Rovio released their annual results last week, and the numbers surprised some commentators. I won’t go into details of the report — Venture Beat did a good job of that here — but want to dig into what our data shows about their performance, and why that might be the case.
What I think is interesting about the above chart is that it seems to show that Rovio’s user acquisition team has gotten a lot better at finding the right users. We can see that revenue per day has increased dramatically, even with the downtrend in daily download volumes. How did they do that?
Lean and Mean for 2016
Rovio started making changes back at the end of 2015, announcing some serious restructuring, most notably splitting out the entertainment division from the games division, but also moving some talent around. Wilhem Taht moved into the role of EVP Games, and Ville Heijari rejoined as CMO Games. These changes seem to have helped — to quote from the aforementioned VB article:
"The games division had its best year ever, with revenue growing 40 percent from €113 million to €159 million in 2016. Games reported an EBIT of €29.6 million, up 640 percent from €4 million a year earlier."
Making Changes — Angry Birds 2
So what changed? Well, looking at the data from Rovio’s biggest revenue driver of 2016, Angry Birds 2, we can see that on relatively flat download growth, monthly IAP revenue grew over 150% from January 2016 to Jan 2017. Analyzing the data on updates, as well as looking at the revenue trend suggests there was quite a bit of product optimization going on. Combined with improvements in UA capabilities, we suspect this drove a lot of the increase in performance.
This was confirmed when we asked Wilhelm Taht, EVP Games, what Rovio did to turn things around:
"We mentally shifted from focusing on the next game or big channel support driving feature update to what we have “here and now”. I.e we went all in on the current top performing games at the outset of 2016, made sure we provide the teams the support and targets they needed and backed them up with increasing, profitable user acquisition. To sum up in one word; we focused on live ops. And while doing so, we started discontinuing everything in dev and soft launch that couldn’t become strategic in the long term."
Look at me, I’m famous
In addition to the solid performance of the games team, Rovio launched it’s first foray into the film industry, in partnership with some serious names in Hollywood. There was a lot of speculation prior to launch around the value of the endeavour, but one look at the performance trend shows that at the very least, it didn’t hurt!
Where to next for Rovio?
The data seems to show that Rovio have radically improved at finding the right users and monetizing them at a higher rate. It remains to be seen whether they can maintain this trend in 2017, but it does seem that they’re getting things figured out and have the talent in place to keep growing. Rovio CEO Kati Levoranta certainly seems to think so:
“I’m happy to say that Rovio did extremely well. During 2016, we found the magic thing in Rovio again.”
Taht chipped in his goals for the team (which we think is a good piece of advice for any aspiring studios):
"To continue operating like there is no tomorrow, and making sure everything new we launch has a grand destiny."