Games – strong growth and high profitability
Alex Pelletier-Normand, CEO:
Yet another eventful quarter behind us! Q3 was marked by more face-to-face interactions, record Games revenues and notable strategic evolvement. The profitability was at a high level, mainly due to higher revenue, incremental income from Angry Birds Reloaded on Apple Arcade and somewhat lower user acquisition investments.
In September, we made meaningful changes that are also new building blocks for our future. Firstly, we announced that Heini Kaihu will transition from Head of HR to take on the new role of Rovio’s Chief Sustainability Officer. The creation of this position highlights the increasing importance of sustainability as part of our vision and our commitment to lead the charge within the industry. Our aim remains to create long-term value for employees and shareholders in a responsible way, and this role strengthens our commitment to have sustainability rooted in our strategy, operations, products and practices. Secondly, we announced the opening of a new free-to-play casual mobile game studio in Toronto, Canada, headed by the experienced studio manager Julie Beaugrand. We are very happy to see Julie join us and build a team which will add a new foothold for Rovio in the casual space.
Launching this studio is also in line with an adjustment we made to our portfolio strategy. In order to maximise our chances of achieving our goals, we will focus further on more casual and wide appeal games. This has multiple benefits, namely building on our proven expertise, maximising the value of our network of users, and moving away from mid-core, a category increasingly characterised by expensive development costs and dependence on high-CPIs market niches.
Our key live games continued to perform strongly in Q3. Angry Birds Friends kept on growing and had its best quarter since Q2-2017. Our largest two games Angry Birds 2 and Angry Birds Dream Blast were relatively stable year-on-year and quarter-on-quarter. As mentioned in our last quarterly report, we reduced marketing spend for Small Town Murders and Darkfire Heroes and consequently this had a negative impact on these games revenues in the third quarter. Small Town Murders’s team continues to work on improving the game with the target to scale up the game further in the future. For Darkfire Heroes, given the limited size of the game and the aforementioned focus on casual, we decided to assign the team to more promising and wide-appeal projects while moving the game to lean maintenance.
In September, we finalised the first part of the Ruby Games acquisition. The team continued to show their mastery in hyper-casual by launching Forensic Master in September which reached the no. 1 position in US download charts. They also soft launched Hunter Assassin 2, the awaited sequel to the hit game Hunter Assassin.
Our new product pipeline is healthy with Angry Birds Journey and Supernatural City continuing their soft launch and our first Moomin game preparing to join them later this year. In addition, we will see our Angry Birds brand strategy unfold in different formats and platforms. We will announce different initiatives in the coming months for what we’re dubbing “Angry New Year”!
We are excited to enter the last quarter of the year which is typically a busy season with elevated fan engagement and seasonal events across our key games. After 19 months of Rovians showing great agility and resilience while working from home, it is energising to be able to see and engage with our colleagues face-to-face at the office in a hybrid environment. I am very grateful for their continuous commitment and dedication.
Read the full report.