You’d think everyone would be loving Angry Birds, especially after so many mobile releases, and the big screen effort that came to theaters a little while back. But all that doesn’t mean that Rovio is swimming in the money. In fact, quite the opposite.
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A new report from Reuters indicates that the publisher has warned investors that profitability isn’t going to meet what it previously forecasted, which means that there’s a big money loss coming. Not only that, but it’s already cut its share price in half, which could mean bad news down the road for it.
According to the report, Rovio noted that marketing costs and other investments have resulted in the loss of money, and its shares have crashed as a result, down 49.7 percent.
A fund manager close to the project, who wasn’t identified, noted, “That guidance is nowhere near the growth they previously talked about.”
The company has been in dire straits for some time, especially after reporting a 20 percent stock drop back in November. It still expected sales to react somewhere around 260-300 million euros, although some analysts noted that this particular number were below previous forecasts.
As for what Rovio intends to do to turn things around, the company had noted that it will keep trying for its long term targets of a 30 percent profit margin and increasing its game revenue, noting that it intends to use approximately 30 percent of said revenue to try to add new users to its games throughout the year. But getting there may be an uphill climb, even for something as appealing as Angry Birds.
“The costs for new users are at a threshold, that’s too high for second-tier games,” noted Aaron Kaartinen, an analyst for Finnish asset manager FIM. “What Rovio is trying, increasing sales by spending on marketing, the equation just doesn’t work. Their games don’t have enough natural traction among players.”
While the company still has many titles to lean on – including new releases like Angry Birds Friends and Battle Bay – it seems like it’s got a lot of work ahead of it if it wants the franchise to fly high again.
