More Rovio Layoffs

Rovio_logo-SAUG. 26, 2015 • More than a third of Rovio Entertainment Ltd.’s workforce will be laid off during the next six weeks to streamline costs. The Angry Birds maker plans to lay off 230 employees in Finland and another 30 overseas. The only projects not seeing staff cuts are employees in the United States and Canada working on the Angry Birds film. Last October, Rovio trimmed its payroll by 130 staffers. The privately held studio announced annual financial results last March. For 2014, Rovio saw its total revenue decrease to €158.3 million ($179 million) from €173.5 million ($196.3 million) the previous year. Operating profit declined from €36.5 million ($41.2 million) in 2013 to €10 million ($11.3 million) last year. While game revenue actually increased from €95.2 million ($107.7 million) to €110.7 million ($125.2 million) between 2013 and 2014, consumer products revenue decreased from €73.1 million ($82.6 million) to €41.4 million ($46.8 million).

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Impact: Rovio’s great success was nurturing Angry Birds into a global transmedia hit. In many ways, maximizing game revenue was less important than using the games to channel kids into clamoring for Angry Birds products. But every fad has its limits and the steep fall off in consumer purchases of plush toys and other licensed products is what is distressing the company today. Another worrisome factor for the publisher is that it has not yet mastered freemium monetization, perhaps because there was not an urgency to do so. This also may be because the free-to-play model came to prominence after Angry Birds became a hit as a paid download. Recent Rovio F2P titles such as Angry Birds Stella, Angry Birds Epic and Angry Birds GO! have seen strong downloads but consumers are not finding a need to make significant in-game purchases. Angry Birds 2 was released on July 30, and has been downloaded 50 million times, but there are questions whether the game will do better at freemium monetization than its predecessors. That leaves a lot riding on whether the Angry Birds movie is successful. The animated film is set for a summer 2016 release, and Rovio has disclosed that it has invested $80 million into production costs. Furthermore, the studio is obligated to share marketing and distribution costs with Sony Entertainment. The Helsinki Times reported last March that Rovio has budgeted more than €100 million ($113 million) in total on the project. If the animated film does not re-energize Rovio’s transmedia fortunes, then the publisher will be forced to hitch its future to growing its game revenue substantially ­– something the firm has not proven it can accomplish in a long time.

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