Glu Mobile In A Sticky Spot

Bad news for Glu Mobile (NSDQ: GLUU) and for the mobile gaming industry. AP reports that Deutsche Bank analyst Jonathan Goldberg downgraded the mobile game publishers stock to "sell" from "hold," citing a slowdown in mobile gaming spending," as well as a sharp rise in licensing costs for the mobile rights to popular content. Glu's shares fell 8.2 percent Tursday. Mobile games slumped last year, with many in the industry--including Nokia--blaming operators for taking their investment elsewhere. Mobile games publishers like Glu who strike licensing deals with popular brands are being squeezed by content owners and game developers who are demanding higher and higher rights fees for their games. Goldberg said it was not unusual for deals to hit $2 million plus royalties for a particularly popular game—though he noted Glu hasn't yet had to pay this kind of money. But the trend for these type of deals is definitely putting a crimp on Glu's margins. Meanwhile, Glu announced Wednesday it had extended its deal with 2waytraffic to develop and publish the very popular mobile game version of hit TV game show Who Wants to be a Millionaire.

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