This article is part of our Road to Helsinki series, where we put the spotlight on the Finnish and Nordic games industries ahead of Pocket Gamer Connects Helsinki on October 1st and 2nd.
Rovio is one of the world’s most famous mobile games companies – and the first to really solidify the platform as a gaming phenomenon thanks to its hit game Angry Birds.
While the IP’s global popularity has arguably faded over time, and Rovio itself was surpassed by its peers after the industry’s shift to free-to-play – including Supercell in the neighbouring Helsinki – it remains a notable player in the mobile space.
In January 2023, seeing some untapped potential in a company that had gone public years prior, but never recovered from early highs shortly after its IPO, Playtika rocked the industry by going public with a €750 million (approximately $810m) non-binding offer to acquire Rovio.
Clearly Playtika wasn’t happy that its previous, private offer hadn’t seen much movement. The ‘surprise’ public bid got the movement it wanted from Rovio – but ultimately not the way it wanted.
(Check out this article on Deconstructor of Fun delving into Rovio’s shareholders (the company had significant ties to the Hed family), the challenge of such an acquisition (Finnish laws require 90% shareholder approval for a takeover), and what a Playtika purchase might have looked like.)
Trigger point
“That really started something, because they announced it publicly,” Rovio VP of strategy and investor relations Timo Rahkonen tells PocketGamer.biz.
“That basically meant that there started to be quite a lot of interest [in Rovio].”
In February 2023, Rovio publicly announced a strategic review to discuss Playtika’s overture and other opportunities, bringing in external advisors like Goldman Sachs.
Asked if Rovio was interested in selling prior to Playtika going public, Rahkonen simply says it’s common for publicly listed companies to have discussions ongoing with different companies as it looks for “what is in the best interest of the shareholders”.
“So of course, you need to evaluate different types of options, but of course, sometimes it’s just more in a casual way, and sometimes more in an official way.
“…But with Playtika, that was basically the trigger point for that.”
Rovio ultimately rejected Playtika’s offer, and later accepted a deal with Sega instead for €706m (approx. $775m) – bringing together two globally iconic games franchises – Sonic and the Angry Birds, amongst other Sega IP.
Rahkonen says it wasn’t all about the monetary value of the deal – though he was keen to point out that the company was required to look out for what was best for shareholders – but also what was best for the future of Rovio. That included how Rovio and an acquirer could work together, the operational and cultural fit, and what a deal would mean for the company itself.
Playtika has history in Finland, having acquired Best Fiends developer Seriously and subsequently closing the Helsinki studio and moving development to its Israel base at the expense of around 120 staff, according to Mobilegamer.biz.
“The board did a very thorough process evaluating different kinds of options and there was interest from other companies as well,” says Rahkonen.
“But then in the end,Sega’s offer was something that the whole board unanimously recommended.”
“Independent” division
Now part of Sega, Rahkonen says Rovio currently has a “very independent position” within its parent company, given its mobile gaming expertise at a global level, something that Sega largely lacked.
Though it should be noted the company has its Hardlight studio in Leamington Spa (Sonic Dash, Sonic Jump, Sonic Dream Team), and some successful mobile titles in Japan.
That’s the goal, we want to have successful Sonic games on mobile, similar to what we have for Angry Birds.
Timo Rahkonen
But Rovio brings with it experience in mobile game development processes, live ops strategies and UA for the Western market, as well as its growth technology platform Beacon to help power that process.
The tech supports development, A/B testing, analytics, UA and more for the company, which can now be used to support Sega’s portfolio in Japan, too.
“We have our own strategy, but we do lots of synergistic projects together,” he states.
“There are lots of areas where we are working together, whether it’s about trying to develop a completely new game, trying to grow the existing games, or looking at transmedia opportunities.
“So I think it just kind of makes sense that we have this quite independent position there.”
Asked if that will remain the case long-term, Rahkonen says that’s something for Sega to comment on, but Rovio has a long-term strategy and “ambitious” plans of its own.
But the deal has changed Rovio’s focus. With the raft of Sega IP now at its disposal, it’s been looking at what franchises it could bring to the mobile space. The company recently announced 32-person PvP battle royale Sonic Rumble, the first new title since the acquisition.
“Sonic is quite the obvious one because that is basically the most recognised and most loved IP they have in their portfolio,” says Rahkonen.
“So that’s something that we have decided to focus on first. …That’s the goal, we want to have successful Sonic games on mobile, similar to what we have for Angry Birds.”
It’s not just Sonic, of course. Rahkonen says while Sonic is its first focus, it’s exploring what other IPs in Sega’s portfolio would make sense on mobile. Meanwhile, it’s also looking into ways to expand Angry Birds beyond mobile, given Sega’s expertise in the PC and console space.
“The plan is to bring Angry Birds beyond mobile in the future,” he states.
Rovio has attempted in the past to release other IPs outside of the Angry Birds, including its match-3 title Small Town Murders. And while it has some new IPs in the works, a strategy Rahkonen believes can work for certain genres, he says its main focus is now on Angry Birds and Sega’s owned brands.
Rovio’s future
Now that Rovio has been acquired itself and become the global mobile arm for Sega, might it consider making further acquisitions of its own? In the past it has purchased studios like Finnish developer PlayRaven, hypercasual studio Ruby Games, and made investments in the ill-fated streaming platform Hatch.
I think in the long-term, M&A and inorganic growth, in general, should be something that should be in your growth toolbox.
Timo Rahkonen
It’s never been aggressive in the M&A space to grow the company, but could that change with Sega’s backing?
Rahkonen says the main focus is to focus on projects between the two companies. However, he notes that in the games industry “you need to keep your eyes open”.
“I think in the long-term, M&A and inorganic growth, in general, should be something that should be in your growth toolbox,” he states.
“I believe strongly that Rovio and Sega could be a really good home for a good developer. But at the moment, that’s not our main focus.”
Rovio would have been a very different company had Playtika’s acquisition been successful, or even if the company had remained independent.
The famous Finnish developer hadn’t had any explosive growth for years. But now that it’s under the wing of Sega and has its hands on Sonic and other famous IP, as well as the Angry Birds, it could be all change.
Given Sega’s recent spate of layoffs across its European offices and the sale of Company of Heroes developer Relic Entertainment, finding that strong growth might now be a necessity.
