came with very low user acquisition costs — which are usually the scourge of mobile game developers who have to advertise heavily to get noticed among 1.5 million games in a $30 billion market. It worked because Kardashian sends fans back to the game every time she shares something on social media about it.
That prompted CEO Niccolo De Masi to sign up other celebrities who, collectively, have more than a billion followers on social media. Glu launched Katy Perry Pop in mid-December, but that game didn’t do well. In an interview with GamesBeat, De Masi acknowledged the mistakes that the company made with it. But he said the company regrouped and moved on to the next game. And this one is hot. At the moment, Kendall & Kylie is at No. 9 on the top-grossing games list in the U.S. iOS app store, and it is No. 3 in downloads.
In its first five days, Kendall & Kylie saw more than 1.3 million downloads in the U.S. on iOS. During the same period at launch, Kim Kardashian: Hollywood only had 612,000 downloads, according to research firm Sensor Tower. In the first five days, Kendall & Kylie made more than $680,000 through in-app purchases, while the Kardashian game made $222,000 in the same time frame. It took Kendall & Kylie two days to reach No. 1 in downloads for free iPhone apps in the U.S., while it took Kim Kardashian: Hollywood 24 days to do that. Reviews are also 92 percent positive for the Kendall & Kylie game, compared to 94 percent for Kim Kardashian: Hollywood and 55 percent for Katy Perry Pop.
Glu has plenty of more opportunities to improve on its results, as it has games coming based on Taylor Swift, Nicki Minaj, WeFire, Gordon Ramsay, and Britney Spears. When we talked at the DICE Summit last week, the full results from Kendall & Kylie weren’t in yet. But with each passing day, Glu’s hit keeps getting bigger. Here’s an edited transcript of our interview.
GamesBeat: On the social strategy, the lesson you have now with the Katy Perry game launching is that it’s not an automatic home run. How do you look at creating these games with that lesson in mind?
Niccolo de Masi: Let’s stand book and look at the movie, game, and music business. I don’t know of any filmmaker, artist, author, or game developer who knows the formula for putting out an automatic hit. James Cameron is maybe closest to it, but he does something once every 10 years. Musicians have albums that aren’t hits even when they’ve had 10 hits in a row. Same with filmmakers, actors, you name it.
We expect the celebrity portfolio to be ROI positive in relation to Glu. I don’t expect every game to be a hit. It’s not physically possible for every one of them to be a number one game. What I do believe, though, is that in the content creation business, you’re trying to stack the probability of success in your favor. It doesn’t matter what content you’re making. That’s all you can do. People try to do that with talent, with brands, with marketing, with innovation. You have to do all of those things.
The Katy Perry game had mostly team execution challenges. I don’t think that was a Katy brand issue. We need to get her music in the game, because that was something we probably should have pushed harder on. We may still do that. Alternatively we may reboot and make a game that integrates what her fans want, which is her music as more of an integral part of the mechanics. But you can’t convince me that 200 million social followers could not have generated a number one game, had we built either the right game or a better game.
We made some decisions that didn’t pan out. It’s safe to say that a lot of lessons and a lot of postmortems have been done at Glu in the last few months. There’s also an element of my own over-aggression, rushing to expand the size of the celebrity portfolio in a year. We pushed to expand a number of studios that had done very well in H214 and H115. We pushed more of them to grow faster than we probably should have. The old adage about growing slowly and growing carefully, I didn’t follow my own advice on that. I also built a couple of games last year that were not done in the studios that specialize in the given genre, in a quest for more rapid growth.
We’ve obviously learned some lessons we already knew, but we relearned them. I broke two of my own rules and was punished for it. This year not only have we been more cautious on things like guidance, but we’ve also been more cautious about the size of the road map. We have fewer titles this year than last year. We have some titles we thought were coming out last year that will come out this year.
We’ve guided this year on the top end to still be the biggest year we’ve ever had. Subject to games like Kendall and Kylie grossing well, games like WeFire, Frontline Commando, the Tencent partnership—these can be real year-makers for us. Kendall and Kylie has been out 18 hours or whatever. It’s No. 1 free and number 38 grossing. I’m sure it’ll keep climbing the grossing. We have yet to spend any paid marketing at the moment.
