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#1: Rovio Announces Earnings Results for 2022

Angry Birds developer Rovio, which is currently evaluating an acquisition proposal from Israeli social gaming giant Playtika (among other strategic options), released their earnings report for Q4 2022 and the full fiscal year last week. 

The company's revenue grew 11% from 2021 to 2022 (from $286 million to $317 million). But it’s not all good news for Rovio. Comparable revenue, which excludes currency fluctuations and does not account for inorganic growth stemming from the acquisition of hypercasual developer Ruby Game Studio, was down 2.5% year over year, from $79 million to $77 million. 

More alarming, however, are the profitability results, with adjusted operating margins decreasing from 15.3% to 12.2% and from 16.6% to 7.7% in Q4, but we’ll dig into that later on.

What’s behind Rovio's underwhelming results? 

As we can see in the chart below, most of Rovio's older portfolio, Other Games, is trending down, and Rovio's latest titles have yet to fare as well.  

Angry Birds Journey, a modern take on the original Angry Bird with a more polished art style and saga-style progression, has so far failed to achieve the necessary metrics to keep up with user acquisition experienced in the first quarter of 2022 and expectations are for its revenue to keep at the same level in the next quarter. 

Ruby, which Rovio acquired in 2021 to compete in the hypercasual genre, also failed to deliver with their first hybrid title and a follow-up to their most successful game, Hunter Assassin 2. Despite positive results during the game launch, Hunter Assassin 2 has struggled to maintain steady growth, as we can see in the chart below. Considering that entering the hybrid-casual segment was part of Rovio’s motivation for the acquisition, and that they had great expectations for the Hunter Assassin IP, this is another piece of bad news. 

Still, revenue for Angry Birds 2 has remained stable, which is an achievement for a game that’s close to eight years old now. Angry Birds Dream Blast, Rovio's main IP Blast puzzle game, also posted positive results thanks to high levels of growth in the past quarter attributed to an increase in downloads. The RPD of the app is still growing, albeit at a slower pace, but it’s still behind other top-grossing Blast apps in a segment where CPI's are very high. 

The UA spending in Angry Birds Dream Blast and some newer titles was one of the main factors behind the company’s lower profitability last year, with an increase in UA spending of 25% and a higher split of budget spent in less mature games in the Grow portfolio. 

As part of the earnings presentation, Rovio also detailed new releases in the pipeline. Those include the soft launch of Moomin, a non-Angry Birds IP puzzle and decorate app, in Japan in Q1 2023; another trial in the hybrid-casual segment with Wizard Hero; and the upcoming soft launch of Bad Piggies 2, a follow up to the moderately successful Bad Piggies. Moomin is the most significant investment in the batch of new launches, but it is set to compete in a saturated segment. Nevertheless, the unique IP, which is popular in Japan, could prove to be a key differentiator for the app. 

The results for the latest year are definitely in need of improvement. Expectations for 2023 are also underwhelming, with the company recommending the same level of revenue and profit as last year, which leads us to believe that Rovio's expectations for new initiatives in the pipeline are lacking, at least in the short term. 

What’s next for Rovio? 

Despite the underwhelming results, Rovio’s fortunes may soon change. After Playtika put in its bid for Rovio, Rovio’s board of directors announced the commencement of a strategic review, which is a fancy way of saying the company will also consider its options with other parties. It’s hard to say what exactly will come of this without knowing which other parties are in the conversation, but we’re eager to see how it plays out.

Moreover, at a time when companies are struggling to optimize user acquisition, Rovio's Angry Birds IP is as valuable as ever. The Angry Birds franchise can still expand to many more genres, and Rovio is keen on doubling down on the IP going forward. The company recently announced a multiplayer cross-platform Angry Birds title, Angry Birds Next, as well as an Angry Birds RPG game and an Angry Birds interactive fiction title. The titles are still very much in the early stages of development, and although they won't impact Rovio's results in the short term it does indicate how intent Rovio is on tapping the IP for future growth. 

Still there is a question of whether the Angry Birds franchise has enough potential to take Rovio to the next level. The series has so far failed to succeed in growing beyond its original IP and while Rovio does have some non-Angry Birds match-3 titles in the pipeline, the company might struggle to compete in a saturated market. If the company remains standalone, Rovio's best bet to grow beyond Angry Birds lies in either the Ruby-led expansion into hybrid-casual, which has so far failed to produce the desired results, or the acquisition of smaller developers in trending casual genres. 

Game Launch Radar

#1: Baseball: Home Run 

• Publisher: Miniclip 
• State: Soft Launch 
• Territories: US, Mexico, Brazil, Venezuela, Canada, Dominican Republic, Italy and Colombia. 
• Classification: Sports - Arcade 
• Quick thoughts:
  • Baseball: Home Run introduces a PVP sports-arcade gameplay inspired by Golf Clash but with a baseball theme.
    • Players participate in very quick 1v1 matches with very simple gameplay.
    • Complexity and variety in gameplay is determined by character abilities and collectibles with different rarities level. 
    • Collectibles are earned in lootboxes, which are the game’s primary monetization source. 
    • You can watch a video of the gameplay here. 
  • Miniclip’s main portfolio is made up of sports games, and unsurprisingly this is not their first take on a mobile baseball title. One of their biggest games is Baseball Clash, another arcade sports title. The key difference between Home Run and Baseball Clash is the complexity of the gameplay. Baseball Clash required players to control multiple variables at the same time, making it less suited to casual players. 
  • The higher level of complexity of gameplay helped differentiate Baseball Clash from bigger competitors like MLB Tap Sports, and we’ll have to wait and see whether the lack of depth in Baseball: Home Run will affect its performance. 

