Social games company Glu Mobile announced the acquisition of two games developers to strengthen its in-house product capabilities, and announced a partnership intended to bolster its presence in the lucrative Chinese market. The company is acquiring Griptonite Games and Blammo Games, which Niccolo de Masi, its CEO, said “will approximately double our studio capacity dedicated to freemium titles, as well as add proven casual, freemium DNA to our team.” It is working with Chinese media company TOM Group in “a strategic partnership that will include the development of a smartphone storefront community for the Chinese market.”

Griptonite Games is described as a “developer of high-quality titles for handheld platforms.” The company has approximately 200 staff, and has “shipped dozens of titles on Xbox 360, Wii, DS, PSP, and iPhone platforms.” Blammo Games recently joined Glu’s gPartners programme to develop two titles, the first of which will launch early next year. The company is led by Christopher Locke, who was described as “one of the creators as well as producer of several freemium top ten grossing iOS titles including Smurf’s Village and Zombie Cafe.”

In a statement, Glu said the work with TOM Group will “combine Glu’s high-quality social mobile games with TOM Group’s mobile internet cloud experience and e-commerce infrastructure.” It was said that both partners “bring unique assets to the partnership which is focused on building glu.cn into a leading smartphone community portal in China” – the site is scheduled to launch in the fourth quarter of 2011.

According to Ken Yeung, CEO and executive director of TOM Group: “The collaboration marks a key milestone for TOM Group in unlocking the value of its cloud-based cross-device open platform. It also evidences the materialisation of our strategy to become a landing platform for our international partners to localise their technology and applications and tap into the Chinese market.”

This week, Glu also published its second quarter results. For the period to 30 June 2010, it reported a net loss of US$1.75 million, compared with a prior-year loss of US$3.22 million, on revenue of US$17.68 million, up from US$15.95 million. It said that for the first time, its smartphone revenue exceeded 50 percent of its total, reaching US$9.4 million and outstripping sales from its feature phone activities. In its conference call, de Masi said that it had achieved this target “significantly ahead of schedule.”
 
The company expects the decline of its feature phone business accelerate in future, as it focuses its resources on the smartphone market.

According to de Masi, the fragmented Android device landscape will “increasingly be a barrier for small competitors.” He argues that “Glu’s expertise and infrastructure for efficiently negotiating this fragmentation worldwide is an increasingly important competitive advantage for the company.”

The company said that “freemium” revenue accounted for 79 percent of (non GAAP) smartphone sales during the period, compared with 69 percent in the prior sequential quarter. Premium smartphone revenue is also increasing. During the second quarter, Glu saw 999,000 in-app purchase transactions, up from 755,000 in the first quarter, with the average transaction value increasing to US$4.07 from US$2.31, due to higher price points for virtual goods.