Rovio, the company behind the Angry Birds game series, posted a subdued set of full-year financial results as the appeal of its flagship gaming app continues to wane, although the firm is pinning its hopes on an upcoming Angry Birds Movie to help turn fortunes around.
Total sales fell 9 percent last year to €158.3 million, while operating profit slumped to €10 million from €36.5 million.
Encouragingly, however, revenue from mobile games grew 16 percent, to €110.7 million, as new offerings helped total annual downloads reach 600 million.
“I feel very good about our 2015 games roadmap,” claimed chief executive Pekka Rantala. “Since the beginning of the year we have launched two games, Jolly Jam and Angry Birds Stella POP! and we have soft-launched two more. All of these are getting very good reviews.”
He added that Asia expansion was proceeding well, and that Angry Birds Fight will be its first game developed specifically for Japan, the world´s biggest game market.
“We have strong partnerships in China with Kunlun and Alibaba, and we are working with other partners in the region, including Korea”, Rantala added.
The mobile games performance was not enough to prevent an overall drop in sales. A decline in revenue from licensing the Angry Birds brand on such things as toys, clothing and sweets, more than offset gains made in mobile gaming.
“It is clear that a growth company like us can’t be satisfied with falling revenue,” Rantala told Reuters.
Rovio has not given up on trying to squeeze more out of the Angry Birds brand. The firm is backing an animated Angry Birds movie, set to premiere in May 2016, which carries production costs to the tune of $80 million.
“The movie will help us get the licensing business back to growth,” maintained Rantala. “We are already seeing signs of pick-up in licensing business, and pretty soon we will be able to publish new major partnership deals.”
Dr Sotirios Paroutism, an associate professor of strategic management at Warwick Business School, said “developing an entertainment company on the back of a successful cross-platform gaming app might sound too optimistic – but staying still, and relying only on gaming, is too risky an option for Rovio”.
He added that past attempts to bring video games into movie theatres had not been successful, “but Rovio might still be able to develop a winning movie formula, particularly for younger audiences and Asian markets, with its Angry Birds cartoon-based characters”.
“In its efforts to become an entertainment company, Rovio is taking a risky route to arrive at a less risky business model,” added the professor.