Angry Birds maker Rovio Entertainment is planning an initial public offering after its move into films and merchandise finally paid off, delivering a significant boost to revenues.
The Finnish mobile games and entertainment group said on Tuesday it would raise about €30m with the sale of new shares. Existing shareholders, including majority backer Kaj Hed, who owns about 70 per cent of the business and is the father of co-founder and former chief executive Mikael Hed, would also sell part of their stakes.
“We are not commenting on potential valuation,” Kati Levoranta, Rovio’s chief executive, told the Financial Times on Tuesday. “What we are saying is that we are planning the IPO and [it] will consist of a secondary share sale as well as a [primary] issue.”
She also dismissed rumours that Rovio was looking at a sale of the business alongside an IPO, saying it wanted to list its stock to help future growth.
“The gaming market is very fragmented and the operational excellence we have developed means we see ourselves as a consolidator,” Ms Levoranta said.
“That does not mean we are necessarily buying other brands, it could be that we buy in talent or new IP.”
Rovio’s is a typical gaming start-up story: it enjoyed spectacular growth from 2009 after co-founding cousins Mikael and Niklas Hed worked out that smartphones would be a new gaming platform. Its games have been downloaded 3.7bn times.
However, from 2014, the company went into freefall as the popularity of its one-hit wonder began to wane in a globally competitive mobile gaming market. Fickle consumers moved away from paid-for apps to “freemium” games such as King’s Candy Crush Saga and local competitor Supercell’s Clash of Clans, which offer basic gaming for free and added features for a price.
While players moved on to new games, the company became increasingly reliant on the Angry Birds brand, building Angry Birds playgrounds and theme parks, selling branded plush toys and sodas as well as T-shirts and cartoons, in a bid to survive.
It lost two chief executives, including co-founder Mikael Hed, within three years, grappling with successive years of shrinking revenues and losses and cutting nearly half its workforce.
The IPO was announced following a strong turnround in Rovio’s financial fortunes, driven by the success of last year’s The Angry Birds Movie. The film made $350m in box office revenues worldwide, according to Box Office Mojo.
Rovio reported revenues of €153m for the six months to June, an increase of €78m from a year earlier. Net profits rose to €13m from €3.6m, driven by the film’s success. A sequel is planned for 2019. Mikael Hed now runs the group’s animation division and was the film’s executive producer.
In the second quarter of 2017, sales at Rovio’s brand licensing unit jumped 243 per cent to €24.7m, driven by revenues from the film. Sales at the games unit, which remains Rovio’s largest business, rose 65 per cent over the same quarter.
“The success of the movie rejuvenated the interest in the brand and appears to have driven people back to the Angry Birds game,” said Jack Kent, a mobile technology analyst at IHS Global Markit.
Following the IPO, Rovio hopes to continue to expand its games business faster than the overall market, although technology analysts argue the group is still overly dependent on Angry Birds. The company’s main game titles include Angry Birds 2, Angry Birds Friends and a new multi-player game Battle Bay.
“Rovio’s biggest strength but its biggest long-term challenge is the success of the Angry Birds brand,” said Mr Kent. “It is several years old now, and while the movie shows there is still a lot of interest in it, the company may have to invest in new intellectual property.”
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