Gameloft has record quarter thanks to winning mobile game franchises

by Phil Hornshaw

Big-time mobile game maker Gameloft rode the uptick of sales of iPhones, iPads and other mobile devices to pull down its best sales quarter ever, according to a press release from the company.

The maker of titles such as the Modern Combat and Gangstar series saw an 18 percent increase in sales during the fourth quarter of 2011 as compared to the same period in 2010, going from $39.7 million in game sales in 2010 to $47 million last year. The quarter capped off a year of growth that saw a total of a 17 percent increase in sales in 2011 as compared to 2010. Gameloft sold $164.4 million in mobile games on Apple’s iOS platform and Google’s Android operating system in 2011, as compared to $141 million sold in 2010.

It’s another story of big successes in the mobile world, where plenty of companies saw an increase in revenues and profits last year thanks to an expanding smartphone and tablet market. Smartphones now make up 50 percent of all cellular phones sold in the U.S. The release of the iPhone 4S had a huge impact on the quarter for Apple, driving it to record profits.

Meanwhile, Gameloft also saw big gains from the successes of smartphone and tablet makers. The developer is known for its premium quality games, usually with prices to match, that mirror popular, high-profile titles from the console video game world. Gameloft released entries in its Dungeon Hunter series (which takes inspiration from Blizzard’s Diablo PC series), Modern Combat (which seems very similar to Call of Duty: Modern Warfare) and Gangstar (which could compared to the Grand Theft Auto games).

While those titles draw criticism in the video game industry from some, it’s hard to deny Gameloft’s success. The developer marries tried-and-true concepts, often very similar to popular games on other platforms, with high-quality visuals and great production values. Gameloft games are often fully voice-acted and employ some of the better graphics available on the iPhone or iPad. It also has been experimenting with a “freemium” payment structure: players download Gameloft games for free, then pay for the full title through an in-app purchase if they find that they like it.

On a freemium trip

Given how well Gameloft performed in Q4 2011, when it really started to ramp up the freemium push on its titles, it seems the experiment is working. Gameloft previously published titles for as much as $6 or $7 in the App Store, and while the titles were always pretty high quality, those price points seem to turn off players. The freemium model gets players engaged first, then brings up the price of entry later, which likely helps to lessen the relative impact of a $7 charge when many App Store games go for a buck or less.

Gameloft’s press release said that 29 percent of its sales came from the U.S., while 30 percent were derived from Europe, where the company is based. While the company makes titles for other platforms, including Sony’s PlayStation Network, it was mobile games that drove its profits. Gameloft reported that smartphone and tablet game sales increased by 64 percent in Q4 2011 as compared to 2010. Those mobile sales accounted for 41 percent of the company’s total.

Though some users may chide Gameloft for its borrowing of other games’ concepts, its hard to deny the company’s attention to detail and quality as it translates into a successful 2011. Gameloft’s model isn’t for every developer, given that the company makes higher-end games that cost significantly more to produce than some smaller independent games. But the company’s sales numbers indicate a healthy demand from mobile gamers for console-like, high-quality mobile games.