Friday, May 28, 2010

The Good The Bad & The Ugly In The Mobile Content Ecosystem May 2010

This segment, which covers my current perception of the state of select companies and business sectors in mobile entertainment, will be a recurring feature on Cabana Mobile. You'll notice dynamism in terms of the companies covered and where they fall within these categories, over time, as my inputs change. Let me know if you agree or disagree with my opinion... and tell me what other companies/categories you'd like to see on this list.

  • DeNA - Japanese powerhouse, fueled by the uber-successful Mobage-town social mobile games portal, has over $500mil in annual revenue, $125mil in profits and over $350mil in cash. These guys could roll-up several major western games publishers in a heartbeat if they were so inclined.
  • Gameloft - the French publisher, always a high quality player, has been on its iPhone game from the start and now derives a full 21% of their revenues come from the AppStore... which is (for better or worse) the only game in town in terms of paid mobile content. Gameloft is proof that you can turn a super-tanker in rough seas.
  • GAMEVIL - South Korean game publisher has 2 things going for it... great capabilities with micropayment model games in its home market and a focus on high-quality builds that are conducive to smartphones. These guys regularly deliver solid profits and have a market cap that must make many of their bigger competitors very envious.
  • Millennial Media - It's no secret that I've always had a healthy level of skepticism about the value of the mobile ad networks. That said, there ain't no denying that the biggest, and one of the best managed, of the independents is in a super-sweet spot in light of Google's $750mil acquisition of AdMob and Apple's $275mil acquisition of much smaller Quattro. Rumors have been swirling for months that Microsoft is in the hunt.
  • Firemint - smart, lean Australian games developer, turned iPhone publisher, is one of my favorite content success stories of the smartphone revolution. Flight Control and Real Racing have been true phenomena on both the iPhone & iPad. The big question is, of course... what's next?
  • Glu Mobile - this quality mobile games publisher, that I once called the "barometer of the health of the mobile entertainment space", has been struggling to evolve from a carrier-focused, licensed IP based company, into a smartphone savvy developer of original game franchises. They're currently going through a painful right-sizing process and experiencing declining quarter over quarter revenues. Cash is a severe pain point and their market cap (under $40mil) is currently 11% of rival Gameloft's.
  • Carrier Decks - remember way back when (2years ago) when Get It Now! and MEdia Mall (and their ilk) used to be like WalMart and Target for mobile content? Well unfortunately the smartphone revolution and Apple's retail smarts have shifted that paradigm... big time. Publishers now routinely report alarming declines in their carrier-based revenue. I doubt the tide will turn back, unless operators focus their efforts on curating and facilitating billing for paid Android apps... 'cause that's a growing mess they're in a position to fix.
  • Motricity - back in January this veteran, Bellvue, WA based, carrier content platform management company made its intentions known to the SEC that it wanted to go public. Lots of folks in the industry were shocked by the timing, considering the the general state of the IPO market, current conditions in the carrier deck business, the very substantial losses Motricity has racked up over the last few years and the fact that 74% of its revenues come from 2 companies.
  • GetFugu - when your stock price is under a penny, you have to take a bridge loan for $170k & after 6 months your one app has only 333 mostly poor ratings in the AppStore, that's kinda ugly. Even the micro-cap day trader crowd is way over it. It's hard to believe that this company will survive the summer.
  • NeuMedia (f/k/a Mandalay Media) - the owner of Twistbox & AMV has always had an identity crisis; is it an adult entertainment or a games company? Recent exec & board defections and a cash-balance triggered notice of default indicate to me that they may not have to struggle with this issue too much longer.
  • Off-Deck Mobile Portals - before the smartphone revolution this was a red hot space, with power-players like Thumbplay, Flycell & Jamba/Jamster vending recurring ringtone & graphics subscriptions, to under-supervised kids. After paying $120 bucks over a year for those 3 Young Jeezy tones and a blingy pot leaf screensaver, most suckers (or their parents) got a clue.
  • Zed - the Spanish personalization giant has been like The Borg for the last couple of years, sucking up companies left & right, and diversifying into myriad content plays... including TV production. Though privately held, they used to brag about being the biggest mobile content company in the world, claiming revenues over $800mil!... but I haven't heard a lot of bragging recently.
  • Buongiorno - this Italian mobile personalization & services goliath still has revenues in the $300mil range, but their revenue has been on a downward trajectory as the company's content offerings get a little long on the tooth and it tries to figure out how to be relevant in a smartphone world.
  • Index - this longtime Japanese content powerhouse, whose mobile group is perennially in my Top 5 by revenue, seems to be faltering a bit. Their one time bid to be a global player, by virtue of a North American & European buying spree, flamed out and now they're fighting to stay relevant in a home market where the iPhone and Android are gaining traction.
  • Android Paid Apps - as I alluded to earlier, this is a mess. Considering how quickly Android handsets (and soon to be tablets) are proliferating across carriers, this should be a huge opportunity. However, Google's disinterest in managing their store & consumer resistance to setting up Google Checkout accounts, have really stifled Android's paid app potential. I think it'll be up to the carriers to fix this problem.
  • Ovi - Considering Nokia's 2.7% marketshare in the US this won't be a factor here for a long time. In the rest of the world there's more hope, especially considering some recently promising download numbers, and the appointment of industry vet Bryan Biniak (a guy who I know understands content) to run Ovi Publish. Frankly I'm more bullish on Ovi now than anytime in the last year.
  • Augmented Reality - Boy, I was really excited about this space for awhile, particularly apps like Layar... but I'm definitely not feelin' it right now. AR still seems more like a novelty than a necessity.

