After a year of failures, Glu Mobile (NASDAQ:GLUU) finally has developed a winning game in Deer Hunter 2014. The game was released on September 18 and quickly jumped to the top of iOS charts for free game downloads according to AppAnnie.com. Now the question will be whether the game has staying power to garner the success of games like Angry Birds and the recent hit Candy Crush.
Glu Mobile has been a leader in mobile games although it hasn't translated to success for shareholders. The Glu Mobile story is similar to the recent struggles of Zynga (NASDAQ:ZNGA) after it went public back nearly two years ago. Both companies offered investors a potentially massive upside in the exploding world of mobile games. Unfortunately, recent successes have come from out-of-nowhere private firms such as King.com with the recent mega hit in Candy Crush that still tops the grossing charts. Has Glu Mobile finally figured out the path to successful game development and does that portend potential good news for Zynga?
New GluOn system
The excitement for Deer Hunter 2014 goes beyond the past success of the franchise. This version of the game includes new technology from Glu Mobile that allows for more social interaction of players. The GluOn games-as –a –service (GaaS) system allows players to join hunting clubs called Club Hunts to compete in challenges and win prizes. The service will also include leaderboards, chats, alliances, persistent player profiles, and a storefront to continuously engage gamers.
Suddenly the social action genre can be so much more than individual players testing their skills. Now the ability to play tournaments and win prizes opens up the excitement to continue playing the game and even inviting friends to join in the fun.
The freemium game developer has several strong franchise games to release in the fourth quarter that take advantage of the GluOn technology. The ability to create tournaments where users can obtain prizes could provide homerun potential for grabbing gamer playing time for extended periods. It's one thing to play these games for free, but it's a totally different animal to compete against fellow gamers for something meaningful. In those scenarios, gamers are more likely to pay for upgraded guns.
Topping the charts
According to AppAnnie.com, Deer Hunter 2014 topped the charts for iPhone downloads and cracked the top ten for monetization. Both numbers are good signs that Glu Mobile might finally have a major hit on its hands. Considering analysts expect the company to continue losing money in 2014 and the recent secondary that priced over 7 million shares at $2.10, Glu needs a major winner to get the company back on solid footing. Not to mention, it needs to prove to the market that success in mobile game development is much more than luck or random success stories.
The real question is whether this game can become a major success that would produce $20 million in revenues or greater. Just think, that goal pales in comparison to the $1 billion in sales achieved in the opening weekend alone by Take-Two Interactive Software (NASDAQ:TTWO) Grand Theft Auto V. Not only has that franchise been a huge success, but also like a few other console franchises, it has provided higher revenue streams with each new iteration.
CastleVille Legends disappoints
The recent release of CastleVille Legends has provided limited success for Zynga that is still struggling to develop top games in the mobile landscape. The game currently sits at only 33rd place on the iPad download charts. Due to the size of Zynga, with a market cap around $2.8 billion, this game isn't going to move the needle like Deer Hunter will for Glu Mobile.
Investors interested in the sector would be keen to follow the progress of Deer Hunter 2014. If Glu Mobile has finally identified a method of successfully monetizing successful game franchises on mobile, the predictability of future game monetization should be greatly enhanced.
If the mobile sector can start attracting the hard core gamer set that spent $800 million on Grand Theft Auto V during the initial day, the future will be very rosy for Glu Mobile and even Zynga.
Mark Holder and Stone Fox Capital Advisors, LLC own shares of ZYNGA INC. The Motley Fool recommends Take-Two Interactive . 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.
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