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Rovio Moves Steadily Ahead

Posted on Monday, Oct 10th 2011

According to Mobile Gaming – U.S. – May 2011, published by researcher Mintel, annual mobile phone and tablet gaming sales in the U.S. have more than doubled over the past five years to reach $898 million in 2010. The market estimates the revenues to double again in the next five years to reach $1.6 billion by 2015. Finland-based Angry Birds developer Rovio is counting on this market growth.

Rovio’s Financials
Rovio plans to launch their IPO in the next two to three years on the U.S. stock exchange. Its financials have not been disclosed. However, a recent report by Finnish daily Helsingin Sanomat pegged their revenues at €14 million (~$20 million) for the first quarter of the year. The performance is ahead of the earlier reports estimating their annual revenues at $50 million-$70 million. The article further estimates that Rovio earned two thirds of these revenues through app sales and the balance came in from advertising.

Expansion of Angry Birds Platform
Downloads of Angry Birds game have also been on the rise. Across all mobile platforms, the app has been downloaded more than 350 million times. To further grow the game, Rovio is expected to be working on Angry Birds Magic, a location-based platform expected to be built into all Angry Birds games. According to reports, the Magic platform will use the location feature to let users unlock newer experiences based on their present location.

Rovio’s Acquisitions
Rovio also expanded their delivery capability by acquiring Finnish animation studio, Kombo. Kombo’s studio had helped Rovio develop certain products for the game. Kombo’s client list included Universal Music Group, MTV, and Nokia. Rovio now plans to deploy Kombo’s resources on Rovio products. Terms of the deal were not disclosed.

Rovio’s Bad Piggy Bank
Recently, Rovio entered into the carrier billing segment through agreements with mobile carrier companies to launch their Bad Piggy Bank, a payments platform. In the U.S., T-Mobile users of Android devices can purchase the ad-free version of the Angry Birds’ Mighty Eagle app for $1 by paying for it through a fee charged on their phone bill. T-Mobile will pay Rovio their share through the Bad Piggy Bank. Rovio plans to expand the billing method to other countries. They entered into a similar agreement with Finnish carrier Elisa.

Further, the T-Mobile deal is expected to have improved the revenue sharing ratio between the platform maker and Rovio. Until now, game developers have had to share 70% of their revenues with the platform provider. While the terms of the T-Mobile deal were not known, Rovio’s agreement is said to have shifted that ratio to something “better.” Rovio may also be planning to leverage the Bad Piggy Bank to negotiate and create a payments platform for other mobile developers to use.

Rovio seems to be on the right path. They are not only expanding their product features and improving their operations through acquisitions, but also working on an improved monetization strategy. The market is surely looking forward to their IPO.

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