At the Casual Connect conference in San Francisco, Glu Mobile CEO Niccolo de Masi was interviewed by Michael Metzger, senior vice president of investment banking firm Houlihan Lokey, about Glu Mobile’s celebrity game strategy and de Masi’s views about entertainment and games. The following are some excerpts from the talk.
You released Gordon Ramsay DASH recently. What worked well and what hasn’t worked well compared to the other DASH games you have?
Glu’s strategy in celebrity gaming is fundamentally about, “how do we take a proven game that monetizes well and has a solid LTV [Lifetime Value] and turbocharge that experience?” We do that not only by trying to expand the audience, which fundamentally drives more installs organically, but it also tends to be a lowering of the average cost per install. So there’s a an audience expanding function for these partnerships. Then there’s also unique content tie-ins. Gordon Ramsay DASH demonstrates all three of these turbocharging factors.
Gordon has been a strong supporter of his own game. You can tell from his Twitter feed. He’s been on social media and TV talking about this. The game itself is quite unique. Gordon does a lot voice-over in it, you can be sworn at by him as you play, and it has a lot of his own refinements and polishing of the design. Whether you’re a Gordon Ramsay or Kim Kardashian, it’s the three same effects: grow the installed base, lower the actual CPI for paid marketing, and then sometimes you get a welcome boost in retention as well. Both in Gordon’s and Kim’s games, we have seen that people stay in the game longer than they do in predecessor titles, namely Gordon Ramsay Dash and Stardom, respectively. There’s probably, on the margin, a greater propensity to spend. We certainly saw that in Kim’s game and to some extent in Gordon’s as well. We are pleased with both of those partnerships. There a template for what we’re trying to accomplish with the rest of our roadmap. Next up for us will likely be a Nicki Minaj game this fall.
You mentioned that your celebrity games have higher LTV’s. How does the celebrity factor play into the LTV of these games?
Thankfully, we’re a public company so I can answer that fairly accurately. If you look at Kim Kardashian: Hollywood‘s cumulative revenue between June 2014 and the end of 2015, you come to something like $157 million in revenue. We’ve also done about 40 million installs, so if you divide that you get to about a cumulative $4 LTV so far. I expect that we’ll see similar numbers from Gordon’s game and other successful partnerships. The expansion comes about through a mixture of factors moving up, so it’s not one single thing. It’s a little bit better retention, a little bit better conversion, and together those ARPPU (Average Revenue Per Paying User), those three metrics if they each go up ten or twenty percent in aggregate you get quite a big boost to overall LTV.
You have a wide range of celebrities with a large following in your games. What makes for a more successful celebrity game, and what makes for a less successful one?
Making games is hard. It’s not only difficult to bring together the art and the science so that there’s a really good experience, but there’s an element of market timing to it as well. There’s always an element of variability, a balance between what’s old and what’s new, ultimately. When you look at our portfolio of celebrity games, the successes we’ve had have been a mixture of the art and science coming together well and being a great experience. Also, something that hasn’t been seen before helps. There’s always an element of whether or not you are doing something that is fresh enough. We perhaps didn’t do that with our Britney Spears or Katy Perry games, for example. We were counting on a new brand and a more established monetization engine to carry the games forward. What we’ve seen in those games is a decent LTV but not a big enough audience.
What’s interesting is when you think about Kim’s game audience, it’s actually three or four audiences pulled into it. You’ve got Kim’s core fan base, which at the time was 40 million followers. Today it’s more than 60 million. She’s actually pulled in other adjacent demographics: you’ve got people interested in Hollywood and becoming famous, then you also have young adult female decision makers, 14 or 15-year-olds, and then those who want to experience what it’s like being a celebrity. You pull all three of those together, you have a $150 million to $200 million game by the time you’re done. Gordon—to some extent—is doing the same thing, there’s never been a celebrity food game before, so we’re first.
We continue to believe in what we are doing. We are leading what I call the personalization of media through gaming. It’s the same trend you’ve seen on TV and on all forms of media, where in the Western world people are becoming what is followed, what is more important. When Tim Cook says “we figured out the future of TV is apps,” we totally agree. The future of everything is apps—the future of magazines, the future of TV, the future of music, and the future of gaming is obviously an app as well. I think gaming is poised to be the apex predator of the entertainment space. We can generate more revenue per second of engagement, [and] more revenue per daily average users, than any other form of entertainment because we are better at driving that compulsion loop. The future of gaming and entertainment is intertwined. The personalization of entertainment is what we’re going to see a lot of in the next five to ten years.
Will games be a key platform for celebrity engagement with their audience?
Performance is the #1 revenue generator if you’re an artist. After that, you’ve got merchandising. I think gaming and apps are poised to be right there on the podium. For Kim, we are #2 on the podium; according to Forbes we were 40 percent of Kim’s haul last year, which means we’re probably #1 or #2. For Taylor or Nicki, we’re planning to do the same thing.
What is your vision of the future of the mobile entertainment space? You look at the top apps and the media streaming apps weren’t there six to twelve months ago, and now they are. What is this doing to gaming apps?
We’re keeping our eyes on it. There’s no hiding the fact that in the past 18 months, a third of the top 25 grossing spots have been taken away from gaming companies and are occupied by Spotify, HBO, Pandora etc. The world has gone mobile and it’s here to stay. For the first three years, the App Store was just a game store. Today, Facebook is a majority mobile revenue company. YouTube is a top-grossing app.
Consumers are spending the majority of their time and revenue on mobile devices. So we have to compete in that landscape. That’s why I think gamification of entertainment is a really interesting intersection for the entire gaming industry to sit up and take note. There will be Pokemon GOs that punch through and occupy the top-grossing spots. But subscription apps have a sizable advantage: a simple UI that cycles a lot of content through, and it’s frictionless, it’s very mass-market. We can learn from this. In the future, our roadmap is going to integrate some of what’s been successful there. Certainly, we’re already making entertainment products with our celebrity partners that are competing for that time. If 20 percent of consumer time goes on Facebook or instant messaging, that’s something we actually have to compete for as part of the consumer’s day.
