The investment comes in the form of promissory notes, which are convertible into equity and will be committed in two batches: The majority will be placed upfront, with a remaining balance being paid “upon hitting specific commercial milestones.”
As part of the deal, Glu’s CEO and chairman, Niccolo de Masi, will join Plain Vanilla’s board of directors. And Glu has also confirmed that it has the option to acquire the company outright at an undisclosed pre-agreed price if the partnership goes well.
Based out of San Francisco, Glu has a number of well-known brands in its free-to-play mobile-gaming arsenal, including Kim Kardashian, James Bond, The Terminator, RoboCop, and Dragon Slayer. The company went public on the NASDAQ in 2007.
Headquartered in Iceland’s capital of Reykjavik, Plain Vanilla launched in 2012 with a small seed funding round but later raised another $4.5 million ahead of the launch of its fast-paced quiz app on iPhone in November 2013. It raised a whopping $22 million before the year was out, followed by another $5 million in the summer of 2014. Today’s news takes the company’s total amount raised past the $40 million mark.
With 40 million registered users under its belt, Plain Vanilla revealed last October that it had teamed up with NBC to transform its hit game into a TV show, and it seems this deal was pivotal to Glu’s interest in Plain Vanilla. Indeed, the two companies now plan to co-develop the QuizUp TV show alongside NBC and ensure the program receives maximum exposure to viewers globally. If all goes according to plan, this will drive downloads of the QuizUp mobile app, and in turn this may open opportunities for Glu to do some cross-promotion of its own in its own properties. This could lead to Glu’s ultimate move — buying Plain Vanilla outright.
It’s clear that Glu is playing it safe to begin with. It’s putting enough money into the Icelandic company to have a say in things, but ultimately it can walk away if things don’t work out well. It is a smart move in many respects. Glu is well aware that many apps and mobile games can have relatively short life spans — so why spend an exorbitant amount of money buying a company that may be obsolete within a year? With a primetime TV show airing in the U.S. and U.K., that could be the key difference between whether QuizUp sinks or soars.
What’s perhaps most interesting about today’s news, however, is that Glu has been so open about its intentions to acquire Plain Vanilla even though there appears to be no real benefit to announcing this in advance. But Glu has its reasons.
“It [the acquisition] is an important feature in the transaction structure which we wanted to highlight,” a spokesperson told VentureBeat. “Glu prides ourselves on transparency and being judicious deployers of our capital for inorganic growth. This deal is a good example of our ability to create an innovative transaction structure, which allows synergies to be realized between Plain Vanilla and Glu even prior to consolidation.”
As with many Internet companies, Plain Vanilla focused its formative years on building a solid user base and built social features into its core to increase stickiness. With investors to appease, it now has to think about making serious money, and partnering with Glu offers a mutually beneficial way of increasing numbers. Plain Vanilla can benefit from Glu’s reach in the mobile-gaming realm while Glu is clearly looking to benefit from QuizUp’s newfound TV fame. If QuizUp is a hit, Glu will see the long-term rewards by purchasing the company outright, and it will be a happy ending for all involved.