Researcher DFC Intelligence’s Worldwide Market Forecasts for the Video Game and Interactive Entertainment Industry report estimates the global market for video games will grow from $67 billion this year to $82 billion by the year 2017. Of late, gaming console sales have declined, but the industry is experiencing strong growth within the mobile gaming segment. Another report by the researcher, Online Games Market Forecasts, projects the online games market to grow from $11 billion last year to $35 billion by 2017.
Despite strong market growth projections, Angry Birds maker Rovio decided to delay its IPO plans. Rovio has not released any recent financials. However, its 2011 revenues of nearly $106.3 million generated more than $67 million in profits. Revenues also grew by more than 10 times last year. Analysts have responded to this performance by valuing the company at $9 billion.
Angry Birds’ Partnerships
To keep users engaged with Angry Birds, Rovio began partnering with famous artists and groups. A few weeks ago, to support the cause of The Mercury Phoenix Trust, an HIV/AIDS charity, it signed up with Freddie Mercury for a Day and made the deceased singer an “honorary member” of the Angry Birds family. A yellow, mustached, crown-wearing bird was seen riding a bicycle with other Angry Birds characters in tow as part of the campaign. Rovio sold special T-shirts to mark Mercury’s birthday, and part of the sales proceeds were donated to the charity group.
It also partnered with Grammy Award–winning band Green Day to release a new musical episode for Angry Birds Friends. The episode will have 10 new levels and pig characters that are inspired by the members of the band. In addition, players will be able to access the band’s exclusive content. Angry Birds has also partnered with Microsoft and will also be available on its soon-to-be-released Windows Version 8.
Despite these innovations, some Angry Birds titles are losing their grip on the market. Angry Birds Space is one such example. While the game reported more than 100 million downloads in June this year, within 76 days of the release, it has slipped to the 47th position among top-grossing apps on the iTunes store. To keep users engaged in the franchise, Rovio plans to release another game, Bad Piggies, by next week. Bad Piggies is expected to tell the Piggies’ side of the story, which, some believe, has also garnered a strong fan following.
Rovio Expands Beyond Angry Birds
Rovio is also spreading its wings beyond its most popular Angry Birds franchise. Recently it released Amazing Alex, a game that is based on a kid called Alex and principles of physics. While the game is similar to Angry Birds because of its trajectory physics, it is more interactive and lets users set up objects to bounce, ricochet, or even crash into each other to clean up Alex’s room. The game has more than 100 levels and also lets users add their own levels. But the game has received mixed reviews. Many players have found it a fun game for all ages, but they don’t think it is as addictive or as challenging as Angry Birds.
Rovio has not confirmed any news about its IPO. The management is not eying one before the second half of 2013 and will wait for investors to take the call on the IPO. For now though, Rovio may learn from Zynga’s experience and stay away from an IPO. Zynga’s stock has crashed since it listed last year end. I believe that Rovio needs to establish its entertainment empire before taking that IPO plunge.