Glu talks iPhone, brands and advertising

Jill Braff on the company's challenges in 2009

Glu talks iPhone, brands and advertising

Glu Mobile's problem in 2009 isn't just about a lack of cash and low share price, but also the fact that the company is engineered for success in a carrier-focused world.

The publisher's talents lie principally in paying big sums for brand licences, porting the resulting games across thousands of handsets, and focusing its marketing around getting premium spots on carrier decks. None of which are primers for success in an App Store style ecosystem.

Glu is by no means the only company facing this challenge, and this isn't to suggest that the publisher is incapable of creating the kind of high-quality own-IP games which will thrive on the App Store and stores like it.

But Glu's financial situation means it can't throw as much money at the task of self-transformation as might be desirable. It is trying, shifting around 30 per cent of its development resources to high-end platforms like iPhone, Android, N-Gage and BlackBerry, and ramping up its production of own-IP titles.

But you can tell it's a tough shift to make. "We got into this world we understood quite well, in terms of creating a publishing roadmap and how to deploy, and now that's been turned on its head a little bit," says Jill Braff, senior VP of global publishing, talking to at Mobile Congress this week.

"We always believed in brands, but a big part was how they became a necessity in the carrier model, with the limitations around discovery and merchandising on the static carrier decks.

"Now with the ability to have user reviews and a lot more information, these decks will become more sophisticated. So if a game that nobody has heard of gets 1,000 five-star reviews, it can cut through."

The big question for Glu is how quickly it can come up with a flow of creative, original games to get those five-star reviews.

Glu CFO Eric Ludwig (who sat in on the interview) says that "the number of ideas coming out of the studio that are completely not Glu are amazing". But the fact that they can be described that way shows the cultural shift that Glu is having to perform.

Glu has certainly been doing its homework on iPhone, monitoring the App Store and testing out different pricing strategies with its Space Monkey game. What have they learned?

"It's not really clear yet where the pricing will settle out," says Braff. "Everybody thought $9.99 would be the price point at the start, but then all the free and 99 cent games came out, and now in the last couple of months there've been a sizeable number of games in the Top 50 at higher price points."

What about the whole branded games thing, then? Glu has seen some of its licensing partners - notably console and casual games firms - take iPhone back in-house rather than license to Glu. How big a problem is that?

"Some will bring their own games to the iPhone, and there'll be some where we continue to do the work," she says. "It's not too dissimilar to the original mobile games business, where a lot of brand-owners planned on doing it themselves, then didn't.

"Even with the carrier business, folks like Konami and Sega exited it, but now they're saying they want to be in the iPhone business. But life is long..."

How about higher price points on the App Store, including the rumoured $19.99 premium section? Braff says Glu embraces higher price points, whether they're $9.99 or $19.99, especially if the quality of the game is comparable to DS or PSP (incidentally, she also says "I don't think Nintendo's just gonna roll over" in the face of competition from iPhone and iPod touch).

She also stresses that $19.99 doesn't just have to be about console-style games. "The thing I like about $19.99 is it's not just about Activision and EA - plenty of casual guys do well on DS at $19.99.

You can buy Diner Dash from Best Buy for twenty bucks too. But we're also going to see micro-transactions that will really change pricing even more, letting us give a game away for free or a low price point, and then create an economic model and community around that game, like you see on the Web."

Advertising could, in theory, fit into this, but it seems Glu has learned from the controversy around its Space Monkey game on iPhone, where ads were introduced to a previously-premium title, causing player anger.

"We confused people," says Braff. "But also, I've worked in entertainment software since 1993, and I don't believe consumers equate free with advertising for their entertainment experience. It doesn't work for movies, music or books.

"If your entertainment is worth paying for, consumers don't have a problem paying for it."

However, she sees more opportunities ahead for console-style models where adverts are incorporated into games, like virtual product placement.

It's been a tough few months for Glu, but at least the company is looking to experiment with new models like this, not to mention the opportunities presented by iPhone and other high-end handsets.

The challenges may be significant, and the rumours of potential acquirers may continue to buzz (Ludwig's presence at Mobile World Congress raised eyebrows among some rivals). But the company shouldn't be counted out just yet.