Back in June, the San Francisco-based company raised $151.8 million in a secondary public offering. That gave it a war chest to pursue new acquisitions. Making good use of that money will be the job of Chris Akhavan, senior vice president for business development, corporate development, and advertising at Glu.
Other rivals such as Scopely have been busy buying other companies. In fact, in the second quarter, the value of game acquisitions and investments topped $7.8 billion, according to data collected by game investment specialist Sergei Evdokimov. During the quarter, Zynga bought Peak Games for $1.85 billion.
But Glu also has its own studios working on titles such as MLB Tap Sports Baseball, Deer Hunter, Covet Fashion, Design Home, and others. It recently published Disney Sorcerer’s Arena, and more games are coming. I talked to Akhavan about the overall strategy.
Here’s an edited transcript of our interview.
Chris Akhavan: We issued a secondary, and the total amount was $151.8 million, back in June. That was a great milestone for the company. A big part of that was to give us the flexibility to pursue M&A, something that we’ve kicked off the year with a greater focus on. People don’t realize that Glu has been built on — a lot of our successful titles and studios that we have today, at one point they originated through an acquisition.
Going back to 2011, we acquired Blammo Games. They went on to create the Kim Kardashian game. In 2012 we acquired the Deer Hunter IP from Atari and went on to have a very successful franchise with that IP. We have the next version of Deer Hunter currently in development. In 2013 we acquired a small studio that’s now become our sports studio, with the MLB Tap Sports Baseball franchise, one of our top games. In 2014 we acquired PlayFirst, which made the Diner Dash franchise. Tom Hall was part of that. And then obviously in 2016 we had the CrowdStar acquisition, which brought us a phenomenal studio with Covet Fashion and Design Home.
If you look at the company today, it’s composed of a lot of great teams and IP that originally came to the company through an acquisition. We set out this year thinking that the company was in a good place foundationally. The company had restructured over a number of years to focus on what we call “growth games,” games we operate over the course of a long period of time. We felt like we’re now in a good place where we can bring on another great studio and team into the picture and support their growth. The capital raise was to give us the flexibility to pursue acquisitions if we find a good fit.
GamesBeat: With that amount of capital, are you looking to catch studios in a certain stage of their growth, before they’ve hit the big time?
Akhavan: We look across the spectrum. If you look at our prior deals, like the team that ultimately became our Tap Sports Baseball studio, that was an acqui-hire. At the time, when we met them, it was a three-person team that was passionate about making mobile sports games. They had a cool prototype of a football game that was very mobile friendly, social, and easy to play. We saw a great team we could build with, so we brought them on board and gave them the resources to build out a full studio, and also help them get licenses with MLB and the MLBPA. Over the years that franchise has grown phenomenally. Through the end of Q1 that studio has done $278 million in bookings as part of Glu. That originated from a small three-person acqui-hire.
On the other end of the spectrum, CrowdStar was a more mature studio when we acquired them. They had Covet Fashion live and running for multiple years at the time. They had Design Home in beta. That was a more mature studio that had a great live title and an impending launch. Glu was able to help invest in the studio and grow that studio through scaling up the team even further, investing heavily in user acquisition, and everything else that’s fueled the growth of the studio.
We’re open to the full spectrum, from earlier stage opportunities where we see a good DNA fit that we can help accelerate, through to mature and even potentially more mature than we’ve done in the past. The funding we raised was more to give us the flexibility to pursue anything within the range I talked about. If we do find a good fit, we’re ready to go from a funding perspective to be able to pursue an acquisition.
GamesBeat: How did your role change here, your responsibilities?
Akhavan: I’ve always been involved in corp dev during my seven-plus years at Glu. I’ve worked on our prior deals. But I also used to oversee other parts of the business, including things like marketing and UA. At the beginning of this year, I handed that off to focus more on corp dev. My role now is very corp dev-heavy, but I also still handle biz dev and our advertising revenue business, which continues to be a meaningful business for us. My role change was really letting go of some of the prior parts of the business to focus more on corp dev and our pursuits in that area.
GamesBeat: How does the game industry look for this kind of opportunity now, the M&A opportunity?
Akhavan: We’ve seen continued consolidation. Our peers at companies like Scopely and Zynga and Stillfront have all been active. We think there are still a lot of opportunities out there, and we think that consolidation trend is likely to continue. As the mobile gaming ecosystem evolves, things become more competitive, and scale becomes an increasing advantage. We’re seeing a lot of studios that might be doing well today — they’re starting to see the benefit of becoming a part of a larger player, where they can tap into shared infrastructure, or even just the capital to fuel investment in things like UA. It can give studios more opportunities to focus on making and operating amazing games, while they let the parent company help them with a lot of that central infrastructure and support, so they don’t have to reinvent the wheel on a lot of these building blocks that are more scalable.