GamesBeat: Is there something extra you’re doing to keep the genre fresh? The novelty of the celebrity mobile game has passed. Everyone’s played Kim Kardashian. They may not want to play another similar game right away.
de Masi: It doesn’t play the same way, though. It’s a portrait game with two modes of gameplay. You can follow Kendall advice or Kylie advice. You’re trying to become a social maven, not a celebrity. There’s a lot more social hooks in it. Not only some of the functionality pioneered in Kim exists there, but there’s also a lot more top as far as clans, guilds, that kind of thing.
When I stand back and look at celebrity—celebrities are their own brands. People use them to sell everything from shampoo to movies. People keep using celebrities to promote everything because there is some halo effect. The difference between our approach to celebrities and that of traditional media is we get social promotion. They have a meaningful piece of the backend. It’s not as if we’re paying them a flat fee to be in a commercial, which is the least effective way to use celebrities. I like to call these permanent commercials we’re running.
You’ll see us bring out a whole plethora of mechanics that use celebrities. It’s not going to be running much risk of fatiguing audiences if we do a good job about honing in on the audience and what the mechanic could be. There’s some overlap between the Kim demographic and the Kendall and Kylie demographic, but as we’re showing in the reviews of the game, they’re substantially different demographics and substantially different games. If they’re 90 percent different and have a 10 percent overlap, you can still crank out hit after hit. Obviously for male celebrities we’re building different kinds of games.
Our challenge for a Nicki, Britney, Taylor Swift game is how to differentiate the mechanics enough, but make sure they’re relevant to the core aspiration of the fan base. If you’re a Britney fan, what are you looking for? What do you want to be aspiring to do? We hit the nail on the head with Kim’s game. You want to be famous. Kendall and Kylie, we appear to have hit it – being a social media maven. We’ll have to wait and see. I don’t expect them all to be Kim-sized hits, but I’ll take half a Kim. Half a Kim is highly profitable for Glu.
GamesBeat: Do you like this category more than, say, the movie category? How would you compare it?
de Masi: We’ve built four movie games in the last three years – Robocop, Terminator, Mission Impossible, and James Bond. We’ve been disappointed with all of them relative to what you can do with a person. There hasn’t been a movie game that’s done as well as a Kim type of title since The Hobbit, which Kabam did a long time ago. That’s an interesting trend. Other people have tried celebrity games. They’ve not done well. Shakira made one that didn’t do well with Rovio. Rovio’s a competent developer. They made a match three game.
The category for Glu will be one of our four – shooters, simulation, sports and racing, and celebrity are the four labels. This is one of the two biggest. Shooters and celebrity will be our biggest revenue-generating labels this year. But it wouldn’t surprise me to see years where we do well and years where we don’t, where simulation and sports pick up the slack. That’s the Glu portfolio strategy.
GamesBeat: When you say you’re taking the lessons into account, how does that change the company and how it’s structured?
de Masi: We’ve hired two new studio leaders. Nick Earl was at EA and Kabam. Tim Wilson was at EA. They both worked together for 13 years at EA. We have a new president of studios and a new CTO. That’s changed my own need to be as involved in products, which is going to be healthy for me. I used to have whole studios reporting to me directly. Now they’re reporting to Nick and Tim, who have more experience running studios than I do. Me being in the weeds of engineering decisions was an error for Glu.
We have 20 teams around the world at 10 different studio locations. A product has between five and seven milestones to go from green light to launch. That’s a lot of meetings. It’s not possible for a Niccolo or any individual to be in all of those and make decisions across 150 milestones a year or whatever and do a good job of it. Mistakes get made. Willpower cannot always be transmitted. Even when things are going wrong, it’s hard to get things to pivot when you have 20 of them instead of one of them.
We have a more central studio process than we’ve had before. We have label leaders. Haven’t had that before. We have studio leaders that roll up to label leaders, and they roll up to the president of studios and the CTO. We have a more rigorous milestone process. Not just green light process, but milestone process. Prior to that it was more or less myself making milestone decisions, as well as some other senior executives weighing in. We’ve put the milestone process separate from the studios. You can’t effectively vote on your own product.
GamesBeat: As far as the number of titles, if there are fewer of them, are there certain games you’re spacing out more, or games you’re giving up?
de Masi: We’re not announcing titles, not forecasting titles, until we see them in beta. Guidance is hopefully going to prove to be very conservative this year. We’re forecasting titles like Kendall and Kylie that we see in beta doing well, but we’re not forecasting the second half of the year for much impact until we see how well it all does.
