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Rovio’s Annual Net Profits Fall 52% in 2013

Rovio, the Finland based game developer behind the Angry Brids franchise, has today announced a more than 50% drop in its 2013 net profit, to $37 million, compared with the previous year, The New York Times reports. While Rovio pushes into the world of freemium games, many industry analysts are questioning whether the business model can remain profitable for the company.

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The Angry Birds maker last year launched its first effort at a freemium game, and has diversified its efforts in recent years into movies, animation and theme parks to reduce its reliance on online gaming. According to the company’s annual financial report, Rovio’s business of licensing the Angry Birds brand for consumer products like candy dispensers and lunch boxes now generates almost 50% of the company’s yearly revenue.

Rovio’s chief financial officer, Herkko Soininen, called 2013 “a foundation-building year”. “We invested in new business areas, such as animation and video distribution, ventured into new business models in games, and consolidated our strong market position in consumer products licensing,” he said in a statement.

The efforts to alter the company’s business model, however, have yet to take root. Rovio’s revenues last year fell slightly, to $216 million, compared with 2012. Rovio’s earnings fell 52 percent, to $37 million last year, compared with $77 million in 2012.

In contrast, Supercell, the Finnish company behind the Clash of Clans franchise, reported a ninefold increase in its revenue over the same period, to $892 million.

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  • dannymalt

    I perceive a Freemium game as cheaper and of lesser quality than if the game sold for $1, and I also feel like they are underhanded in some way in how they plan on gauge me later while playing the game, and forcing me to pay more money to really experience the game.

  • Al

    These games have become annoying with their hard sell tactics (like constatnly pushing you to use free bonuses until they are used up, so that you start paying for more) and sometimes (depending on the game) the requirement to purchase stuff to really get into the game. One of the reasons I quit playing plants vs zombies is because the price of the premium stuff jumped dramatically so that you could no longer purchase much of anything with the coins you earned in the game.

    I’d rather pay up front and not within.

    I think the biggest mistake was offering games at such undervalued prices so that most developers couldn’t make a living off of their efforts. I mean, a buck! Seriously?! I don’t mind, but from a business standpoint, that’s way too cheap for what you get (unless you can sell a bajillion, like Rovio).