Glu Mobile Inc. (GLUU) Signs Important Deal With Potential Cash Infusion

The fully online 3D MMORPG game is already an established top-grossing game in the Chinese market and will be initially launched in the U.S., Canada, and Australia.

The likely biggest news from the Q2 earnings report will be any developments from the plans to work with Skillz to introduce skill-based, real-money gaming in Glu’s skill-based games. The Skillz tournament platform will allow users to compete for cash prizes in games such as Deer Hunter Reloaded in up to 37 U.S. states as of the end of Q213. The popularity of that game and the ability to win cash prizes could combine to provide a major hit.

Fierce competition

Besides the small, private firms that continue to deliver the massive winners in mobile games, Electronic Arts Inc. (NASDAQ:EA) remains the biggest threat as the top global publisher on the iOS platform. The company now tops over $100 million in quarterly mobile revenue and has a cash hoard to match that of Zynga. Electronic Arts Inc. (NASDAQ:EA) faces major headwinds with declining console sales and the shift to mobile that only accounts for roughly 10% of the current revenue base. Though the company is very profitable giving it an advantage over both Glu and Zynga that struggle to produce profits.

Bottom line

While Glu obtained access to several game franchises via the MGM Interactive deal, it still lacks the cash needed to ensure success. Any cash infusion from MGM could be years away though the good sign is that it accepted the warrants at a price over 10% higher than the current stock price.

If online gambling or skill-based gaming becomes a major revenue gainer, both Glu and Zynga are positioned for significant gains. Suddenly mobile gaming could be more significant than either Facebook Inc (NASDAQ:FB) or consoles and these two stocks are positioned to benefit the most of any public stocks.

Mark Holder and Stone Fox Capital Advisors, LLC own no shares of any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Glu Mobile Signs Important Deal With Potential Cash Infusion originally appeared on Fool.com is written by Mark Holder.

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