GamesBeat: That strategy has almost become a necessity. If everyone else is doing this in the market, then it’s a forcing function. You have to eat or be eaten.
Akhavan: The market is definitely requiring another tier of capability to be successful today. You have to be great in so many areas, from analytics to UA to, in many cases, ad monetization. Product marketing, PR. When you start to add it up, it becomes a sizable effort for even a 50-person or 100-person studio, to build a great game and also be great at all of those additional functions. Whereas plugging into a bigger publisher like Glu, you get access to phenomenal talent that can support you in those areas and allow that core studio to focus on making great products, which is ultimately what studios want to focus their energy on.
GamesBeat: How do you look at the key advantages of Glu? What do you see as something that helps Glu in this strategy?
Akhavan: We’re strong in UA and marketing, for sure. That’s a core strength. But what’s unique about Glu is our focus on growth games. We’re not a high-volume business where we’re cranking out title after title. We’re very selective in investing in titles that we think have that very long growth potential. “Products that can last for decades” is what we always try to create and nurture. Our advantage is having experience in building these growth games and accelerating them and showing that track record of year after year of improvement and growth, going deeper on these properties. Whether it’s Design Home or Tap Sports Baseball, we’re always finding ways to evolve these experiences and deliver more to the audience, as well as finding innovative ways to tap into new audiences.
When we approach a studio, that’s something they find attractive about Glu. When we place a bet on a title or franchise, they know that we’re going to take it seriously and invest deeply, as opposed to other publishers that might dabble in placing many different bets to see which ones work out. We’re more intentional in where we apply our resources and focus. Where we see that potential, we lean in very heavily, and across the spectrum — marketing, UA, and everything else in terms of supporting the studio. For example, things like user research teams that can support them in understanding their audience at a deeper level. That’s important when you’re trying to create that multi-year relationship with your players.
GamesBeat: The example you brought up of the small sports team growing up and being matched with a license, that’s a clear way to unlock the value of that team.
Akhavan: It was similar with our Toronto studio, the one that was acquired in 2011. They had initially created a game called Stardom Hollywood when they joined Glu. Later on, Glu helped them get the partnership with Kim Kardashian, which obviously led to phenomenal success. It’s another example where our expertise in working with IP was something we were able to bring to the table to help a studio succeed.
GamesBeat: What do you think about the potential of mobile games? I spend a lot of time across the whole spectrum, and I recently spent a lot of time with The Last of Us Part II. It’s a very interesting, very satisfying thing to play and write about. I wonder if mobile games can or should have the same kind of ambitions as triple-A games. And if not, what is the opportunity, the thing that could be driven for?
Akhavan: There are definitely opportunities for mobile games to expand beyond what people historically associate with them. It could look different compared to what you might expect from a triple-A PC or console experience. Maybe that’s not exactly what you get on mobile. But as a general theme, offering gamers and consumers much deeper, more meaningful experiences is something that I see developing and evolving in mobile.
Design Home and Covet Fashion are good examples for us, where those are — you could call them games, but they’re really beyond just a game. They’re adding value to the lives of people that interact with those products, giving them an outlet for creativity, an outlet to learn more about design or fashion that impacts their real lives. Ultimately it gives them a connection to other people that have shared interests, where they can collaborate and bounce ideas off each other. Through that I think you’re seeing much deeper connections and experiences developing through mobile games.
Certainly there’s an opportunity, though — a game like Last of Us is a great example of compelling narrative and depth of character development. We haven’t seen a lot of that yet in mobile, but it’s not something that can’t be viable on the platform. You just need to rethink how you deliver it in a way that makes sense on a small phone versus a PC monitor.
GamesBeat: Games for diverse audiences seems to be an area where you’ve excelled. That’s another more fertile direction, maybe.
Akhavan: Those products serve an underserved market. Largely women make up the audience for both of those titles. Traditionally the mobile game industry just says, “Well, we’ll make another farming game, or a match-three game.” Instead, these products offer meaningful connections to the real lives of the people that interact with them. Beyond that, they give a true creative outlet, where they can express and develop their creativity. They operate in spaces that weren’t overly saturated, and where there was this big demand from consumers to have a different kind of interactive entertainment experience that just wasn’t being offered previously.
GamesBeat: As far as the footprint you have, how much interest is there in international markets, like China? Because of where we are with COVID, is there any particular geographic interest in where you want to expand?
Akhavan: Glu is pretty heavily concentrated in North America. We’ve talked in the past about how we have a desire to expand internationally. In particular we’ve been focused on expansion efforts in Europe. It’s something we’re looking for. Should any acquisition fit with an opportunity to expand internationally, that would be a plus.
Touching on what you hinted at with COVID, one of the challenges a lot of people are facing in corp dev, obviously you can no longer travel to studio and do what you typically do, have these multi-day visits where you spend all day on site meeting people and getting a feel for the culture. Those dinners you have after a long day together, where you get more of that personal connection, that’s challenging to do now when we’re on video calls all day.
