Glu Mobile (GLUU) has had a big autumn. It launched its Deer Hunter mobile game in September and it ended up being a big hit for many weeks on iOS and Android -- not just in the U.S., but also around the world.
The gaming business is a hits business, which scares many investors. But it stands to reason that when a game hits, it can be incredibly profitable. That's just what happened with Glu's Deer Hunter. The stock rode the hit game from the low $2s when it was introduced all the way up to $4 just before the most recent earnings report (after which it dipped back down).
A hit game doesn't just mean it gets a lot of downloads. Most games today have to be launched free or as a freemium model. This maximizes the number of users that get the game in their hands and, hopefully, hooked. Then the key is to get these users buying extra stuff. These could be new guns, extra lives, or keys to help them move up to the next level.
Angry Birds by Rovio has done a terrible job historically of converting users into paying customers. Glu did a great job with Deer Hunter, and that's part of the reason the stock moved up so much.
So what's next for Glu? I recently bought back into the company because of a new game coming out early in 2014: Robocop. The game is tied to a remake of the cult classic movie that will be released in February. It seems likely (although never a sure thing) that the new version will attract new fans.
The Robocop game built by Glu is in beta release in Canada, ironing out the kinks before releasing it globally. I had the chance to play it recently and it's solid. Obviously, it's a first-person shooter game. In some ways, it's very similar to Deer Hunter, except you're in the badlands of 2018 bankrupt Detroit instead of the swamps of the Mississippi.
I'm getting in earlier in Glu this time compared to Deer Hunter, when I waited to see if the game would be a hit before buying the stock. This brings extra risk but, obviously, also extra reward if the game pans out. Hopefully, Glu has figured out a model to continuously churn out hit games.