Since the debut of mobile game Kim Kardashian: Hollywood on June 25th, developer Gluu Mobile has seen its stock rally nearly 50%. Kim K’s cult following has added about $140M in market cap. As a result, Glu has hit levels it hasn’t seen in the last 5 years. This is just the beginning.
In the game, you create your own character and live the life of a celebrity by buying luxurious gifts, visiting popular locations and participating in the dating scene.
The game is free to download and play, with revenue coming from in-app purchases for things like clothing or a “burst of energy” for making your way through Hollywood. This model has worked for other viral games like Candy Crush and FarmVille and it seems to be doing the same for Glu’s blockbuster.
The Kardashian Impact
Popular gaming website GameSpot reported that the Kardashian game could net Glu revenues of $200M for the year. To put into perspective, Glu had projected annual firm revenues to be in the $160M range (proving to grow 40% YoY). Even if Kardashian could bring in half this estimated figure, Glu will have a remarkable 2014.
ThinkGaming, a site tracking app store stats, estimates that the daily revenue from the Kardashian game is $293,515, making it the fourth top grossing iOS game. What’s more interesting though is that Kim’s game has the highest number of daily new users by a wide margin (below).
For the second quarter of 2014, Glu gave top line guidance of 30-32M. Since the Kardashian game was launched in late June, its impact will be felt in Q3 so expect Glu to increase their guidance for the quarter.
Keeping the above figures constant, the Kardashian game has the potential to bring in over $25M/quarter in revenue. This seems like a conservative figure when compared to the GameSpot estimates; however it will blow Glu’s projections out of the water. In any case, the probability for an earnings surprise is extremely high.
More Growth in Pipeline
Newly released Dino Hunter: Deadly Shores, a similar game to Glu’s successful Deer Hunter except with dinosaurs, has been one of the fastest growing games with nearly 103,000 daily new users. Such strong growth numbers give good reason to expect Dino Hunters to be a contender for the Top 10 list.
Hercules: The Official Game is based on the upcoming film starring Duane “The Rock” Johnson. The free game should see increased popularity with the release of the film in late July.
The unexpected surprise brought by Kim Kardashian and the ramp up of new releases Dino Hunter and Hercules should make for an exciting second half of 2014. Glu Mobile earnings expectations have been misjudged, thus making an “earnings beat” highly likely. Due to this catalyst, I expect GLUU to continue its rally.