Fortunately a lot of the relationships we had prior to this all happening, so we can build on those. We’re not letting the current situation slow us down. We’re working on video and doing what we can to maintain the same ability to build those relationships in this new environment we all have to work with. But we’re open to a broad range of geographies in the studios that we talk to.
GamesBeat: Looking at the opportunity that you found to raise money this year during the pandemic, games seem better off than many other industries right now.
Akhavan: The game industry has been fortunate. People have turned to gaming more broadly in this time, where other forms of entertainment aren’t available. My personal point of view is it’s also introducing a lot of people that weren’t engaged with games into the gaming world. For the whole industry, we’re going to see this as something that drove an acceleration, more people becoming gamers and finding that games are not just simple entertainment anymore. You can find meaningful friendships and create meaningful relationships through games.
I always tell my wife — I’m a big PC gamer myself, but for me it’s how I go and hang out with my friends. We’re on Discord voice chat with each other while we play a game like Valorant or Counter-Strike. This moment, for a lot of people, has introduced them to the fact that while we can’t connect with each other in person, games provide an outlet to maintain relationships and create new relationships. That’s been one of the positives, if there is one, to come out of the difficult situation we’re going through this year.
GamesBeat: What are you thinking about as far as moving forward with your workforce during this time? We have the pandemic, we have Black Lives Matter, we have sexual harassment crises. All these things are weighing very heavily on the workforce.
Akhavan: Personally I’ve been inspired by how Glu has responded to what’s happened with the Black Lives Matter movement in particular. We’ve addressed that in a big way internally. We’re having a lot of conversations here, and we’ve rolled out training programs for all of our employees on unconscious bias, allyship, power and privilege. This morning I was working on unconscious bias training. It’s nice to see that Glu is stepping up within our organization and working directly to support the cause. In addition, we’ve made a donation to the NAACP and the Equal Justice Initiative. I’ve seen similar from a lot of other gaming companies. I’ve been inspired to see the industry step up and play an important role there.
In terms of the working from home environment that we’re dealing with, Glu has been listening closely to our talent and understanding what’s working, what’s not working. People have mixed challenges. Everyone is very productive from home, so it’s been a great moment where we as an organization have learned that people can be incredibly productive in this remote format. But that comes with some challenges. There’s been burnout in being on Zoom video all day, not having that real-life personal connection. Not everyone has a nice dedicated office space at home. Maybe they don’t have the right equipment they need. They have to deal with those challenges.
We’re working with our talent in the short term to make this as comfortable as possible, including giving mandatory company days off. People aren’t taking vacations now, and we want to make sure they’re taking time to rest. It’s hard to do that when everyone’s plugged into their computers, so we have full company shutdown days we add on top of normal holidays.
Beyond that, in the long term we’re looking at how to evolve, potentially, the work structure between working at home and being in an office. We’re seeing big benefits to working at home. The future of work, even well beyond COVID, could be very different than it was pre-COVID. We could have a world where people work from their homes part of the week, and then come to the office for a couple of days a week with more of an intention to spend that time meeting with other people. You could see more of this hybrid office and home model being more prevalent coming out of the pandemic.
GamesBeat: One thing I’ve been thinking about a bit is stories that have to do with the evolution of the game industry. I look at something like EA in 2008, when they had 60 games in development, and now they launch maybe six or eight games a year, but the revenue and profit are far bigger than they used to be.
Akhavan: We have a miniature version of that. Back when I joined in early 2013, the company was cranking out games all the time. I feel like the month I joined, that month alone, the company put out three games. It was a very different model. There were a lot of sequels, Frontline Commando 2 and so on. That rinse and repeat cycle — put out a game, monetize it for six to nine months, and then you have the next game coming out. Certainly we’ve also made that evolution toward the growth game philosophy of investing in fewer properties, but in a much more meaningful, long-term way.
GamesBeat: I wonder about changes in the whole industry, like the rise of hypercasual games. How might that affect Glu?
Akhavan: Hypercasual has been interesting. We’ve obviously been keeping an eye on that market, given how significant a share of downloads have gone toward hypercasual games. It’s a net positive for the whole market, because hypercasual is a great way to introduce people that are not even casual gamers — maybe you get them into these snack-sized 20-second session games, and then that’s a pathway for them to get into more meaningful and long-term engagement games.
We know that’s happening, because if you play those hypercasual games — play a level, die in 10 seconds — the ads you typically get are for more long-term live ops-oriented, free-to-play games that are designed for longer sessions. We’re seeing hypercasual as this interesting funnel that maybe brings in a very casual consumer, gets them familiar with games, and then potentially, through the ads they see in those hypercasual games, they ultimately move into deeper gaming experiences.
