Mobile game publisher Glu Mobile (NASDAQ: GLUU) -- which rose to prominence on celebrity-backed games like Kim Kardashian: Hollywood and Restaurant Dash: Gordon Ramsay -- recently introduced The Swift Life, a new social app that stars Taylor Swift.
The Swift Life is less of a game and more of a social network for Taylor Swift fans, which lets users connect to each other via message boards and quizzes. The app, which marks Glu's first celebrity-sponsored app of 2017, will launch alongside Swift's new Reputation album later this year.
Image source: Getty Images.
Glu's stock has roughly doubled this year, fueled by impressive (albeit unpredictable) revenue growth on new titles like Design Home, MLB Tap Sports Baseball 2017, and Covet Fashion. Glu gradually pivoted away from celebrity-backed games over the past year, but it still clearly senses opportunity in popular celebrities like Taylor Swift.
Will The Swift Life generate big numbers for Glu in the coming year? Or will it be another failed effort to replicate the surprising success of Kim Kardashian: Hollywood?
A look back at Glu's hits and misses
After striking gold with Kim Kardashian: Hollywood, which debuted in 2014, Glu launched a lot of celebrity games in a bid to catch lightning in a bottle again. This included games featuring Nicki Minaj, Britney Spears, Katy Perry, Kendall and Kylie Jenner, and Gordon Ramsay.
Kim Kardashian: Hollywood. Image source: Google Play.
Out of all of those games, only Restaurant Dash: Gordon Ramsay and Kendall & Kylie achieved meaningful success, with respective lifetime revenues of about $30 million and $20 million. But that still paled in comparison to Kim Kardashian: Hollywood, which generated $72 million in revenues in 2015 and another $62 million in 2016.
Nicki Minaj: Empire, Britney Spears: American Dream, and Katy Perry Pop all bombed, indicating that social media followings -- Glu's main way of estimating a game's potential audience -- aren't a reliable indicator of future success. Instead, the success of the games tied to Kim Kardashian, the Jenner sisters, and Gordon Ramsay suggests that the link between reality TV and mobile games is stronger than the link between pop music and mobile games. This means that The Swift Life could suffer the same fate as Katy Perry Pop.
Royalties are another concern. Glu pays celebrities an average royalty rate of 20% on mobile app sales, and those expenses consume around 10% of its GAAP revenues. That percentage doesn't sound high, but it matters because Glu remains unprofitable, with its GAAP loss widening from $17.9 million to $23.6 million between the second quarters of 2016 and 2017.