Mobile game revenue has never been better. Along with established hits like Candy Crush Saga and Clash of Clans, up-and-comers are enjoying the benefits of in-game sales as well, including DomiNations, which we talked about yesterday. But now Tencent wants to get a bigger part of the picture, as it made a recent investment in Glu Mobile that could mean a change for the better in its games division.
GamesIndustry International reported that the popular mobile company has invested $126 million in Glu Mobile, resulting in a 14.6 percent investment in it. As a result, the company intends to “turbocharge” Glu’s game line-up, with Tencent senior vice president Steven Ma serving on the team’s board.
“Tencent was attracted to Glu due to its five-year growth track record, high-quality entrepreneurial management, and unique approach to methodically building a portfolio of success in the shooter, action-RPG, narrative-RPG, time-management, sports and racing games,” Ma said.
Glu has had no problem seeing success in mobile, with a revenue of $248.1 million last year, led by the highly popular Kim Kardashian: Hollywood, as well as other popular titles like Deer Hunter 2014. The company also has a five-year deal with superstar Katy Perry, and just announced a five-year deal with Britney Spears.
With the Glu Mobile investment, Tencent will have more of a stake in the American market, as 71 percent of Glu’s revenues come from North America. “It’s a case of fewer, bigger, better and not a volumetric approach in either direction,” said Glu’s CEO Niccolo De Masi, speaking to investors. “We do believe we can grow our China business considerably given how large that market is now.”
Speaking with Re/Code, De Masi explained that, with the deal, potential games could be criss-crossed over to other markets. “Potentially, we have the opportunity to help take some of their games out of China to other markets, just as they might take games to China and turbocharge them. It’s quality over quantity. It’ll be one or two projects a year, not one or two a month. And we’re very excited about this. You couldn’t ask for a better partner if you want to make money off of the Android ecosystem in China than Tencent.”
But don’t expect a full buy-out of Glu, as the partnership is pretty well set. “There’s a cap on the amount of shares that they can ever own,” said De Masi. “They can go into the market and buy more shares, but they can’t deter anyone else from coming in to buy Glu. They don’t have a preferred position. Tencent has a track record of being willing to sell portfolio companies at a profit if someone else comes in and want to bid. But we’re in a great position now with a great board member (Ma), and an opportunity to run faster than we could have without them.”
Here’s hoping the partnership reaps great success for both parties.