Glu Mobile Stock Price During The Year of De Masi

Pretty nice run. The stock closed today just a penny shy of its 52 week high. I look forward to watching how the market reacts to their Q4 and 2010 earnings after they report on Monday.

Hypothetical SWOT Analysis For DeNA Roll-up of Glu Mobile, Hands-On & Digital Chocolate

As I've been blabbing about for months, the established publishers in the mid-tier of mobile games are languishing under the new smartphone app store paradigm, as the two biggest players (EA & Gameloft) have consolidated power, and nimble newcomers (Firemint, Lima Sky, Chillingo) have seized marketshare. The competitive advantages these guys once enjoyed (carrier sales teams, the ability to port to a thousand devices, licensing relationships), have become expensive burdens, and most lack the resources to make wholesale changes to their businesses. In light of this, I've often wondered if it would be feasible for a company, with some vision and cash, to roll-up a few of these guys in the interest of unseating the top players and creating a true smartphone games powerhouse. For fun, let's imagine a scenario wherein Japanese social mobile gaming powerhouse DeNA, with its $530mil in revenues, almost $400mil in cash & ambitions to put a stake in the ground outside Japan, considered buying Glu Mobile, Digital Chocolate and Hands-On Mobile (for like $100mil, right?). What would a SWOT analysis for this "Newco" look like?

Strengths (Internal)

• Combined annual revenue of ~$125mil puts Newco within striking distance of Gameloft
• 98 Paid iPhone Apps featuring quality franchise titles like Deer Hunter, Glyder, World Poker Tour, Kitten Cannon, Brick Breaker & Tower Bloxx
• Interesting leadership potential... The icon: Trip Hawkins & the upstart: Niccolo de Masi
• All global HQs are in Northern California
• Studios in Finland, China & US
• Global distribution capability
• Healthy balance of original & licensed IP

Weaknesses (Internal)

• Cash... DeNA would have to fix that
• Re-branding would be required, none of these brands is perceived as a winner or has meaningful consumer cache... plus there's no combination that doesn't sound X-rated
• With over 500 employees... there would need to be some downsizing/consolidation
• $20+million in debt
• Reconciling investors & boards won't be a job for the faint of heart
• Scale sometimes leads to inertia

Opportunities (External)

• Unify all games with OpenFeint's social gaming/app discovery platform (in which DeNA has a 20% stake)
• Build in-app purchases into as many titles as possible to maximize longterm revenue potential
• Historic carrier relationships might become valuable again as Verizon, AT&T, et al take a larger role in managing Android Market
• Take all components of Newco private, clean 'em up and then spin it back out as an IPO when market conditions improve
• Take cue from Zynga in terms of marketing on social, new & traditional media

Threats (External)

• Platform consolidation and platform dependency (when Apple changes the rules, it hurts)
• Continued price erosion
• Competition with other forms of gaming & entertainment for consumer discretionary dollars
• New, well financed, market entrants

I'm sure Newco would appreciate your unpaid consulting, in form of comments. I'll add to and adjust this over the next few days based on your input and my own random inspiration (brain farts).

Glu's Titanic Gloat Is Retro Uncool

Note to mobile publicists... sometimes no news is good news or, at least, better news than news that makes your company look like its stuck in a time warp. Case in point, the recent announcement by Glu Mobile (GLUU) that it partnered (for the 6th time) with Warner Bros Digital Distribution to release a mobile game based on the film "Clash of Titans" had me double checking my Hellenic calendar to make sure it wasn't 2005, giggling a bit and, ultimately, questioning what's going on over there at Glu. In this day and age announcing a single-player, top-down fighter on Java, BREW and WinMo platforms is tantamount to a band announcing the release of a new album on 8-track... except not as funny or retro cool. Its especially weird considering recently appointed CEO Niccolo de Masi proclaimed that the company is focusing on new platforms and is attempting to wean itself from expensive licenses. I'd cut them some slack if it looked like Warner Bros was pushing the agenda, but that doesn't appear to be the case, considering they're scarcely mentioned in the release... and aren't quoted. Having just suffered through a particularly suckilicious 2009, in which they've been battered in the market and relegated to 2nd-tier publisher status, you'd think Glu would be doing everything possible to manage industry perception. But instead this game is being associated with images like the one at the top of this story, from week late coverage on Licensing.biz... which really kinda sums it up, don't you think? In this case they should probably have said nothing. Going forward, I think Glu needs to get a better handle on their messaging.

Readers Don't Believe Glu Mobile Is Stuck On Hands-On

Inspired by my January 5th post, in which I advanced a theory about why Niccolo de Masi jumped ship from Hands-On Mobile to Glu Mobile (GLUU), I asked readers the question: "Will GLU Mobile & Hands-On Mobile Combine In 2010?" The poll only ran for 5 days because I wanted to close it in advance of Glu Mobile's earnings call tomorrow. Based on comments I received (on and offline) to my original post, I guess I'm not entirely surprised to see that a 63% majority of responders believe that this deal is not going to happen, while 37% indicated that it would. I did not vote in this poll, but I do still think a deal makes sense and probably should happen if Hands-On still has some cash in the bank.

Is Glu's de Masi Move Part Of A Hands-On Hook-Up?