#2: Tomb Raider Reloaded 

• Publisher: Square Enix 
• State: Global Launch 
• Territories: Worldwide 
• Classification:  Action RPG 
• Quick thoughts:
  • Tomb Raider Reloaded has been in soft launch in a few territories over the past few months, and this week Square Enix launched the title globally. The game is available as a F2P game, with IAP’s and ads, available for both Android and iOS stores and also as a Netflix title, where it features none of the traditional F2P monetization features of its standard mobile counterparts. 
  • Square Enix’s new title follows a gameplay loop similar to that of Archero, but infused with familiar Tomb Raider IP.
    • The game features casual action RPG and roguelike gameplay with a top-down view, where players progress through dungeons and fight enemies.
    • Players progress through rounds by upgrading their character with equipment and new outfits. 
    • You can watch a video of the gameplay here. 
  • Tomb Raider Reloaded looks nothing like other games in the franchise, and the gameplay is fairly casual compared to the series’ console entries, which may come as a disappointment to longtime fans of Tomb Raider. While the game is clearly designed to cater first and foremost to mobile audiences, Square Enix’s decision not to try and port a more high-fidelity version of its console/PC Tomb Raider entries feels like a missed opportunity. 
  • Another interesting choice was releasing the game as both a F2P and subscription title simultaneously, which optimizes the title’s player reach while diversifying the monetization model. Still, it may impact the game’s overall revenue model and economy considering the development team now has to juggle both a standard F2P version and a subscription one. 

Other Game Announcements

• MY.GAMES’ Rush Royale hits 50 million downloads and snags the No. 1 Strategy Game spot. (Link)
• Square Enix’s Echoes of Mana will shut down on May 15th, 2023. (Link)
• World of Warcraft is removing Twitter functionality. (Link)
• Top Games achieves 12-fold revenue from Evony: The King’s Return thanks to Flexion. (Link)
• Tower of Fantasy’s “Half Anniversary” celebrated by Hotta Studio. (Link)
• Lumi Interactive announces Kinder World spin-off Take Me or Leaf Me. (Link)
• Fire Emblem Engage DLC to feature Heroes’ original mascot. (Link)
• Goddess of Victory: NIKKE to release its PC version soon; here are the system requirements. (Link)
• The Alchemist Code is shutting down for good at the end of March. (Link)

Company Announcements

• EA reportedly seeking £488m deal with Premier League for post-FIFA football games. (Link)
• Boss Alien founder Jason Avent reveals new studio Hardball Games. (Link)
• Sand Balls publisher SayGames surpasses four billion lifetime downloads. (Link)
• Activision Blizzard’s mobile revenue increased 14% year-on-year in 2022. (Link)
• Nexon hits "record revenue" in 2022 but net income down 11%. (Link)
• Fingersoft implementing six-hour working day. (Link)
• Scopely adds Zynga's Eric Wood as new senior VP of publishing. (Link)
• Netmarble goes into the red in new financials. (Link)
• AppLovin earns $702 million revenue in Q4 2022. (Link)
• Krafton weathers mobile storm in quarterly financials. (Link)

Ecosystem Announcements

• Chinese regulators hand out 87 new video game licenses in February. (Link)
• Odeeo saw 300% YoY revenue growth in 2022 with 10 billion ad opportunities. (Link)
• Xsolla expands digital distribution hub to telecommunications carriers. (Link)
• Yahaha Studios announces launch of 3D search tool Asset Ovi. (Link)
• Snapser raises $2.6m in seed funding round. (Link)
• Latent Technology secures $2.1m in a pre-seed funding round. (Link)
• Pokémon World Champion hosts first creator-driven tournament. (Link)
• Mastercard and Xsolla team up on payments for gamers. (Link)
• 80% of YouTube Gaming’s esports content in 2022 was for mobile games. (Link)

Content Worth Consuming

• Mobile Game Trends and Predictions for 2023 (Game Refinery): “So, what’s in store for the mobile market this year? Could Blockchain mobile games make a comeback? We’ll have to wait and see, but we’ve got a good idea of how blockchain technology will be implemented across mobile games in 2023. Below, you can find out how and our predictions for the most exciting mobile game trends heading your way in 2023.” (Link)
• The Case of Playrix and why Product-Market fit is a moving target (Nebojsa Radovic): “What inspired me to write about them is their approach to User Acquisition (UA) and how UA and creative findings impact their product roadmap. This approach not only helped them survive the proverbial mobile marketing winter but also helped them record one of the highest revenue months in their recent history.” (Link)
• AI and creatives: Now, later, and the far-future (Iron Source LevelUp): “In this LevelUp episode, Melissa sits down with our very own maestro of creatives Dan Greenberg, Chief Design Officer at ironSource. They talk AI image generation, what it is, how it can be used now, and what it needs to truly change the game.” (Link)
• How unconventional setting affects the success of a hyper-casual game in an occupied niche (Azur Games): “We got a puzzle game for publishing with the familiar yet unconventionally implemented mechanics of pouring water into flasks: first of all, it was completely in 3D, and second, it featured little men instead of paints. We decided to test it. Color Sort Puz has now crossed the threshold of $1.5 million in total revenue and continues to grow every month.” (Link)
• Marketing tips to have a successful Early Access phase (GamesIndustry.biz): “Today I want to share with you a few marketing and communications tips that might help you have a successful Early Access, and a community that you will love spending time with – and vice versa. Most of these tips are applicable in the "released in Early Access but before the 1.0 launch" phase.” (Link)