|Rovio Profit Falls by More Than Half|
Maker of Angry Birds Game Trying to Adjust Business Model
By Juhana Rossi and Sven Grundberg
Wall Street Journal
Updated April 28, 2014 7:17 a.m. ET
ESPOO, Finland—The maker of the Angry Birds mobile game, racing to adapt to changing gaming trends and diversify a business built on a wildly popular smartphone app, said profit more than halved in 2013 while revenue was essentially flat at €156 million euros ($216 million).
Finland-based Rovio Entertainment Ltd. poured heavy investment in a new racing game called Angry Birds GO! in 2013, which the company labeled "a foundation-building year."
GO!, however, failed to make a large impact amid stiff competition from a raft of other Nordic gaming entrants—including Supercell Oy, which makes Hay Day and Clash of Clans, Minecraft maker Mojang AB, and King Digital Entertainment PLC, which makes Candy Crush Saga and recently went public.
Until last year, Rovio's flagship Angry Birds games generated revenue through download fees. However, nearly all the top-performing titles in the industry today are so-called free-to-play, or freemium games, meaning they cost nothing to download and revenue is generated through in-game purchases. As a result, Rovio has been adjusting its model and that is a slow process.
"To be honest, the free-to-play transition has taken longer than we anticipated," Rovio Chief Executive Mikael Hed said in an interview. He said the roughly flat revenue curve was largely attributable to the transition.
The company posted a net profit of €26.9 million ($37.2 million), compared with €55.5 million in 2012. Revenue in 2013 was up slightly from €152.2 million in the year prior. Operating profit, meanwhile, fell to €36.5 million from €76.8 million.
Rovio is closely held.
Mobile gaming rivals such as Japan's GungHo Online Entertainment, King and Supercell all saw explosive growth last year. King, for instance, saw a more than tenfold revenue increase in 2013, as sales skyrocketed to $1.88 billion from $164 million in 2012, largely on the back of its "Candy Crush Saga" megahit. Meanwhile, Supercell, with its "Clash of Clans" and "Hay Day" games, saw revenue soaring to $892 million last year, up from $101 million in 2012.
Rovio also makes money through licensing its Angry Birds brand and producing animated film clips. Its workforce grew to more than 800 people in 2013, up from about 500 at the end of 2012.
Corrections & Amplifications
An earlier version of this article misspelled the name of Rovio Chief Executive Mikael Hed as Michael Hed.
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