GB: Is there a way to see where this could monetize?

Ahuja: The goal here, being first with this, is to cement our position with the Glass team. Now when they come out with something new, they’ll come to us, hopefully. That may include when they launch a store where you can monetize a product, all the way to the commercial launch of the device.

de Masi: Google already has it built in, when you think about the ecosystem. They have Google+, Google Checkout. If you can play it with your Android phone, it’s not too big a logical leap. This isn’t 2010, where they didn’t even have billing.

Ahuja: Once they have a way to bill, we can figure out ways to monetize.


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GB: What have they signaled as far as what’s coming for this? Any other clues for how long this is going to take to become a complete platform?

Ahuja: They already have a store, called MyGlass, the Glassware store. Everything is free. They were very particular about taking the in-app purchase clause out of our standard agreement. Right now they don’t have that. But ultimately they may plan to do that.

de Masi: They’re following the usual playbook here, as we are, which is to get the device penetration and then worry about that later. Right now it’s us and the New York Times that are available on Glass. But they obviously have plans to make big progress next year.

GB: There was a wearable conference recently. Everybody seems to be talking about things like Glass.

de Masi: Yeah. But this project is unique in the wearable ecosystem. It’s the furthest along. It’s the most functional. It has the support of one of the two founders of Google. That gives them almost unparalleled resources to make it a realizable vision. Google has obviously been a software company, but they bought Motorola, and they have an eye on trying to be a hardware/software play. This is a unique opportunity to do something big. Especially if you think about what wearability can be for their search business in the long term. It fits nicely there.

Ahuja: Google has already filed a patent for pay-per-gaze advertising, which is related to Glass.

GB: What do you think of the state of the game business these days, especially in mobile?

de Masi: It’s the land of the big getting bigger. There are opportunities for small companies like Supercell to come out of nowhere, but over time you’re going to see—My prediction I made a few months ago is that by the end of next year, every company of any significance will be public. Supercell is now part of a public company. King is trying to go public. Kabam, the rumors are going up and down. We’re public. Nexon, Gree, DeNA, Tencent.

Since I joined Glu four years ago, the space has gone from when we were the only public mobile game company – aside from EA and Gameloft – to now, where virtually everything is public. That will help Glu in the long term. It brings transparency to all competitors over all metrics. We’ve been living with that for a long time.

GB: What’s the scale for a hit now? $50 million is what kind of hit to you guys?

de Masi: It’s fairly significant. We’re an approximately $100 million business this year. We can grow that meaningfully year-in year-out. I said when I joined Glu that we could double the smartphone business every year. We’ve done about that. We started from almost nothing. I don’t know if we can keep doing that at this size, but we’ve guided to 20 percent year-on-year growth, and that’s something you can easily exceed if you get another $50 million game.

The thing about the game business is that for a company like Glu, which puts out maybe a dozen games a year, the chances of one of them being really meaningful to the size of the business has improved dramatically. I always tell our investors, if you’re looking for a good gaming investment, Glu is highly compelling because of the ratio of the size of a top 10 grossing game to our existing revenues and market cap. If you’re Zynga and you have $1 billion of revenue and a $2.5 billion enterprise value, you can get a $100 million game shipped and it doesn’t make much of a difference. You sustain what you have. For Glu, we get a $100 million game and the company is not only twice the size, but the profitability profile goes from breaking even to $20, $30, $40 million of EBITDA.

This is the phenomenon. They went from $50 million in 2011 to goodness knows where they are now, on the back of one game. That leverage ratio is interesting for us right now. We have better expertise than ever now. We’re making strides in the talent wars. Our chances of getting a $100 million, $500 million game are better than ever right now. And they’ll probably keep going higher as time goes by.

GB: I talked to John Riccitiello, the former CEO of Electronic Arts, recently. He was saying that brands are the big thing. Is that similar to what you were saying about how public companies are going to rule?

de Masi: Size is going to matter. EA has arguably more franchises in more categories than any other company. He did that deliberately when he was there. I think that is going to happen in the rest of the industry. There will be consolidation. Company size will be dictated by the number of categories where you have a leading IP shot on goal – something that’s in a top three position in that genre. For us, the core of the business will be to be that in the action space and the shooter space. We’ll see what we can converge to in the action space.

We think we’re unique in that no one else is doing anything in the shooter category other than us. 50 or 60 percent of revenue on console is shooters and action game. On mobile, what’s that percentage? Maybe five, or three? We probably have a huge market share of a small category right now, but in the long run it’s hard to believe that small percentage on phones and tablets is not going to go up. I’m not saying it’s going to 50 percent. But even if it goes to 13 percent, which is highly plausible in the next five years, that would benefit us dramatically.

Some of the ways that it’ll get there—It’s not only us continuing to figure out the right analog for action games and shooters on phones and tablets. It’ll be figuring out how these peripherals and companion devices can bring the experience to life.

GB: The Moga guys, what do you think of those folks who are doing the controllers for mobile?

Ahuja: We’re already live with support in Eternity Warriors II. It works in the menus, in gameplay, in the entire experience with Moga and Nvidia Shield. Our stance there is that as long as you follow the Android guidelines with your controller, we’ll support it. We’re taking it on a game-by-game basis. Deer Hunter 2014, in a week or so we’ll launch with support for Moga and Shield. We’ll do some analytics and see how many people are using these controllers and go from there.

GB: Apple did something with iOS 7 that enables these controllers. It’s certified now?

Ahuja: Apple is certifiying. Google is not. Apple, as always with hardware, they have their specific requirements, which is why you don’t have to deal with fragmentation. But Google has issued guidelines on Android as well. They’re not going to certify these controllers, but there are guidelines you need to follow, and we’re only going for the ones who follow Google’s guidelines.

GB: That could hopefully be the thing that brings shooters up in market share.

de Masi: I think it’ll be one of the things. As the hardware keeps getting more powerful, and tablet resolution goes up—Deer Hunter is a shooter, and the reality is that it has the largest DAU probably ever on a shooter for phones and tablets. Who would have thought it would have been that large? RTS games have had a big ride between 2012 and 2013. So has casino. Before that it was casual games. What has not had a ride like that? It’s action games, shooters.

It’s inevitable, in my mind, that there will come a moment where this stuff performs exceptionally well. One of the reasons for that—I like to joke about this internally. Shooters are the world’s second-oldest profession. They’ve been around forever. It’s a permanent, timeless, low design concept kind of thing. High design concepts, we all remember Zen Bound in 2009. Who cares? No one wants to wrap a block with rope. Shooting things seems to be fairly timeless. I’m confident about finding the right analog for these things, as opposed to the genre itself having any fundamental long-term constraints to it.

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