Mobile game publisher Glu Mobile (Glu) has announced it’s investing “up to” $7.5 million in Plain Vanilla, the Icelandic game studio behind popular multiplayer trivia game QuizUp.
The investment comes in the form of promissory notes which are convertible into equity, and will be committed in two batches: the majority will be placed upfront, with a remaining balance being paid “upon hitting specific commercial milestones.”
As part of the deal Glu’s CEO and chairman, Niccolo de Masi, will join Plain Vanilla’s board of directors. And Glu has also confirmed that it's the option to acquire the company outright at an undisclosed pre-agreed price if the partnership goes well.
Based out of San Francisco, Glu has a number of well-known brands in its free-to-play mobile gaming arsenal, including Kim Kardashian, James Bond, the Terminator, RoboCop, and Dragon Slayer. The company went public on the NASDAQ in 2007.
Headquartered in Iceland’s capital, Reykjavik, Plain Vanilla launched in 2012 with a small seed funding round however, afterwards raised another $4.5 million ahead of the launch of its fast-paced quiz app on iPhone in November 2013. It raised a whopping $22 million before the year was out, followed by another $5 million in the summer of 2014. Today’s news takes the company’s total amount raised past the $40 million mark.
With 40 million registered users under its belt, Plain Vanilla revealed last October that it had teamed up with NBC to transform its hit game into a TV show, and it seems this deal was pivotal to Glu’s interest in Plain Vanilla. Indeed, both companies now plan to co-develop the QuizUp TV show alongside NBC, and ensure the program receives maximum exposure to viewers globally. If all goes according to plan, this will drive downloads of the QuizUp mobile app, and in turn this may open opportunities for Glu to do some cross-promotion of its own in its own properties. This could lead to Glu’s ultimate move — buying Plain Vanilla outright.
It’s clear that Glu is playing it safe to begin with. It’s putting enough money in to the Icelandic company to have a say in things, however, ultimately it can walk away if things don’t work out well. It is a smart move in several respects. Glu is well aware that several apps and mobile games can have relatively short life-spans — so why spend an exorbitant amount of money buying a company that may be obsolete within a year? Backed by a primetime TV show that’s airing in the U.S. and U.K., that could be the key difference between whether QuizUp sinks or soars.
What’s perhaps most interesting about today’s news, however, is that Glu has been so open about its intentions to acquire Plain Vanilla, even though there appears to be no real benefit to announcing this in advance. However, Glu has its reason.
“It [the acquisition] is an important feature in the transaction structure which we wanted to highlight,” a spokesperson told VentureBeat. “Glu prides ourselves on transparency and being judicious deployers of our capital for inorganic growth. This deal is a good example of our ability to create an innovative transaction structure which allows synergies to be realized between Plain Vanilla and Glu even prior to consolidation.”
As with several Internet companies, Plain Vanilla focused its formative years on building a solid user base, and built social features into its core to increase stickiness. With investors to appease, it now has to think about making serious money, and through partnering with Glu this offers a mutually beneficial way of increasing numbers. Plain Vanilla can benefit from Glu’s reach in the mobile gaming realm, while Glu is clearly looking to benefit from QuizUp’s new-found TV fame. If QuizUp is a hit, Glu will see the long-term rewards, buy the company outright, and it will be a happy ending for all involved.