Update: Top 10 Mobile Games Publishers WW November '10

Update #1 Nov 24 2010 @ 9:45pm: Based on feedback I've added Capcom to the list & moved Digital Chocolate up in the rankings, while moving Namco down a bit. I've elected to remove Artificial Life because only about 50% of their revenue can be attributed to mobile games. Please... I encourage more feedback in the interest of making this the definitive list.

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• Note that I've added Chinese mobile powerhouse KongZhong to the list... in recent quarters mobile games have become a much more significant portion of the their overall revenue, which is about $145mil over the past 4 quarters.
• Purely from a mobile games perspective, it could be argued that both Artificial Life & Digital Chocolate don't belong on this list, but I'm keeping them here for the time being, while their primary businesses are still mobile games. If current trends persist, Digital Chocolate will quickly evolve into a company that primarily derives revenue from social online gaming (Facebook games).
• Per a previous suggestion from Jon Jordan over at PocketGamer.biz, I'm considering adding Disney/Tapulous to the Top 10... but I'd need some independent confirmation that their combined worldwide mobile games business yields at least 20 something million dollars.
• Overall I'd suggest that the Top 10 are becoming less significant in terms of their contribution to mobile gaming revenue and even in terms of real dollars I've dropped their aggregate revenue to $715mil from $720mil just 3mos ago.

Top 10 Mobile Games Publishers WW August 2010

All numbers are for the most recent 4 quarters for which I have data, at today's exchange rates.

In terms of non-public, guesstimated data, I've moved Chillingo onto this list... due to their boffo performance in the AppStore (see related post)... I'll move them up or down based on community feedback. I've also let Namco slip a bit as the PacMan franchise seems to cooling a bit in the new retail channels. I still have D'Choc hanging on by a thread. Granted, they've rolled a lot of iOS titles, but none appear to be rockstars and their new emphasis on Facebook games is a bit of a tell, right? Do you guys think ngmoco should be on this list? Please, please let me know your thoughts.

Enterprise Values of 22 Public Mobile Entertainment Companies Aug 2010

Update June '10: Enterprise Values of 21 Public Mobile Entertainment Cos Including Motricity

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

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

Is Artificial Life More Artifishy Than Dishy?

LA-based(?) mobile games, apps and platform company Artificial Life (ALIF) claims to have had "a very positive year" in a press release announcing 2009 earnings issued Tuesday, but what they aren't telling you is that their Q4 clearly sucked. I'm still digging through their 10-K to determine what exactly transpired in Q4, but the more I dig and the more I talk to people in the industry about this company, the more there is about it that just don't seem quite right. Perhaps it's their 153 sq ft world headquarters (headcloset?) in LA, or perhaps it's their recent iPhone hyperbole which obfuscates the more probable sub-1mil paid download reality across their portfolio. It could be the queasiness I feel when I read that key elements of the company's 2010 strategy include über-buzzilicious initiatives in mobile green technology (whatever that is) and augmented reality. Or maybe it's just Artificial Life's oddball collection of promotional games, health care and real estate apps, as well as m-commerce and participation TV platforms, that no one I've ever met has ever used. Then again, it could be that despite regular claims of profitability, they seem to keep burning through cash. I know, I know it was just last May that I called these guys "the new hotness"... but whatevs, I think I was kinda digging Jamie Foxx's "Blame It" back then as well. At least I didn't make a $6.5mil investment in the company like 3M did back in October. One wonders what or who they'll be blamin' that on when ALIF dips back below $1 and encounters their next cash crisis.

btw - if anyone has any unique insights about this company please feel free to contact me... and, as always, comments, feedback and divergent opinions are welcome.

Top 10 Mobile Games Publishers WW February 2010

As always, let me know if I'm missing something or if you think I have incorrect data.

Readers Think EA Mobile Rocked The 4th Quarter

The results of my week long readers poll are in. I asked y'all the hard-hitting question, "Which mobile games publisher will show the strongest Q4 09 over Q4 08 revenue growth?" (and had the 5 public mobile games companies on the above chart as options)... and here's how you voted. Clearly readers believe the #1 mobile games player is firing on all cylinders and is gonna extend its lead over Gameloft (which reported 7% growth yesterday... if we cut them some slack). We'll know a lot more about how good you guys are next week when EA and Glu Mobile report earnings. Check back here for my follow-up. For the record, I voted for GAMEVIL.

Btw... just so you know, EA's fiscal quarters don't match calendar quarters, so the last calendar quarter of the year is their fiscal Q3 2010. This poll assumed calendar Q4 for all companies.

Btw2... if you didn't vote this time, be sure to participate in the next poll starting tomorrow.

