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Rovio profits plunge in "foundation building" 2013


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Tim Ferguson

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Angry Birds maker Rovio reported a significant fall in profit for 2013 after what the company’s CFO described as a “foundation-building year”.

The company reported net profit after tax of €26.9 million, down from €55.5 million in 2012, and less than the €35.4 million reported in 2011. Its 2013 revenue was €156 million, slightly up on the €152.2 million reported for 2012.

Rovio CFO Herkko Soininen explained that the company invested in new business areas in 2013, such as animation and video distribution; tried new business models with its games; and consolidated its position in consumer products licensing.

Rovio has historically generated much of its game revenue from paid downloads but the industry shift to freemium games has seen it invest in “the free-to-play economy” with games such as ‘Angry Birds Go!’.

Mikael Hed, CEO of Rovio, told The Wall Street Journal that the company’s relatively flat revenue is partly due to the business model adjustment.

The company’s main app-related revenue came from paid games, virtual goods in free-to-play games, and advertising.

Compared to other big-name mobile game makers, Rovio’s results suggest it could be losing momentum.

Supercell, the company behind ‘Clash of Clans’ and ‘Hay Day’, reported 2013 revenue of $892 million, up from $101 million in 2012. Meanwhile, King, which makes ‘Candy Crush Saga’, reported 2013 revenue of $1.88 billion ahead of its IPO at the end of March. King made a $567.6 million profit in 2013.

However, Rovio is investing in numerous segments away from mobile gaming. Its consumer products division accounted for 47 per cent of total revenue, expanding its presence in Russia and Latin America.

During 2013 Rovio also invested in animation production for its ToonsTV online distribution channel and the first Angry Birds feature film. Other activities included opening six Angry Birds activity parks in Spain, Finland and China and producing more than 100 book titles in more than 40 countries.

It also launched its Rovio Stars third-party game publishing initiative, with three games emerging during the year.

Soininen said Rovio is creating a long-lasting business whose entertainment strategy “will consolidate Rovio’s position as one of the world’s most beloved brands”.

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