Glu CEO Greg Ballard On The Economics Of Mobile Games

Glu is going well but has a few problems with the European market, CEO Greg Ballard told the Nokia (NYSE: NOK) World show, according to Pocketgamer. He warned about mobile games following the path of the first Atari, where the market was swamped by bad games and people simply stopped buying them…and this is a fairly common complaint from people in the mobile industry, although it’s rare to hear people admit their own company makes crap games, although some admit the market forces them to focus on quantity over quality.

Ballard listed some points about the European market: The average price of games has remained stable at about 5 pounds, compared to the US where the average price has risen from $4.50 to $7.50 between 2004 and 2007 — still less than in Europe — which is good for consumers but less good for the games industry, unless there’s an increase in sales to make up for a stagnant price point, but Ballard said Glu’s (NSDQ: GLUU) top five games in Europe sell 70 percent of the amount of the top five US titles. Going further, Ballard breaks out the revenue share in the industry: 1.50 pounds goes to the distributor, 1.75 pounds to the operator and 1.75 pounds to Glu, out of which it may have to pay a separate cut to the brand-owner for a licensed game. Furthermore, Ballard used the example of the Transformers mobile game where it made 25,000 versions of the games for different handsets, operators and languages, with 21,000 of those in Europe, and then said that games have a shorter shelf life in Europe. “It means publishers have to think short term,” said Ballard. “We can’t invest as much in European focused games as in global titles, and we have to put a premium of quantity over quality. We do continue to launch European or even British-only titles, but the economics of our business make that increasingly a challenge.”

It seems almost like a chicken vs egg situation, where the developers build for the market which needs quantity, and the people tend to go for the “latest thing” because they’re pretty much all the same. Ballard also spoke about the poor distribution channel and the over-abundance of mobile game developers, and hopes that there is consolidation in the industry. This would see less competition, but would allow the surviving developers to invest a bit more in their games.

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