I've been racking my brain for the last couple of days trying to make sense of the news that Niccolo de Masi is leaving Hands-On Mobile, after just 3mos as its CEO, to run Glu Mobile. My first thought was that Hands-On was in such disarray, and so late to the smartphone game, that the restructuring I hoped was afoot turned out not to be worth pursuing in the end. My second thought was that Glu got so desperate in their protracted CEO search that they put more money on the table than a 29 year-old could possibly refuse... 'til I read their latest 8-K. Then I had a conversation today with an industry veteran who posed a novel, and ultimately, more interesting theory. What if de Masi is bringing Hands-On with him? What if this move is the precursor to a merger between the two companies?... now that's juicy!

From Glu's perspective this could be attractive because Hands-On allegedly still has a pile of cash left in the bank from the $29mil sale of its Korean division to EA in May 2008. For public Glu, with a depressed stock price vacillating on either side of $1 and a healthy appetite for cash, this could be an attractive fix. Glu would also benefit from Hands-On's valuable World Poker Tour license, which has been a cash cow since 2005, and its legacy Guitar Hero licenses (also big earners), which would be a nice complement Glu's newly launched Guitar Hero 5 title. For the investors in Hands-On, including Executive Chairman Dan Kranzler, this could finally be a way to go public... like they've been planning since the mobile paleolithic. It would also give Hands-On much improved smartphone capability (an area where Glu is finally getting its shit together) and restore its once impressive international distribution capabilities. Moreover, this move could create a real competitor, another $100mil+ (or close to it) game publisher, in an industry segment that's recently looked a lot like a two horse race between EA Mobile and Gameloft.

What do you readers think?

Breaking: Niccolo de Masi Named Glu Mobile CEO

Whoa! Former Monstermob wunderkind, and most recently Hands-On Mobile CEO, Niccolo de Masi has just been named President and CEO of Glu Mobile. This is shocking since he was just named to the head post at Hands-On Mobile this past October. It makes one wonder what on earth is happening at that long-struggling publisher. More to follow... Meanwhile according the Glu Mobile press release:

Niccolo brings to Glu a strong background of senior management and executive experience in the mobile gaming and content sectors. Most recently, Niccolo served as Chief Executive Officer and President of Hands-On Mobile, a mobile technology company and developer and publisher of mobile entertainment. From June 2006 to February 2007, Niccolo was the CEO of the London-listed mobile entertainment company Monstermob Group PLC, and prior to being named CEO, he was responsible for formulating and implementing Monstermob's growth and product strategy. Prior to joining Monstermob in 2004, Niccolo worked in a variety of corporate finance and operational roles within the technology, media and telecommunications (TMT) sector, beginning his career with JP Morgan on both the TMT debt capital markets and mergers and acquisitions teams in London. Niccolo has also worked as a physicist with Siemens Solar and within the Strategic Planning and Development divisions of Technicolor. Niccolo holds B.A. and M.A. degrees in Physics, and an MSci. degree in Electronic Engineering—all from Cambridge University.

In connection with the appointment of Mr. de Masi as Glu’s new President and CEO, the Compensation Committee of Glu’s Board of Directors awarded Mr. de Masi a non-qualified stock option to purchase 1,250,000 shares of Glu’s common stock pursuant to Glu’s 2008 Equity Inducement Plan, which is a non-stockholder approved plan. This stock option was granted to Mr. de Masi on January 4, 2010 and has an exercise price equal to the closing price of Glu’s common stock on the NASDAQ Global Market on such date.

Will de Masi & Kranzler Finally Get Hands-On To Realize It's Potential?

PocketGamer.biz is reporting, and the company's website is confirming, that Hands-On Mobile's President (and former Monstermob wunderkind) Niccolo de Masi has taken over as CEO of the San Francisco based mobile games publisher, replacing David White. I've also heard rumors recently that Dan Kranzler, who founded the company back in 2001 (when it was known as Mforma), may be planning to take a more active role in its management, after years of being a very passive Executive Chairman (and peacing out with the Dalai Lama).

Does this mean there's a massive restructuring in the works? Hopefully... because Hands-On, the poster child for unrealized potential in mobile entertainment, is long overdue for a shake up. This is a company that raised $63mil in venture funding in 2004, was on an IPO path in 2005, was an early content rockstar in China and at various times over its 5 year history has employed some of the smartest folks in mobile and controlled some of the most powerful brands in gaming (Marvel, Guitar Hero, World Poker Tour, etc.). Hands-On could have been, should have been, a global mobile gaming powerhouse like Gameloft or EA Mobile, but instead in 2009 they're a tertiary player that doesn't even make my Top 10 Mobile Games Publisher list.

So what's to do? According to PocketGamer they've been diversifying into platforms like PSP Minis, DSiWare, Facebook games and, get this, iPhone (where they currently have 8 Paid Apps, none in the Top 100)... hmm, but that sounds like what all the other kids are doing. Perhaps they should be really alternative and focus on the carrier business... oh, and while they're at it change the company name back to Mforma (which is cooler and more potential-ly). We'll see. Let's just hope the re-emergence is in process, the rumors about Kranzler are true and that he and de Masi have a few more rabbits (and a bunch of cash) in their hats.