GamesBeat: On the M&A side, how much might you consider that market?
Akhavan: We’re genre agnostic in general when it comes to M&A, but if you look at our prior track record, we do a lot of analysis to understand where the opportunities are in the market. I talked about the sports studio. Back then we saw a big opportunity for mobile free-to-play sports that was wide open. Baseball in particular did not have a top-grossing game. That was one where we thought there was a huge opportunity to invest. We also talked about Design Home and Covet Fashion as being products that were sitting in their own categories.
What I’ll say about that, we’re genre agnostic. We’re willing to look at studios across a wide variety of genres. But we ultimately want to invest in opportunities where we think there’s a differentiated market to go after, or a significantly growing market where we can grab a meaningful share. We tend to shy away from hyper-competitive, hyper-saturated markets, like the social casino market. That’s one we’ve historically avoided, where you have these massive players in a hyper-competitive situation.
GamesBeat: How do you look at some of these long-time franchises, like Diner Dash? How often do you need to refresh that or change its direction or otherwise keep it generating revenue?
Akhavan: I want to say that PlayFirst started in the early 2000s on PC. We acquired the studio in 2014. Since joining Glu, they’ve launched a total of four versions of Diner Dash. The first was the initial Diner Dash when they joined, which was the first smartphone, truly free-to-play Diner Dash. They took the learnings from that and launched Cooking Dash, which was very successful, along with the Gordon Ramsay Restaurant Dash game. Then Diner Dash Adventures is the most recent installment in that franchise, launching last year. While there’s been new SKUs launched in that franchise, it’s really been an evolution of the franchise itself, that team learning what their audience is looking for and refining their approach. It’s been a multi-year investment in the Dash franchise.
GamesBeat: What do you consider to be some of the biggest areas of investment for you internally right now?
Akhavan: We’re very focused on our growth games. We’ll continue to invest heavily in Design Home and Covet Fashion, as well as our baseball title. In terms of pipeline, we have a new Deer Hunter in development, and then a couple of games beyond that. We’re also continuing to invest in the Disney Sorcerer’s Arena game that we recently launched. The internal focus is continuing to refine and evolve experiences across those titles. We’re always looking to up-level our central infrastructure and be able to offer even more compelling tool sets over time to the studios we work with.
GamesBeat: How do you decide that you need to let go of a game, give it a break, or otherwise feel like you can’t be the most competitive in a particular space?
Akhavan: If I look back to the past couple of years, there have been titles that we ended up walking away from, or de-emphasizing. We had a WWE game that we created and launched, and it just didn’t hit the mark. The KPIs weren’t where we needed them to be. We gave it a good effort and tried to continue to refine, and after a while of doing that we concluded that the gap we’d need to fill to make that a viable business in the long term was just too great. We redeployed that team’s resources to other titles.
We try to be very data-driven, and also consumer insights-driven. Look at the data and understand it, but also layer on the more subjective pieces that you can get through consumer insights, get that holistic view of how users are experiencing a game. Whenever we decide to not invest in a product, it’s because the signals coming from across that spectrum of data and insights are telling us that we’re too far off the mark to create a long-term successful growth game.
GamesBeat: When it comes to leadership from women in game companies, and Glu in particular, how are you thinking about that, making that possible?
Akhavan: It’s been a big priority for us, part of our effort to improve in terms of diversity and inclusion. We’ve added two women to our board recently. We’ve taken direct action there. It’s an area where we need to continue to address and improve diversity across the spectrum of our talent.
GamesBeat: How big do you think mobile is going to get, and how fast is it going to grow toward the kind of numbers people are talking about? Newzoo was talking about 3 billion gamers by 2024. How should we think about that? How much do you think companies should try to grow as a result?
Akhavan: We’re obviously very bullish on the prospects for mobile in the long term. We’re still in the early days. Mobile games are evolving quickly. There’s so much room to improve and develop more meaningful experiences. When you look at things we’ve talked about in this conversation, whether it’s hypercasual or games like what CrowdStar brought to market, games that brought in new audiences that were not previously gamers, that trend will continue. We’ll continue to see interesting, compelling new experiences offered in the mobile gaming world that will bring in the next wave of consumers that don’t necessarily interact with any games today. There’s a lot of reason to believe that this market has plenty of room left to grow.
GamesBeat: How do you work with Nick Earl?
Akhavan: I work with him every day. He’s hugely supportive. He’s always willing to get involved. We have conversations with the studios. He’s passionate about our culture and how we operate at Glu. He does a great job of walking new teams through what that looks like, so they know that if they do become a part of Glu, they’re walking into a culture that we’ve built with a lot of care and intention. Nick has been critical in that process, being that voice for the company. He’s there all the time to collaborate and bounce ideas off him. He’s always willing to directly engage with new teams.