Angry Birds Maker Rovio Says It Needs New Games to Revitalise Sales

Rovio Entertainment, the maker of the Angry Birds mobile game, on Friday reported higher third-quarter profits that sent its shares up more than 10 percent but the company also said it needed new games to drive growth.

Rovio, which listed in Helsinki in September 2017, has been hit by its high dependency on the Angry Birds brand, first launched 2009, and tough competition. The group's shares dropped 50 percent in February after Rovio said sales could fall this year after 55 percent growth in 2017.

"It is clear that we need new games in order to accelerate growth," Rovio's Chief Executive Kati Levoranta said in a statement, adding that the company planned to launch at least two new games next year and had another ten projects in the pipeline.

Rovio expanded into film with an Angry Birds movie in 2016, which earned about $350 million (roughly Rs. 2,514 crores) at the box office and expects a movie sequel to boost business next year.

The company has also stepped up investments in its 80-percent owned spin-off company Hatch, which is building a Netflix-style streaming service for mobile games.

The company said Hatch had now left beta phase and was recently publicly released in the Nordic countries, Britain and Ireland.

OP Bank analyst Hannu Rauhala said the news about Hatch entering commercial production was a positive sign.

"Now there are hopes that at some point it will start creating revenue, reducing its current negative impact on profit," said Rauhala, who has a "buy" rating on the stock.

"The result was good but it should be remembered that in the game industry the variation between quarters can be significant," Rauhala said.

The Finnish company reported third-quarter adjusted operating profit of EUR 10.4 million ($11.80 million or roughly Rs. 84.70 crores), up from EUR 4.0 million (roughly Rs. 32.5 crores) a year ago.

The rise in quarterly profit was mainly due to reduced marketing costs and growth from Rovio's most popular game, Angry Birds 2, which increased its gross bookings 68 percent to EUR 30.8 million (roughly Rs. 251 crores) year-on-year.

But looking ahead, Rovio said tough competition and high marketing costs would put pressure on its full-year outlook.

The group said it expected 2018 sales to be between EUR 280 and 290 million (roughly between Rs. 2,280 and Rs. 2,360 crores), compared with a previous range of EUR 260 and 300 million (roughly between Rs. 2,116 and Rs. 2,441 crores). Last year, the company had revenues of EUR 297 million (roughly Rs. 2,416 crores).

The company's sees its full-year core operating profit margin at 10-11 percent, up from a previous view of 9-11 percent.

© Thomson Reuters 2018