Angry Birds CEO’s ‘Games First’ Plan Pays Off as Sales Rebound

  • Finland’s Rovio boosts earnings as a potential IPO looms
  • CEO puts focus on games as partners help with movies, merch

Rovio Entertainment Oy is said to be planning an IPO valued at $2 billion, banking on a resurgence of the Angry Birds brand. Bloomberg Gadfly columnist Lionel Laurent reports on 'Bloomberg Markets.' (Laurent is a Bloomberg Gadfly columnist. The opinions expressed are his own.) (Source: Bloomberg)

The maker of Angry Birds mobile games is on the rebound, increasing sales at a rate topping 90 percent for a second straight quarter as the company prepares for a potential IPO.

Finland’s Rovio Entertainment Oy, which reduced its work force by more than half in the past three years amid slowing revenue, is now reaping the fruits of a new strategy placing more focus on in-game purchasing and advertising instead of paid downloads. The company is also relying more on licensing partners to handle its movie and merchandising businesses rather than doing it all in-house.

Kati Levoranta. Source: Rovio Entertainment Oy

Kati Levoranta

Source: Rovio Entertainment Oy

The strategy of ‘‘games first” lets the company concentrate on what it does best, Chief Executive Officer Kati Levoranta said in an interview at Rovio’s headquarters in Espoo, outside Helsinki. ‘‘We’re in a very good position.”

Earnings are also recovering, helping to draw interest to the potential initial public offering. The challenge for Rovio is not just to keep attracting players to its titles, but to convince them it’s worth spending money on extra features in its games -- all the while fighting rivals such as South Korea’s Netmarble Games Corp. and Supercell Oy, a local competitor.

For a Bloomberg Gadfly column on Rovio’s IPO risks, click here

A stock sale could take place as early as next month and value the company at about $2 billion, people familiar with the matter have said. Levoranta declined to comment on any IPO plans, saying the company is focused on making progress with delivering on its new strategy.

The biggest money-maker for Rovio is now Angry Birds 2, a followup to the original title which became the best-earning app in Apple Inc.’s U.S. store in 2010. While the sequel, at 2 years since its launch, is also aging, it has its best days ahead of it, said Wilhelm Taht, executive vice president of Rovio’s games division.

The average age of the best-earning mobile games is over three years, meaning a title doesn’t have to be an instant hit to succeed. To have fresh games is important, but it is more crucial to keep updating and maintaining the ones that are doing well at any one time, he said.

While the various Angry Birds versions have been downloaded billions of times, Rovio’s other titles have yet to match that success. New games Battle Bay and Angry Birds Evolution, launched in the second quarter, have had strong starts, Taht said.

Revenue rose 94 percent last quarter to 86.2 million euros ($101.6 million), with the games business increasing sales 65 percent to 61.3 million euros. Sales at the brand-licensing unit more than tripled to 24.9 million euros, helped by proceeds from “The Angry Birds Movie.”

A sequel is planned for 2019 with partner Columbia Pictures taking on some of the risk. Rovio funded the 2016 original by itself, a bet which paid off as the movie made about $350 million in worldwide box-office sales. The new funding model is more aligned with the company’s new strategy, CEO Levoranta said.

‘‘Our focus is on games, and the movies represent a nice boost for the brand,” Levoranta said.

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