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Everyone’s Talking About Glu Mobile, Here’s why!

14 Jan Everyone’s Talking About Glu Mobile, Here’s why!

Glu Mobile, Inc. (NASDAQ: GLUU), formerly known as Sorrent, Inc. develops free-to-play mobile games. The Company’s portfolio consists o f games covering genres such as sports, lifestyle, casual and outdoors, with award-winning original and licensed IP titles such as Covet Fashion, Deer Hunter, Design Home, Diner DASH Adventures, Disney Sorcerer’s Arena, Kim Kardashian: Hollywood and MLB Tap Sports Baseball.

The Company publishes and markets its games primarily through Apple App Store, Google Play Store, and other digital storefronts. Glu Mobile has two key umbrella brands namely Crowdstar, which incorporates real-life inspirations with games, and focuses on women’s lifestyle games driven by high aesthetics, style and elegance and Glu Sports, which is targeting the male audience with emphasis on sports and outdoor games that use high-end graphics to create an action-packed and competitive environment.

Image Source: Company

Glu Mobile has a series of new launches lined up for 2021, beginning with the beta release of its Table & Taste food game in the first quarter, as part of its suite of lifestyle products. The game has been developed using its benchmark development model and has received highly encouraging data about its retention KPI’s from its consumer prototype launch in Q2, 2020.

Furthermore the Company would be launching additional titles such as Deer Hunter World, Tap Sports Fishing and Tap Sports Baseball 2021, under its Glu Sports Brand. Glu Mobile has its eyes set on margin expansion and to achieve this end, it not only intends to extend its existing games, but also develop and acquire new growth games. In addition, the Company will strive to achieve increased productivity and marketing efficiencies.

As per its Q3, 2020 business update, the Company has registered 22 percent YoY growth in bookings to reach $147.3M, owing to increased engagement and ABPDAU due to the pandemic. YTD bookings were up by 38 percent at $435.8M.Revenue was up by 48 percent YoY at $158.5M, while its YTD 2020 revenue stood at $399.1M, a growth of 34 percent.

The Company’s user acquisiton strategy relies on a centralized team that uses a data-driven, segmented marketing approach to attract and retain customers. Furthremore Glu Mobile is also continuously enhancing and scaling its game features to promote organic installs.

Image Source: Company

Glu Mobile is expecting bookings in the range of $595M to $605M from its live titles in 2021, with 8% to 10% annual growth from its 3 growth games, however the guidance does not take into account the 4 new original IP titles Crowdstar Moments, Table & Taste, Deer Hunter World & Tap Sports Fishing in to account. The Company expects Table & Taste and Deer Hunter World to reach double digit growth rates by the second year.

Glu Mobile (NASDAQ: GLUU)

Market Cap: $1.57B; Current Share Price: 9.16 USDChart
Data by YCharts

The Advent of the Smartphone has revolutionized the gaming industry. There is an exponential rise in the number of gamers, which now stands at about 2.3 billion gamers worldwide. According to a report by Newzoo, the global games market which was valued at $137.9 billion in 2018 is likely to reach $180.1 billion in 2021, growing at a CAGR of 11%. Mobile games will contribute to 59 percent of the total or over $106.4 billion by 2021.Mobile and Tablet gaming alone contributed to over $70.3 billion in 2018.

Image Source: Freepik

The Second-Largest segment is Console gaming with revenues of $34.6 billion in 2018. The report points out that the industry grew at a CAGR of 11 percent between 2012-2021, which in itself is a major accomplishment, as maintaining a double-digit growth rate for over a decade, is no mean feat. The segment will have grown from an inconsequential sector in 2012 to a 100-billion-dollar industry by 2021.

Asia-Pacific regions will drive the growth in the market, with a steadily increasing smart phone user population, generating $71.4 billion or 52 percent of total global game revenues. Countries such as China, which is the number one gaming market, and Japan are the largest spenders on mobile games, with average spend per payer in Japan being 1.5 times higher than in North America and more than 2.5 times higher than in Western Europe. In addition, China, alone will contribute to more than 25% of all global game revenues, with over $37.9 billion revenues in 2018.

North America is the second-largest market for games with a year-on-year growth rate of 10% and nearly $32.7 billion in 2018. There were similar trends in the Europe, Africa and the Middle East Market, which generated combined revenues of $28.7 billion in 2018. Though lacking in average spends per payer, this segment will witness a steady growth in the Smartphone population, making up for the revenues.

Key Takeaways

  • The Global Games Market is expected to grow by 19.6 percent to reach $174.7 billion in 2020 and will continue to grow to a projected $217.9 billion by 2023 according to a report by Newzoo. The pandemic and the resultant lockdowns have encouraged people to stay home and socialize less, causing a spike in gaming activity. The same report further states that games on mobile will generate $86.3 billion in 2020, up from our previous forecast of $77.2 billion.
  • Glu Mobiles bookings are increasing at an impressive rate, a higher booking rate implies that it is successfully attracting new users or witnessing increased spending from its existing users, either in the form of subscriptions or one-time purchase, both of which augur well for its future revenue.
  • Growing competition, rising costs and rapidly changing customer preferences in the gaming industry calls for the optimal use of advertising and marketing promotions to attract new users and build a large subscriber base. The Company is leveraging its leadership, technology and process expertise to create a multi-pronged strategy for user acquisition and retention.
  • The Company has 4 new titles lined up for launch in 2021 namely Crowdstar MomentsTable & TasteDeer Hunter World, and Tap Sports Fishing. Glu Mobile is estimating $25 million and $75 million in revenue from Table & Taste and Deer Hunter World in the first year. It further expects these titles to achieve double-digit growth by their second year, adding value to its bookings and revenue.
  • Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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