Helsinki: Finnish mobile games maker Rovio pinned its hopes on Thursday on a costly 3D movie project helping it return to growth, after a 73 per cent profit drop gave the latest sign its mainstay Angry Birds brand is losing appeal.
A decline in its business licensing the Angry Birds brand on toys, clothing and sweets is adding to the problems of Rovio, which has yet to repeat the success of its original slingshot-based game which became the No.1 paid mobile app of all time after its launch in 2009.
Rovio said total sales fell 9 per cent last year to 158.3 million euros ($169 million), although revenue from mobile games grew 16 per cent to 110.7 million, as new offerings such as Jolly Jam and Angry Birds Stella Pop! helped total annual downloads reach 600 million.
Operating profit slumped to 10 million euros from 36.5 million.
"It is clear that a growth company like us can't be satisfied with a falling revenue," Chief Executive Pekka Rantala told Reuters.
Rovio, whose long-term aim is to become an entertainment brand on a par with Walt Disney, has expanded the Angry Birds brand into a spin-off TV series and is backing an animated movie set to premiere in May 2016.
Rantala said the total production cost of the Angry Birds movie will be about $80 million, and marketing costs, which will be partly paid by Sony Entertainment's Columbia Pictures, would total more than the production budget.
"The movie will help us get the licensing business back to growth. We are already seeing signs of pick-up in licensing business, and pretty soon we will be able to publish new major partnership deals," he said.
Having cut the number of licensing partners to around 400, including toy maker Hasbro, the company is also striving to build new brands alongside Angry Birds to be expanded into new games, consumer products and animations, Rantala said.
Analysts have said Rovio has been slow to respond to a shift to freely available mobile games, where revenue comes from purchases inside the game, as well as advertising.
"We are still in transition, we have launched free-to-play games but there is room to improve the monetizing in this area," Rantala said.
Rovio last year cut about 110 jobs, or 14 per cent of the total, and has lost several key personnel, who have left to set up new mobile game start-ups.
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