Angry Birds creator Rovio has seen quarterly profits fall a shocking 96%. The mobile games company’s new 5G gaming platform, Hatch, received a significantly slower-than-expected uptake, and marketing costs were high.
On top of this, Rovio’s shares dropped 22% after it said it was evaluating “strategic alternatives” for Hatch. After spending so much on developing and marketing the new 5G gaming platform, this seems like a concerning chain of events for investors.
However, Rovio might not be completely giving up on Hatch, instead focusing its attention on Hatch Kids, a subscription and streaming service for children and families.
Hatch too soon
Rovio has admitted that the competition in streaming games has intensified globally since the days of Angry Birds. On top of this, the roll-out of both 5G networks and devices has been slower than expected, meaning that the majority of people won’t be 5G gaming yet.
OP Bank analyst Kimmo Stenvall said he still saw “some kind of future” for Hatch, though, and he estimated its value to be as much as 50 million euros.
“It may be a bit too early for Hatch at the moment. Gaming is rising to a new level with 5G connections, and 5G coverage is still on an early stage,” Stenvall told Reuters, stating that competition would be “fierce”.
Rovio has also revealed that it expects a steady decline in its brand-licensing revenue, by 50% year-on-year.
The company did have some good news to share, though, with games revenue and gross bookings hitting new records, at 66.7 million euros and 67.0 million euros, respectively.
If Rovio can turn around the popularity of its new 5G gaming platform, Hatch, the results in the next quarter might be much kinder on the company.