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Niccolo De Masi, Glu Mobile CEO, on the “freemium” business model and how Glu makes money in an increasingly free gaming world.
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-- -- mobile gaming becomes increasingly popular game makers have struggled to find ways to make money off these free games.
Well one developer says it's found a solution with a premium model will mobile president and CEO in -- -- to massive joins us now.
The -- you know in my past my rule -- my kids is they can only download games that are freight.
I want neighbor and a good thing because everything is free it seems these days -- how -- -- make money.
What is actually -- principal ways we drive revenue everybody looks at advertising and our games.
So about 25% of our revenue comes from an -- you don't pay anything.
But I actually 75% of our revenue comes from.
A very small proportion of people who choose to buy a virtual good -- virtual currency.
To give themselves an advantage over other players one or 2%.
Of the sum total of people playing -- games are actually parting with cash.
That's it though right -- -- it's a really small percentage and that's kind of the norm among the industry amusing is numbers at the same around 2% of the people actually purchase up.
Is that enough to sustain you or better yet offset you're developmental -- development costs.
Oh.
Absolutely I mean we've you know -- been going through this premium transition for ten quarters now and we chose to be early in this direction because we've seen it be successful.
And number of countries on number of platforms and I think in a world of digital distribution for gaming which is happening on all platforms all countries.
It's a winning business -- I mean two thirds of the revenue from the apple and android stores are coming from premium.
Apps and games and so we believe the two big trends for -- her right growth of premium the growth replay and the growth of mobile gaming include -- position you know smack in the center of both of those.
It boggles my mind now eat you know we're in the midst of the -- getting out of recession and people.
Buying virtual things for virtual people -- partly real money it just -- doesn't make any sense to someone like me.
Well if you fingerprint.
-- you do as an alternative if you were buying a console game you'd be partied with seventy dollars or eighty dollars of real cash.
Plus you'd be buying your kids you know 200 dollar console and only then would they start playing the game.
Compare that to -- games and your kids can download and play our games endlessly for free and you don't have to buy -- console right you're already have a phone or tablet.
Do you using for other things so it's it's far more affordable overall.
I get that I get that now -- what's interesting to -- you are not nearly as reliant on FaceBook as say the others are mean you're you're you know EA.
China guards -- out all those guys are really reliant on FaceBook you're not you're gone that -- No we we've never gone that way in fact I mean we looked at the gaming landscape you know ten quarters ago and I got a -- -- said.
Let's go over the puck is going and the puck is going to mobile devices.
It's going to store is that apple Google Amazon Microsoft control.
Not that FaceBook controls very analyst going to it's going to vertically integrated devices.
-- -- store so.
-- as a business built from the ground up to cater for a mobile gaming world.
You're you're out there you're certainly competing -- -- -- -- thank you for your thoughts and sharing your insights.
Thanks mark it's really is -- -- you can and you can build your own kingdom and people -- on they buy all the -- and well in their Kingdome cultural kingdom there virtual kingdom real.
