After a decade, Kim Kardashian maker Glu Mobile shoots for $1B revenues in five years

Glu Mobile is celebrating its 10th anniversary in mobile games. And considering the ups-and-downs of the industry, which has become a $30 billion business, that’s no small accomplishment.

Glu survived the lean years in the transition from feature phones to smartphones, and thanks to celebrity game hits like Kim Kardashian: Hollywood, Glu is aiming to hit $1 billion in annual revenues in the next five years, said chief executive Niccolo De Masi in an interview with GamesBeat. (De Masi is going to be one of the speakers at our GamesBeat 2015 conference on Oct. 12 and Oct. 13).

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The Kardashian game generated $74.3 million, or more than 30 percent of Glu’s revenue, in 2014. But that’s just the beginning of the money that could come with the celebrity category. De Masi said he expects celebrity games to be half of his company’s business going forward, and that’s why he has signed deals with Britney Spears, Katy Perry, and Kendall and Kyle Jenner. Games based on these female celebrities could expand the reach of mobile games to new audiences and become half of Glu’s revenue in the next five years, De Masi said.

While celebrity and brand-based games in mobile face a future full of competition, De Masi feels like he has a good position. Kam Kardashian West has more than 87 million followers on social media, and every time she says something about the game, that’s free advertising for Glu. The other celebrities signed up give Glu a reach of 434 million people on Twitter alone. Those social reach of those celebrities is growing so fast — and Glu is signing up more celebrities — that De Masi believes the social reach can top 500 million by the middle of 2016. Over the next five years, De Masi believes the celebrity social followers engaged with Glu’s games will grow to a billion.

San Francisco-based Glu formed 10 years ago, when U.S. mobile game pioneer Sorrent acquired European game company Macrospace on May 31, 2005. Back then, those companies were making games based on feature phones with primitive displays. Glu went public in 2007, and it also launched a game on the first day that Apple opened its iTunes app store. It launched its first games on Google Play in 2012, and it created its experimental game Spellista for Google Glass in 2013.

De Masi joined the company five years ago when it was still trying to navigate the transition its premium games business. He decided to move aggressively into free-to-play smartphone and tablet games. He ignored Facebook and web games, and he believed from the start that mobile was the right market. Revenue grew from $25.7 million in 2005 to more than $241.8 million for the year ended Dec. 31, 2014.

“Glu doubled headcount to more than 700, and we’re launching 15 games this year,” De Masi said. “We’re also trying to boost the average batting average for hits. I expect to keep increasing that over the next five years. A lot of that growth is coming from emerging markets.”

That latter point is why Tencent invested $126 million for 14.6 percent of Glu in April. De Masi said he has been studying Tencent’s growth since its initial public offering in 2005. Tencent is like the Facebook of China, and it has been able to monetize its social networks through gaming for the past decade. Glu is trying to do the same thing, by making games based on celebrities who have huge social followings.

“Katy Perry has 170 million social followers, and she is effectively aggregating a following through multiple platform apps,” De Masi said. “We in turn are going to monetize the audience through gaming. It is a powerful and sustainable model that is proven.

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“The celebrity platform at the moment is just one genre, as a 2D role-playing game. But in the long term, we’ll expand that engine and that type of genre and expand the celebrities across multiple engines and multiple genres.”

The celebrity games is the biggest category for Glu, but it has also developed expertise in five others as well. They include first-person shooters like Frontline Commando, time-management games like Eternity Warriors, car games like Racing Rivals, and sports games like Tap Sports Football 2015. Some of its other big hits include Contract Killer, Diner Dash (which it acquired with the purchase of Play First), and Deer Hunter.

Those categories contribute to the company’s revenues, and they help balance out the risks in the portfolio.

While other game companies such as Supercell (maker of Clash of Clans), King (maker of Candy Crush Saga), and Machine Zone (maker of Game of War: Fire Age) are making more money than Glu based on just one or a few hits, Glu’s strategy is still based on having a portfolio of games. De Masi believes that small teams can make the best games. and he also believes in investing in smaller or experimental games, such as titles the Apple Watch.

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De Masi said his company will invest in experiments in virtual reality and wearables.

“We’re going to follow Apple and Google into the living room,” he said. “We’ve always been a supporter of visual fidelity. As devices become more powerful, our games will be relevant.”

Glu has about $190 million in cash, and it expects to end the year with $200 million. De Masi believes that Glu will grow revenue about 20 percent to 30 percent a year to reach its goal of non-GAAP revenue of $1 billion in 2020.

“Never in Glu’s history has the balance sheet and revenue been as large and healthy as today,” De Masi said. “I feel we are on a good-to-great journey. We are early in that journey, but I am proud to say that ten years into Glu’s existence, we’ve made a lot of progress.”

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In the long run, Glu’s goal is to help expand the market to larger numbers of players, whether that means getting hardcore gamers to come over to mobile from the consoles, or getting people who don’t play games to try them out.

“I think a successful mobile game is going to work on multiple devices and in multiple markets,” De Masi said.