Rovio’s downturn signs the end of 1p mobile gaming

Chris Burns - Mar 2, 2018
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Rovio’s downturn signs the end of 1p mobile gaming

Rovio reported their Head of Games left the company one week after reporting a highly disappointing round of quarterly earnings. Just over a week after Rovio warned investors of a possible 2018 operating margin between 9 and 11 percent. Their forecast was below 2017 operating margin which ended up being 10.6 percent. News during the company’s earnings call sent the stock into a downward plunge.

Rovio hit the ground running when they released the original Angry Birds mobile game in the year 2009. They’ve created 17 individual Angry Birds games including the first. That’s one new game for Rovio each year for the first three years, three new games in 2012, and two new games each year until this year, 2018, where they’ve already released one before Springtime. The game series remains available for Android, iOS, video game consoles, and PCs.

Rovio saw massive success with plush toys, comics, several miniature animated TV shows, books, and licensed products of many sorts. They’ve gone so far as to create an animated feature film with Columbia Pictures – The Angry Birds Movie. They’ve gone to the top. But all good things must end.

Fourth-quarter operating profit at Rovio was up to 10.4-million Euro, doubling what it was the same quarter a year ago. Revenue went up 17% year-over-year, from 63.2-million Euro to 73.9-million the same quarter. That’s October, November, and December of the year. Profit before taxes was up from 5.1-million to 9.9-million Euro, but with projections headed downward, it would appear that the company may be a teensy bit overvalued at the moment. Or at least it was before the drop over the last several days.

Last year the company opened its initial public offering of stock. Those that invested have not seen any major profits – and in fact are seeing a significant loss if they’ve held on to stock since first purchase on the first opening bell. Things aren’t looking particularly good for the company as they announced their Head of Games was leaving the company “with immediate effect” on Friday.

The fall of Rovio’s Angry Birds series is unfolding on generally the same timeline as the smartphone hardware industry stagnates. At the same time, the industry seems to be turning away from hardware and toward a future in which the most valuable commodity a company can have is your complete and unwavering trust, while mobile games – used so far in a large part to emphasize the power of mobile hardware – aren’t going anywhere particularly fast.

The only sorts of games that thrive for long periods at this point in the history of the smartphone are games with social aspects. Niantic’s Pokemon GO, games like Minecraft, Heads Up, and Clash of Clans show that the future of mobile gaming isn’t in the smartphone, it’s WITH the smartphone – and with the smartphone as just one part of a larger ecosystem.

It’s in this arena that the next big titles will pop up. Success comes from group approval – or at least very, very good hype that captures the collective imaginations of the entire world. That and addiction through peer pressure. The future isn’t Angry, it’s Socially Dependent.


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