Updated: Top 10 Mobile Games Publishers WW

Artificial Life Revenues & Net Q3 08 to Q3 09

Artificial Life Issues Artificial iPhone Hype

Artificial Life (ALIF) put out one of those classic, cryptic mobile entertainment, performance-oriented, press releases on Wednesday... trumpeting their great success on iPhone. You know, the kind of document that despite the intention of the issuer, ultimately prompts many more questions than it answers. If this business is ever going to be taken seriously there needs to be much less of this sorta hype-massaging nonsense and much more transparency about numbers. For goodness sake Artificial Life, just tell us how much money you've made on iPhone in the last year.

The biggest problem with these releases is that they selectively blend Free App and Paid App download numbers. Our friends at D'Choc are masters of this form of obfuscation. If one wasn't paying attention, and assumed Artificial Life was only talking about Paid App downloads, one might determine that they made $6mil (after Apple share) from iPhone/iPod touch Apps over the last 12 months... based on their 21 Apps being downloaded an average of 220k times each, at an average price of $1.86 (based on their current US Paid App iPhone assortment). That would be about 22% of their $27.5mil of 2008 revenue... impressive, right? Unfortunately, that's preposterous considering Glu Mobile (which has 75% more Paid Apps live currently) disclosed on their quarterly conference call yesterday that they only made 2.5% or $500k of their Q3 2009 revenue from all new distribution channels, including Apple.

You'll notice in the release that Artificial Life uses variations of "download" and "sell" interchangeably to yield maximum dramatic effect. My favorite example is, "The number of iPhone game downloads is approximately equivalent to 37.8% of the overall number of games sold by the Company so far in 2009." I think what this actually means is that the combination of all Free and Paid App downloads of Artificial Life titles on iTunes is equal to 37.8% of total paid game downloads on all platforms during the period... which is much less impressive, but much more meaningless ;-). I'm also pretty confident that Artificial Life's claim that its "best selling game was downloaded close to 1.8 million times" on iTunes includes both downloads of the Paid App and the associated free teaser App. Btw - if anyone thinks I'm wrong, please let me know.

I think there are only three valuable pieces of information to take away from this release: 1) high quality iPhone App development takes Artificial Life 3 to 4 months, 2) the US is still the biggest individual iPhone App market by far for these guys, but overall the World ex US is bigger, and 3) this industry needs to stop with all this thimblerig reporting, and embrace the disclosure of real, comparable performance metrics, so that cynics like me don't assume everyone's business is smaller than they're making it seem.

Quick Updates: Mandalay Ups WPT Bid & 3M's Artificial Life Investment

• Apparently Mandalay Media (MNDL) is jonesing hard for that World Poker Tour Entertainment (WPTE). According to a press release this morning it's now offering to "acquire WPT for $36.5 million, consisting of $28.5 million in cash, $5 million in Mandalay Media stock and perpetual revenue participation rights, guaranteed to be at least $3 million. The estimated value to shareholders per share is $1.77, including the guaranteed portion of the revenue participation rights, and as adjusted for the actual share count at closing. The proposal represents a premium of approximately 61% over the closing price of WPT’s common stock on October 26, 2009 and a premium of approximately 28% over the implied value at closing of WPT’s pending asset sale with Peerless Media Ltd." Investors clearly like this potential marriage because both stocks are up over 10% in early trading this morning. Mandalay estimates that if the acquisition is successful that synergies (buzzword alert) realized in the combined company will yield annual revenues in excess of $60mil (compared to $47mil if you add their 2008 revs) and EBITDA in excess of $8mil. btw - if anyone has any insight into how this potential deal is going to be financed, I'd love to hear about it.

• Just some quick housecleaning in terms of my post Monday about 3M's investment in Artificial Life (ALIF). In the end the 6,447,491 shares of common stock 3M purchased at $1 each actually gave them an 11.31% stake in the company... the original estimate was 10%.

3M Invests $6.5Mil in Artificial Life

3M now stands for Minnesota Mobile Marketing and the company's New Ventures arm is buying 6,447,491 shares in LA/Hong Kong based Artificial Life (ALIF) at a price of a $1 each. OK, the first part of that statement isn't true, but the announcement today, that 3M is taking 10% of the mobile marketing games company, does seem to indicate that the Maplewood, MN conglomerate believes mobile marketing is mission critical for the company going forward. The investment is part of a broader alliance between the companies which will focus on the following areas:

• General mobile and broadband applications and technologies
• Digital Watermarking
• Virtual Reconstruction of 2D and 3D Objects
• Augmented Reality
• 3D Image processing
• Object recognition
• Mobile Healthcare and Diabetes Solutions
• Mobile Marketing and M-Commerce Platform

This list indicates to me that Artificial Life is in the process of broadening the scope of its mobile marketing remit. Not a bad plan, frankly. Given the current glut of content plays and cluttered distribution channels, I think mobile marketing currently represents the biggest opportunity in mobile. The other really good news here for Artificial Life is that this investment bails them out of an uncomfortable cash position... at last check they had under $2mil in the bank (yikes!). Clearly the markets like it, as Artificial Life's stock is up over 20% today in early trading. But let's get to the most important question... so, what does a mobile Post-it note look like?

