Advertisement Is Mobile Gaming Thriving Or Struggling? Depends Whom You Ask by Dianne See Morrison Dec 4, 2008 - 8:56 AM CST 4 Comments Tweet Share Post A day after *Glu Mobile* said it would shed staff and cut CEO Greg Ballard Advertisement Advertisement 4 Comments Ides of March December 6th, 2008 Glu's impending bankruptcy is directly and solely attributable to the leadership of its CEO. Glu has grossly overpaid for tired, unsuccessful movie licenses and other product licenses. Calculated from its financial statements (cost of goods plus "impairments") it appears that Glu's EFFECTIVE royalty rates are in the 40% – 50% range for licenses, and no company can succeed with this level of expense. Glu did not have to pay these rates for these licenses, but has been consistently unable to walk away from bad deals. This was compounded by their complete failure to operate cost effectively and be non-GAAP profitable and cash flow positive, which is how public companies are valued. Finally, Glu's CEO simply has been unable to create any intrinsic value in Glu (by developing successful original games and titles) so they've increasingly relied on poor licenses and misfit acquisitions such as Superscape for their growth and success. Even as a "pure play" company Glu could have been highly successful if they had been operated efficiently and cost effectively and had not grossly overpaid for their licenses. But without a product-focused or operationally focused CEO, Glu relied on being a marketing-driven company, and as with other marketing-driving software companies (Acclaim) this focus was doomed to fail. Chip December 6th, 2008 I think the industry is in trouble. Did you see the press release about the executives from Tapatap that are headed to DC to get bailout funding for the mobile entertainment industry? Here it is. http://www.tapatap.com/tapatap-userweb2/public/corp/press.htm#12.04.08 Gary December 5th, 2008 Glu is hosed because they're a "pure play" company that has to license every title it publishes. Big competitors such as EA, in addition to generating their own properties, pay for a license to a property across all platforms, so the cost to the mobile division is far less. Glu's business plan dooms the company, due to the actual amount of sales any mobile title gets; it's just too expensive to license content for mobile only. Plus in missing iPhone it shows they're weak at dealing with changes and new technology; and being an unprofitable company, they won't have enough resources to move to support the new platforms (like EA did when they were surprised by the Wii). Once a year or so someone will catch lightning in a bottle like Steve Demeter did on the iPhone. I hope he can repeat it, otherwise he'll be back at the bank in a few months. Charley Hine December 4th, 2008 Steve D. raked in '250,000 million'? Comments are closed.