Reading through Glu Mobile’s S-1 filing I was interested in the details given about the licenses for branded games, which companies always refuse to give details on. Rafat has already noted that in the first nine months of 2006 85 percent of Glu’s came from games or applications with brands or IP licensed from third parties… in that time Glu Mobile had revenues of $31.8 million and paid out $9.7 million in royalties, or around 30.6 percent of total revenues (36 percent of revenues from licensed games, after a quick calculation). That’s before the operating costs, of course, and to compare costs Glu Mobile spent $11.346 million on research and development, and $8.317 million on sales and marketing. In the “risks” section it also notes that “licenses for intellectual property that terminate prior to 2008 and during 2008 represented 55.0 percent and 18.3 percent, respectively, of our revenues in the first nine months of 2006″, and warns that failing to renew or replace these licenses could affect Glu’s performance.
Still, Glu has been pretty successful in selling these games so far, and intends to continue the licensing strategy. The filing reveals Glu’s belief that it will get easier for the company to sign up licensors. Brand owners are beginning to realize the complications of producing their own mobile games and are becoming increasingly keen to partner with a specialist, and in addition are becoming more reluctant to partner with smaller game publishers that “do not have a reputation for quality development or that do not have the breadth of carrier relationships and technological capabilities necessary to publish a game on a worldwide basis”, according to Glu, giving them an advantage.
Related stories:
–More Glu Mobile IPO: iFone Acquisition Dispute; Salaries, Etc
–More on Glu Mobile
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