How To Make Freemium Work: Niccolo de Masi, CEO of Glu Mobile (Part 5)

Sramana: It seems like your core markets would be North America, Western Europe and Japan. Is that where most of your revenue comes from?

Niccolo de Masi: We do generate a lot of revenue there as well, especially for the smart phones. We also do very well in China. We have a strong presence there from our feature phone days and our local game offerings are strong.

Sramana: What kind of revenues are you generating from China?

Niccolo de Masi: Historically we have made up to 10% of our revenues from China. I don’t see any reason why we cannot make those levels of revenue in the future as smart phones gain traction in China.

Sramana: Can you give me an example of revenues from one of your action adventure game titles? How many users do you have and how many convert?

Niccolo de Masi: I will use Gun Bros as an example. We have seen revenues of up to 2 million dollars per quarter. We see 5% of users paying, however we are able to capture advertising revenues on the entire user base. This is one of the reasons that we think advertising and the freemium model go hand in hand.

We want to keep our users on Glu games as long as possible, every day. We are not trying to build our own ad network so we partner with other ad networks and we rotate our filling of ads among them based on the price they are able to monetize our real estate for. We aggregate 5 to 10 different advertising networks. Some are huge like Google, some are small like Flurry. We try a lot of techniques including banner ads, video ads, and incentive ads which provide virtual game currency. Mobile eCPMs right now are around a dollar whereas online they are around ten dollars. We believe there will be convergence there. In previous quarters about 25% of our revenues on the smart phone side will come from some sort of advertising.

Sramana: Help me understand and competitive landscape around high production value action adventure games. Who is out there?

Niccolo de Masi: There are great console companies that are beginning to compete. Those are folks like EA. There is potential for folks like Take-Two and Activision to get into the mobile space. Right now they are almost all exclusively focusing on Apple and they are all using a paid download model. We are experts at using the freemium model while being able to cover all devices across platforms. That is a really important difference.

Sramana: What percentage of your revenue comes from the Apple ecosystem versus Android?

Niccolo de Masi: The majority comes from Apple but Android is growing pretty quickly. We think we are going to see a nice percentage growth in Android revenues quarter on quarter. We have a great relationship with Android and Google.

Sramana: How do you view Zynga and comparable companies?

Niccolo de Masi: Zynga is a huge company and they are so profitable that they can compete in whatever market they want. I think their first step is to first, protect current revenues on FaceBook, and then the second step is the gaming portal site. They will then grow their existing brands in mobile. We think we have powerful mobile-only expertise. Zynga is enormous on FaceBook but we are a bigger company on mobile. That is exciting because we do not have the resources they do but our products are translating nicely on mobile devices.

This segment is part 5 in the series : How To Make Freemium Work: Niccolo de Masi, CEO of Glu Mobile
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