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Glu CEO Says Games Will 'Turbocharge' Its Tencent Partnership (Q&A)

On the table: Taking the American studio's games to China, and building games specifically for the East.

Along with better-than-expected quarterly earnings, game developer Glu Mobile said yesterday that it would sell about 15 percent of itself for $126 million to Tencent, a tech titan with booming fortunes in the Chinese gaming world but a relatively small footprint here in the West.

What will that deal mean for Glu, which publishes both the celebrity-social hit Kim Kardashian: Hollywood and the mobile incarnation of the shooter franchise Deer Hunter? CEO Niccolo de Masi spoke with Re/code yesterday after Glu’s earnings call to spell it out.

This Q&A has been edited for brevity and clarity.

Glu CEO Niccolo de Masi
Glu CEO Niccolo de Masi

Re/code: What do you hope for from the Tencent partnership?

Niccolo de Masi: Tencent is the equivalent of Facebook plus the largest gaming company in the world. They did $13 billion in revenue last year, 57 percent of which was gaming revenue. The rest was messaging and various other Internet services. They’re able to link games into their distribution network to maximize reach.

What we’re doing with the celebrity [game] platform kind of parallels what they’re doing with social. Gaming is the best monetization source for a social graph. I’m trying to monetize the social following of celebrities and share, significantly, some of those revenue streams with celebrities.

Part of the plan is for each company to help take the other’s games to new audiences, right?

Potentially, we have the opportunity to help take some of their games out of China to other markets, just as they might take games to China and turbocharge them. It’s quality over quantity. It’ll be one or two projects a year, not one or two a month. And we’re very excited about this. You couldn’t ask for a better partner if you want to make money off of the Android ecosystem in China than Tencent.

And the way the deal is structured, Tencent can’t own more than 25 percent of Glu?

That’s correct. There’s a cap on the amount of shares that they can ever own. They can go into the market and buy more shares, but they can’t deter anyone else from coming in to buy Glu. They don’t have a preferred position. Tencent has a track record of being willing to sell portfolio companies at a profit if somebody else comes in and wants to bid. But we’re in a great position now with a great board member, [Tencent SVP Steven Ma], and an opportunity to run faster than we could have without them.

Do you think the partnership might get you into new game genres that you’re not in now?

It might. It’s hard to say where this might go. We do think we can do better on Android in China and I do think we make a lot of titles that can travel well, whether it’s our shooter games, our action-RPG games, our movie titles. You know, James Bond will do well in China, and it’ll do well with or without Tencent, but there’s room for us to collaborate. We’ve never collaborated with them before, so that’s all upside.

On the topic of the celebrity games, do you think you could make a Kim Kardashian-like game for a celebrity who’s totally unknown in the West but big in Asia?

Definitely. In China, Japan, maybe even Korea and Russia, these are markets big enough that have home-grown celebrities that have a lot of clout. I think the Japanese, Chinese and Korean markets particularly have proven to be large enough to support games just targeted at their geography. You can make $100 million a year on a game in China. You can make $500 million a year on a game in China. We’ll be beginning to consider that sort of expansion, for sure.

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