For game makers, making a hit title is elusive, making money from the mobile platform is even more so. The reasons are simple: free games either attract free riders or give a means to up-sell a product. Glu Mobile (GLUU) is very aware of the difficulty it faces. After reporting a decent quarter but marred with bonus expenses and a weak outlook, the stock fell 12 percent on November 6. The company’s strength? – the Kim Kardashian game. The weakness? – too many.

In its third-quarter report, Glu praised its billion count following base on social media. This number is meaningless for shareholders, because follower count does not equate to revenue or even users. The company earned $8.5 million on revenue of $64.4 million. Management also rewarded itself and senior staff through stock options. This cost the company $4.1 million, plus another $1.7 million ($5.8 million in total).

There were key staff additions during the quarter. Hiring ex-staff from Electronic Arts (EA) might prove positive, but that remains to be seen. The Kim Kardashian game performed well in the quarter. It accounted for 29 percent, or $18.8 million of total revenue.

Looking ahead, Glu will release a Katy Perry game, announcing it on December 17. Glu will release the Kendall & Kylie game early next year (2016). It scheduled the Nicki Minaj game title for a launch in the middle of next year.

For now, Kim Kardashian will sustain Glu’s level of revenue, but profit growth is questionable. On the web, Twitter (TWTR), and interest forums, interest for Kim did not grow much:

Source: Tickertags.com

There is no guarantee, either that Nicki Manaj or Kendall and Kylie will find success. On a positive note, Glu pays the celebrities up front, so investors know the costs upfront. Making money is not assured, but at least costs are known up front.

Profit margin improves, but cash flow from financing hurt existing shareholders.

Bottom line