We’re not announcing a whole chunk of titles. We’ve announced Nicki, Gordon, Taylor, Britney, Kendall and Kylie, and WeFire. That’s six titles. I said there are going to be eight.
GamesBeat: Does that mean you’ll have six fewer Deer Hunter-type games?
de Masi: We haven’t announced a Deer Hunter game. Every one of our labels will be represented every year. But the proportion will come down to giving titles more flexibility to either run longer or shift and pivot. We still have the same number of teams. We haven’t slashed team numbers or anything like that. But giving ourselves flexibility to guide what’s going to come out—Having maybe three to six months of visibility rather than 12 months of visibility will give us more operational flexibility.
GamesBeat: If you look at the way certain companies have operated, what comparisons would you make with Glu? I see Supercell putting games into territories and then killing them. Wooga talks about doing 40 ideas a year and two releases. There’s always a different cadence that every company has.
de Masi: Tencent, same thing. They have a big internal studio, and they’ll tell you that a third of their projects will make it through the funnel from green light. But they have all sorts of consolation prizes. If you don’t get WeChat featuring, you get lesser featuring on some other Tencent application.
This notion of concepts is generally misleading. You can’t tell a lot. Unlike the movie business, where Pixar can put something in development for five or 10 years—in that case you’re just paying two guys to write a script. In the game business scripts are meaningless. PowerPoints are meaningless. Show me the mechanic. Show me why this is a fun core loop. You have to invest more, I would posit. We’re talking half a dozen, a dozen people to get something playable.
Supercell has obviously done a great job, at least up until their latest launch—we haven’t heard or seen from them since. It’s hard to produce one every year. On average, I like to joke, gaming is like men’s tennis. If you’re in the top 20 seeds you can be dangerous in the final. You can have a $500 million game or win Wimbledon if you’re in the top 20. It’s not like women’s tennis, where Steffi Graf won every year she played.
Reversion to the mean is a powerful phenomenon. It’s still in Glu’s favor. It’s a lot less likely that King or Supercell will produce another $500 million game than it is that Glu will get its first. Our biggest game is $100 million or $200 million, not $500 million. A $500 million game for Glu would be a real needle-mover. For King, because of Ricardo’s tremendous success—King was half the size of Glu in 2011. Now it’s a $2 billion juggernaut. A $500 billion game only keeps the catalog flat, if they’re lucky. For Glu, which has done a quarter billion dollars in revenue in 2015, you could double the business, a $20 share price kind of thing.
That’s still what we’re playing for. We’re all trying to get better at our craft. Glu doesn’t compete in categories where we’re not number one or number two. We’re not in casino. We’re not in RTS or RPG. We’re not in match three. Other companies, the whole company is focused on being the best at that. We don’t want to be in a category unless we think we have a team that knows how to be number one or number two.
GamesBeat: Kendall and Kylie, are they doing anything right now to promote the game?
de Masi: Have you not been following them? [Laughs] Not only have they been active, but Kim has as well. It’s been a very supportive family this morning.
GamesBeat: You must be very good at following everyone. You’ve won them over to Glu’s side.
de Masi: I spend a fair amount of my time working with our partners to get the best outcome. That was Kylie. Kendall was tweeting earlier. They’ve all been tweeting their number one position. Kim’s also been tweeting. They’re playing the game right now. The girls are taking pictures of themselves. Kris has also lent her enthusiasm. Kris, by the way, leaves her avatar—her game avatar is her Twitter. You’ve got her tweeting, saying nice things about Glu. I can’t complain.
We have more and more brands integrated into the game. We have Karl Lagerfeld and a whole host of other things. She has a good following herself as kind of the mom-ager. Kris has been, in many ways, my business partner on both of these games.
I’ll see you at GDC. We’ll have WeFire in beta by then. You might see some interesting good news there.
Glu Mobile (NASDAQ:GLUU) is a leading global developer and publisher of Social Mobile games for smartphone and tablet devices. Glu's unique technology platform enables its titles to be acces... All Glu Mobile news »
Niccolo de Masi, CEO, Glu Mobile Inc. Niccolo de Masi joined Glu as its President and Chief Executive Officer in January 2010 and brings to Glu a strong background of senior management and e... All Niccolo De Masi news »