Comments from CEO, Kati Levoranta:
Rovio’s first quarter was in line with our expectations. Our top game Angry Birds 2 achieved record revenues and Angry Birds Friends continued its steady performance. Revenues from the Angry Birds movie grew somewhat year-on-year and although we got some headwind from the currency exchange rates, our profitability improved considerably year on year.
We continued to execute our Games As A Service strategy, which means that while we continuously acquire new users, we continue to deliver new updates, contents and game events to our existing users to retain them in our games longer and to improve conversion of in-game purchases that e.g. enable access to new virtual goods or faster progress.
Game development requires continuous innovation and passion: Our creative, multi-talented teams produce compelling gaming entertainment and I believe that Rovio has the talent, expertise and passion required to stay at the leading edge of games development. We have currently ten games in different development phases, one of which is in soft launch.
The cost for digital marketing in the industry continued to be high during the first quarter. We strive to grow our revenues and increasing investments in user acquisition through improving the performance of our key games and efficiency of our marketing. We are also pursuing revenue growth by extending the payback time range of user acquisition investments to 8-12 months from the previous 8-10 months, starting in Q2. This may have a negative profitability effect in the short term while our full year outlook remains unchanged.
The sequel of The Angry Birds Movie is planned to enter theatrical distribution in September 2019. The Angry Birds Movie 2 cast includes the familiar stars from the original movie as well as it introduces new talent from Hollywood films and TV series such as Black Panther, Crazy Ex-Girlfriend and Ocean’s 8. The original Angry Birds Movie helped our Business Licensing Unit’s partners to sell 260 million licensed products in 2016 and 150 million in 2017. We believe that the sequel will bring further opportunities to license our brand to both new and existing consumer products and content licensing partners.
One of the reasons we stated when going public was our aim to participate in the consolidation of the games industry. This is on our agenda continuously and we are actively scouting for targets having a good strategic fit.
Exploring and taking advantage of future gaming technologies and platforms is another essential part of our strategy: we have recently released an “Angry Birds for Messenger” game on Facebook’s new Instant Games platform. Movies, musical and TV entertainment are increasingly being consumed over streaming services. Hatch Entertainment, an 80% owned subsidiary of Rovio, is developing an equivalent streaming service for mobile games and is currently available as a beta test version in 18 European countries and offers over 100 mobile games. The service is actively developed based on user feedback and the technical performance has been improving continuously. Adapting other technological development is high on Rovio’s agenda and, for example, we have teamed up with Magic Leap as an early access partner developer regarding a new form of augmented reality (AR) applications.
You can read the full report here.