Whether you love or loathe Kim Kardashian, one thing is indisputable: The woman knows how to market herself. On top of reality shows, high-profile marriages, and headline-grabbing selfies, her new mobile game is becoming one of the most popular and profitable apps of the year.

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Source: Google Play.

Glu Mobile's (NASDAQ:GLUU) Kim Kardashian: Hollywood, which was released on June 27 for Apple (NASDAQ:AAPL) iOS devices, is currently the most downloaded free iPhone app and the fourth-highest grossing app in the U.S., according to App Annie.

Only Supercell's Clash of the Clans, King Digital Entertainment's (NYSE:KING) Candy Crush Saga, and Pandora Media's streaming radio app are currently more profitable. The game was also recently released for Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Android devices.

The goal of Kim Kardashian: Hollywood is to become an A-list celebrity. To accomplish this, Kim advises players to buy better clothes and date famous people to boost their social ranking. To achieve that, players need to spend virtual dollars known as "K-Stars" in the game. A player can buy up to 175,000 K-Stars at a time for $99.99. Just like other "pay or wait" games, players who don't want to pay real money must spend energy on jobs or wait for hours to earn more K-Stars.

The business of celebrity apps
There are already plenty of celebrity apps out there. A Snoop Lion app helps users "Snoopify" their photos with graphics and stickers; a David Hasselhoff app answers questions like a cheesy magic 8-ball; and a Taylor Swift app lets fans send greeting cards to each other.

Most of those apps aren't full-featured games like Kim Kardashian: Hollywood, and none of them have been successful enough to alter an entire company's full-year outlook. Yet that's exactly what Douglas Creutz, an analyst at Cowen & Co., expects Kardashian's game to do for Glu Mobile. Creutz estimates that annual revenue from the game could hit $200 million.

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Source: Google Play

But $200 million won't be enough to make the game the next Candy Crush Saga, which grossed a whopping $1.54 billion in gross bookings (virtual items and access to skill tournaments) last year. But it's still a massive amount compared to Glu Mobile's non-GAAP revenues of $113.4 million last year.

Last quarter, Glu Mobile's non-GAAP revenue climbed 90% year over year to $47 million, thanks to strong sales of its Deer Hunter and Eternity Warriors franchises. For the full year, Glu expects non-GAAP revenues between $155 million to $161.5 million. But considering the recent success of Kim Kardashian's game, Glu's full-year outlook could dramatically improve over the next few quarters.

Does this mean Glu Mobile could soar?
While the bullish math seems simple enough -- $200 million would be nearly double Glu's projected revenue for the full year -- there are potential pitfalls that investors should watch out for.

First, there's a question of royalties. The Guardian recently estimated that sales of $200 million and a net profit of roughly $100 million would translate to $40.5 million in royalties for Kim Kardashian. $40.5 million would be a huge weight on Glu's bottom line, considering that it expects non-GAAP net income between $1.4 million and $3.2 million for the full year. Therefore, royalty payments to Kardashian could easily mean the difference between a full-year profit or a loss for Glu.

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Source: Google Play

Second, the game is heavily dependent on in-app purchases, a controversial practice which has recently landed Apple and Google in trouble. The European Commission recently urged Apple to do more to limit accidental in-app purchases. Google also promised to stop labeling games with in-app purchases as "free" by September. If Apple follows Google's example, "free" games like Kim Kardashian: Hollywood could experience a steep drop in downloads.

Last but not least, mobile games aren't built to last forever. A recent study from Flurry Analytics of more than 26,000 apps that peaked between 2011 and 2013 found that half of all apps lose half their peak users within three months. It also found that games die out the fastest, with a half life of only two months compared to seven months for news apps. This means it might be premature to compare Kim Kardashian: Hollywood to longer-lasting games like Candy Crush and Clash of Clans.

The Foolish takeaway
In conclusion, the popularity of Kim Kardashian: Hollywood can be a blessing and a curse for Glu Mobile.

If the game succeeds and nearly doubles Glu's annual revenue, it could make Glu too heavily dependent on a single game. If the game fades away prematurely, Glu's stock could quickly give up its massive gains. But one thing is for certain -- the popularity of Kim Kardashian's game has opened the doors for similar celebrity-sponsored games to hit mobile devices in the near future.

 

Leo Sun owns shares of Apple and Google (C shares). The Motley Fool recommends Apple, Google (A shares), Google (C shares), and Pandora Media. The Motley Fool owns shares of Apple, Google (A shares), Google (C shares), and Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.