Wednesday 12 February 2020 10:16 am

Angry Birds maker Rovio sees profit collapse in final quarter

Rovio, the games firm behind Angry Birds saw quarterly profit plummet 96 per cent after its new 5G platform Hatch failed to take flight.

Rovio, which saw its shares fall 15 per cent this morning, said that the roll out of 5G networks had been slower than expected and had had a knock-on effect on the new gaming platform.

Read more: Shares in Angry Birds maker Rovio crash as it lowers outlook

The figures

Fourth quarter profit tumbled from €5.3m (£4.5m) last year to €200,000 in the same period this year, with sales also dropping 1.4 percent to €71.6m.

The collapse came despite the Finnish firm posting new records in revenue and bookings, which reached €66.7m and €67m respectively.

However, acquisitions costs such as the costs of having games displayed in prominent places in the app store, rose 18 per cent to €27.5m, which hit games revenues.

Why it’s interesting

Rovio has been trying to replicate the success of Angry Birds, which has since its launch in 2009 become of the world’s best-selling app-based games.

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Hatch, the world’s only made-for-5G game streaming service, was opened up to outside investment last year, but fundraising was closed on Wednesday without any new investors being announced.

The firm said that it was now evaluating “strategic alternatives” for the platform, including shifting the emphasis to Hatch Kids, a streaming service aimed at children and families.

Rovio also said that it was looking to make annual cost savings of €6m for the subsidiary, of which it owns 80 per cent.

The company did not give revenue guidance for the coming year but said that profit should improve as acquisition costs had thus far been lower.

What Rovio said

“During the end of the year we scaled down user acquisition investments significantly as the returns on those investments were not meeting our payback model expectations,” said chief executive Kati Levoranta.

Read more: Angry Birds maker Rovio predicts bumper 2019 despite halved profits

“Our user acquisition investments in the beginning of 2020 are at much lower level than during the third and fourth quarter last year,” she said.