Market Overview

Glu Mobile Positioned to Benefit From Facebook's Oculus Rif

Glu Mobile (NASDAQ: GLUU) is coming off a turbulent quarter. As an industry leading gaming company in the in Free-To-Play gaming space, they develop games specifically for mobile apps to be used on tablets and smartphones. Founded in 2001 and based in San Francisco, they now have teams in four countries. Their focus is on developing and publishing action/adventure and casual games. In addition to developing popular games, they also work with 3rd party licensing brands. A few of their popular brands include Big Time Gangsta, Blood & Glory, Contract Killer Zombie, Deer hunter and many others.

 

2014 brought Glu a lot of momentum as their stock price soared with a 38% gain through the spring. Yet the summer has not been so kind. The company has had had exciting yet volatile quarter. On July 30 the quarterly earnings were announced and the numbers outpaced projections for both revenue and earnings. The release of Kim Kardashian: Hollywood has been a highly successful game and is expected to bring in over 200 million before the end of the year. Yet on the day of the earnings announcement the stock saw a 19% drop.

 

Acquisition of Cie Games the Developer of Racing Rivals

 

With the earnings report, Glu also announced its acquisition of Cie Games, the developer of the highly successful Racing Rivals. This acquisition opens the door for Glu to add racing to its growing portfolio of gaming specialties. The Racing Rivals Game was launched in August of 2013 and is still ranked 27th in the App Store and 15th on Google Play. The purchase is expected to help Glu double its revenue by year end. Yet with all this good news, investors are not pleased.

Investors have been concerned about the price paid for Cie Games, which is expected to close the end of August. They were also disappointed that earnings were not higher, with the success of the Kardashian game. However, the quarterly numbers did not reflect the success of the Kardashian game because the earnings report was released before the end of the accounting period, which contained the Kardashian sales numbers. These factors have resulted in an investor selloff and accounts for the sharp decline in stock price in July and August.

 

Competition Heating Up in The Virtual Reality and the Gaming World

 

In addition to the gaming success Glu is having with their most recent releases, virtual realities technological improvements may provide new revenue streams in 2015. As the gaming headset Oculus Rift reaches its launch date, gaming companies like Glu are strategically positioned to be able to integrate virtual reality technology into their gaming experiences for users. Games like Tap Sports Baseball will be able to be played on a virtual reality platform. This will create a real life user experience, where they do not feel like they are watching the game, but will feel as if they are part of the action. VR technological advances will be a game changer for the gaming world and the software companies that develop these games.

 

Next Galaxy Corp (NXGA), a leader in innovative virtual reality software is also positioned to see significant gains with the advances in VR technology on the hardware side. Next Galaxy was founded by former Boeing (NYSE: BA) digital engineering guru Mary Spio. Next Galaxy's platform technology aims to simulate the communal experience of attending live events, such as concerts, sporting events or business conferences through Virtual and Augmented Reality.

 

The company has recently teamed up with EON Reality to create the first fully immersive and interactive social virtual reality platform using the Oculus Rift headset. They have also brought on leading Grammy nominated producer Willie “Bum Bum” Baker to create a series of virtual reality shows with the CEEK platform.  The collaboration will be a “docu series” that will be shot with 360-degree cameras to give fans an inside look at today’s music stars as well as up-and-coming artists.  Baker, a Grammy-nominated producer with a long list of accolades, has worked with the likes of Beyonce, Pink, India Arie and BoyzIIMen.

 

Hardware versus Software

 

Oculus Rift, bought by Facebook earlier this year, is set to reposition virtual reality with its hardware. Software developers that have the ability to produce seamless software for the device will be able to see exponential growth as Oculus comes to market and users seek more virtual experiences that mimic real life in new ways. This technology is set to turn the 80’s version of virtual reality on its head. The technology is now able to transport people into virtual reality, where there is little distinction between the game or experience and reality. This blurring of the lines will enable users to truly experience the event as if they are there.

 

Taking virtual reality hardware to the next level is providing companies like Glu and Next Galaxy the ability to capitalize on these advancements as they produce software that can be used with hardware platforms.

 

 

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

 

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