Angry Birds maker's float seen less likely despite mobile games growth
28/08/2015 17:33
By Liisa Tuhkanen
LONDON, Aug 28 (Reuters) - The often touted but regularly
delayed stock-market listing of Rovio, creator of the hugely
popular "Angry Birds" mobile game, could be even more distant
after this week's warning of lower earnings and a planned cull
of more than a third of its staff.
While the mobile games market as a whole is thriving and
looks set to grow to more than $35 billion in 2017, according to
research firm Newzoo, Rovio's woes typify the difficulty
established players have in changing with the times.
"They lost their moment ... You need to list when your games
are working well," said Thomas Alzuyeta, analyst at Gilbert
Dupont, noting a drop in interest in the game franchise that
debuted in 2009.
Alzuyeta said newer contenders such as free-to-download
"Clash of Clans", from Rovio's fellow Finnish company Supercell,
had better managed to retain player interest, with regular
updates and features paid for in bite-size "microtransactions".
Rovio, which is pinning its hopes on an Angry Birds 3D movie
due for release in May 2016, said on Wednesday sales had been
lower than expected and forecast falling profits for the full
year. It said it was cutting up to 260 jobs. ID:nL5N11129Y
In an e-mailed statement on Friday, the company said the
cuts did not affect the outlook for a potential market listing,
though a flotation was not on the agenda for now.
"We're focusing on our principal areas of business, which
will only improve our competitiveness," a spokeswoman said.
A cross-sector move towards free-to-play products has been
one of the biggest challenges for Rovio, which has failed to
create follow-up hits to Angry Birds, instead pushing for
earnings from product licensing deals.
That may have allowed other games to steal the limelight:
runaway hit "Candy Crush Saga" led to the listing of King
Digital Entertainment KING.N , one of the few European mobile
gaming companies to trade on an exchange. Japan's Gumi 3903.T
also recently listed.
Yet Rovio is not the only games company to run into trouble.
Gumi said in March it planned to cut jobs and sell assets, while
King earlier this month reported a revenue drop. ID:nL3N10O641
Zynga ZNGA.O , known for "FarmVille" and "Mafia Wars", last
week forecast current-quarter bookings well below estimates. Its
shares are a fraction of their early 2012 peak. ID:nL3N10H602
King's experience on the stock market, where its shares are
down nearly 30 percent since their float in March 2014, has also
shown how investors can lose faith.
"The sector changes so fast that the companies that don't
change with it run into trouble," said Newzoo head Peter Warman.
"And that's what's happened with Rovio."
(Additional reporting by Jussi Rosendahl in Helsinki; Editing
by Lionel Laurent and David Holmes)
((liisa.tuhkanen@thomsonreuters.com; +44 20 7542 3343; Reuters
Messaging: liisa.tuhkanen.thomsonreuters.com@reuters.net))
Keywords: ROVIO OUTLOOK/