Tuesday, May 18, 2010

Monday, May 17, 2010

Updated Enterprise Values of 15 Public Mobile Entertainment Companies

What a difference a week makes. I'm already updating this spreadsheet with some new data. Here are some notable changes:
  • Buongiorno posted Q1 2010 earnings
  • Velti filed updated earnings with the SEC as part of their bid to go public on the NASDAQ (they're currently listed on LSE)... their numbers are pretty impressive (more on that soon)
  • Mandalay Media, parent of Twistbox & AMV, changed its name to NeuMedia, Inc. & announced a notice of default related to a cash balance provision from a key creditor
  • ROK Entertainment's stock is down over 50% today (guessing they'll be more news to follow). Btw - did y'all know the biggest shareholder in ROK is the DeJoria family, which controls the Paul Mitchell salon product empire? Always thought the guy in the ads was Paul Mitchell... but that's actually John Paul DeJoria (Mitchell was his founding partner). Anyhoo, probably hasn't been a great investment no matter how you cut & color it

Select Data From Buongiorno's Q1 2010 Earnings

Friday, May 14, 2010

Gameloft Gets Some App Store Promo Love

Wow! Gameloft got one of the six rotating feature "bricks" at the top of the iTunes App Store. That's some pretty sexy real estate for publishers trying to break through the insane clutter of Apps in the store. What's fascinating is that Gameloft elected to tag the ad with it's company name and link to their catalog of iPhone & iPad titles. Clearly they must believe (or want to test the theory) that Gameloft has become a recognizable endorser brand with consumers who buy games... and not just folks who attend MWC & CTIA. Hmm, I wonder if that's really the case. I've always considered the games business analogous to the film business with respect to marketing... wherein the emphasis is always on the title, because it's assumed that the consumer is generally agnostic about the company releasing it. What do you guys think?

Thursday, May 13, 2010

Wednesday, May 12, 2010

Stories I'm Watching From The Road

I'm traveling on business with a client, so I haven't had a chance to work on a post for the last couple of days. I'll have some new stuff by the end of the week. In the meantime, here are the stories that have caught my attention this week:
  • EA Mobile posted another strong quarter ($55mil) & fiscal year ($212mil), reinforcing their revenue leadership position mobile gaming (mocoNews story)
  • GAMEVIL continues to be red, red hot & profitable (earnings release). Glu Mobile execs must fantasize about this South Korean game publisher's financial statements
  • Nokia continues to obsess over their own structure and re-orgs for the 2nd time in 6mos (Mobile Entertainment story), losing one-time heir apparent Rick Simonson in the process (NY Times story)

Friday, May 7, 2010

Latest Enterprise Values of 15 Public Mobile Entertainment Companies

  • Data for Velti & ROK Entertainment should be taken with a grain of salt, since they haven't released financials in recent quarters
  • It looks like a couple of these companies should consider giving their cash back to the investors, and calling it a day. Some of them shouldn't be public at all (and are barely going concerns)
  • I think the shining stars of this lot are the mobile games publishers Gameloft, GAMEVIL & Com2uS
  • I look forward to adding Motricity into the mix, once (if?) they go public
  • Let me know your thoughts on this and if there are any other public mobile entertainment companies I should be tracking

Tuesday, May 4, 2010

Glu Mobile Still Struggling With Smartphone Traction & Cash

Glu Mobile (GLUU) reported earnings after the close of markets today. Here are some highlights from their conference call:
  • Revenue was above guidance, but still down 17% compared with the Q1 2009
  • Glu Mobile is still only deriving 9% of its revenues from smartphones, which looks pretty weak compared with Gameloft, which generates 21% of its revenues from iPhone OS alone
  • They are putting a big stake in 4 new original "mass-market persistent" game franchises that will launch before the end of 2010
  • Forecasting Q2 2010 between $13.6mil & $14mil
  • Revenue by region: 52% NA, 27% EMEA, 21% rest of world
  • Avg revenue per Top 10 title in quarter was $791k
  • Largest title accounted for 9% of revenue
  • Verizon accounted for 18% of revenues
  • 80% of revenues came from licensed titles
  • Even though the company realized a positive cash flow of $1.6mil in Q1, ongoing payment obligations related to their $30.5 acquisition of MIG for in 2007 continue to drain their resources... currently they've got about $7.5mil in the bank
  • CEO Niccolo de Masi & CFO Eric Ludwig plan to announce a solution to ongoing liquidity concerns by the Q2 2010 earnings call
  • There was only 1 question from an analyst at the end of the call (after a long awkward silence)... kinda sad really

Glu Mobile Stock Trading Volume Over Last Year