Coverage: Maker of “Angry Bird’s files for IPO
Angry Birds maker Rovio Entertainment Oy plans to sell shares in a Helsinki initial public offering, seeking funds to support its resurgence seven years after releasing its best-selling mobile-game title.
Ville Heiskanen and Ruth David of Bloomberg News had the story:
Main owner Kaj Hed, 62, and some other holders will sell shares, and Rovio will offer about 30 million euros ($36 million) of new stock, the company said Tuesday, without providing a total value for the sale. The IPO could value the maker of the Angry Birds mobile games and movie at about $2 billion, people familiar with the matter said last month.
Rovio has emerged from a slump after changing the way it charges for game playing, and an IPO gives Chief Executive Officer Kati Levoranta ammunition to develop new titles. The listing is set to test investors’ appetite for entertainment software, a group whose shares have barely budged from their offer prices following IPOs this year, according to data compiled by Bloomberg.
Mobile-game makers often struggle to replicate the success of initial blockbusters. King Digital Entertainment Plc, the creator of Candy Crush, was acquired in 2015 for a 20 percent discount to its IPO price amid revenue declines. And Netmarble Games Corp., the maker of the Lineage and Stone Age mobile games — and South Korea’s biggest listing in seven years — has declined about 4 percent since its shares started trading in May.
Naomi Rovnick and Madhumita Murgia of The Financial Times reported that Rovio turned down an offer in 2011:
Rovio rebuffed a $2.3bn offer from rival Zynga in 2011, according to reports at the time. At the height of the popularity of Angry Birds in 2012, some analysts said the company was worth up to $9bn.
“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.
Chad Bray of the New York Times reported that Rovio will need to diversify beyond Angry Birds:
But Rovio now needs to prove it can profit beyond the success of Angry Birds. Its games business, which includes the original Angry Birds and more than a dozen spinoff titles, accounted for 79 percent of its revenue in the 12 months through June.
“They need to find a way to diversify their brand portfolio in the future,” said Atte Riikola, a research analyst at Inderes in Helsinki, Finland. “They have had problems in their history when trying to diversify, so it won’t be an easy task to do.”
The company has done a good job creating offshoots of its flagship game, like Bad Piggies and Angry Birds Match. The company has also introduced several non-Angry Birds titles in recent years, including a puzzle game called Fruit Nibblers and a game tied to the pop singer Shakira.
“The hardest part in the app market is to find the users, to get people to download your game,” said Tero Kuittinen, chief strategist at Kuuhubb, a Finnish company focused on lifestyle and mobile video game applications. “If you have a well-known intellectual property — you have something that is instantly recognizable, James Bond, ‘The Wizard of Oz,’ any kind of property like that — it helps you a lot. Why wouldn’t they leverage Angry Birds?”