Enterprise Values of 15 Public Mobile Entertainment Companies

Enterprise Values of 12 Public Mobile Entertainment Companies

Top 10 Mobile Games Publishers WW

Here's my latest update to this list. You'll notice, based on my recent post estimating Digital Chocolate's numbers, that I've moved them up the list and increased the total revenue estimate of the Top 10.

As always, your feedback is welcome and encouraged.

Does App Store Claim Make Digital Chocolate A $35mil Publisher?

Stuart Dredge posted an interview last Friday on Mobile Entertainment with Trip Hawkins, in which the Digital Chocolate CEO pontificated about the state on the mobile games industry. Great read, but due to my ongoing obsession with valuing the size of this business and that of its individual companies, I must say I fixated on one particular statement. Hawkins said, "suddenly Apple has one handset, we put out a handful of games, and voila – it's suddenly 20-25% of our business.” Wow, that's a pretty big chunk of business and impressive considering Hawkins' own admission earlier this year that they were a latecomer to the platform. So how much money is this and how big is Digital Chocolate?

When I did an analysis of Gameloft's iPhone (inc. iPod touch) business in early September, following their claim to have sold 6mil games on the platform, I estimated that their games had sold at an average price of $3.75... which yields $15.75mil back to Gameloft, or 9% of their revenue for the last 4 quarters. Now Gameloft was not a latecomer to the platform and they have been one of the better publishers at maintaining higher price points for their product, so I think we can comfortably assume that D'Choc's iPhone business is quite a bit smaller than that... right? Currently, Digital Chocolate has 35 paid game titles in the App Store, with an average price of $2.08. Typically their prices have been 20-30% lower than those of Gameloft, which currently has a average App Store price of $3.06. Today Gameloft has 5 titles in Top 100 Paid Apps (out of their 41 Paid Apps), and Digital Chocolate has none, but that's somewhat of an anomaly. Digital Chocolate titles have consistently performed pretty well, and as you can see from my June 29th App Store survey they had 3 in the Top 100 at a time when Gameloft also had 5, with many fewer titles in the store. That said, given the average pricing differential, Top 100 performance and slower ramp-up I think that Digital Chocolate's App Store business over the last year is, being generous, about 50% of Gameloft's... let's call it $8mil in revenue. I can get to the same number if I make some fair assumptions about Hawkins' other claim in the ME interview... that they're "a few weeks away" from 40mil downloads on the platform. If 10% of those downloads are paid and their blended average price is $2.80 (75% of Gameloft's), that's very close to $8mil (after Apple's share). OK, so if that platform represents 22.5% of their overall business, then Digital Chocolate is a $35.5mil publisher. According to my Top 10 Mobile Games Publishers list, that would put them in Capcom territory... and makes them bigger than both I-Play and Artificial Life. Do you guys think that's right? If so, I'll update my list accordingly.

Yikes! Artificial Life Creating Robbie Williams iPhone Game

Perhaps I was a little irrationally exuberant when I suggested that Artificial Life (ALIF) might be "the new hotness in mobile games" back in May. The company's latest announcement, that they are producing a Robbie Williams iPhone game as part of the promotional activity around the release of his forthcoming album "Reality Killed The Video Star", is feeling decidedly like the anti-hotness (and that ain't coolness) to me. Apparently Artificial Life is creating a 3D rally driving game (not sure I get the tie-in) that'll release in coordination with Williams' album in Q4.... probably a re-skin of one of its BMW games. Oh I just can't wait! This seems pretty lame on a bunch of levels. Robbie Williams, for one, is hardly the phenom he once was... so the creation of an iPhone game feels like a somewhat desperate attempt by some marketing genius to keep him relevant with "the kids." Also, in the biggest market for iPhone games (the US), Williams never was a phenom... and probably never will be. It's hard to imagine a scenario where this game will get a lot of downloads, even if it's free... so the biggest value for Williams will the publicity (to which I'm contributing, I guess... perhaps genius is at work here). For Artificial Life the value is a pure financial practicality. They did something similar with Tokio Hotel a while back, and the model must have penciled out for them. In this case I presume they're being paid by Williams' label or management to create this game... and I hope it's a lot, because (as I've mentioned recently) they desperately need some cash and because repairing the collateral damage to their reputation as a games publisher on the rise (assuming they had or want that) will be expensive. That said, maybe I just expected/hoped that Artificial Life aspired to be a top-tier, world class mobile games publisher and that was never their intent. Frankly, if they simply want to play in the mobile marketing gun-for-hire app creation space there's probably no harm done, and this may even enhance their profile as a company that can quickly give brands presence in the mobile space.

Updated Top 10 Mobile Games Publishers Worldwide