This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Rovio's Skyrocketing Growth and the Increasing Dominance of Smartphone Gaming

By Michael Comeau

NEW YORK ( Minyanville) -- Finland's Rovio Entertainment, maker of the phenomenally popular Angry Birds series of mobile video games, just released its full-year 2011 financial results, and the numbers are spectacular -- particularly when compared with the old-school of the video-game industry.

For 2011, Rovio's revenues hit $106.3 million (¿75.4 million), jumping more than ten-fold from 2010 as downloads of Angry Birds, Angry Birds Seasons, and Angry Birds Rio reached 648 million.

Rovio also reported that actively monthly users reached 200 million, making the Angry Birds franchise about one-fifth as big as Facebook in terms of user count.

And it's not all about the top line. Rovio is extraordinarily profitable, with a pre-tax margin of 64% that easily outpaced industry giants like Activision (ATVI) and Electronic Arts (EA), which are growing at much slower rates.

More from Minyanville
EA: House of Organic Digital Magic? Or Activision-Copying Relic of a Declining Civilization?
Financial Armageddon: Should a Rational, Thinking Person Be Worried?
7 Reasons Why the Bull Market Will Resume

And according to Reuters, Rovio is planning an IPO on the Hong Kong Stock Exchange in 2013.

It makes sense.

Zynga (ZNGA), though down nearly 50% from its March high, is still valued at nearly $6 billion.

Also, note that Zynga recently paid $180 million to get its hands on OMGPOP, maker of the monster mobile hit Draw Something, and reportedly made a $2.25 billion offer for Rovio.

EA and retailer GameStop (GME) have also paid huge sums to get their hands on casual/social/mobile gaming companies.

So it's obvious that there is a whole lot of money chasing the fast-growing producers of these addictive games.

Now, looking at Rovio as a potentially investable public company is pretty tricky. Wall Street will want to see evidence that the company is more than a one-trick pony. Angry Birds shows no signs of falling from grace, but there was a time when investors thought the same thing about Guitar Hero and the Nintendo Wii. And while there are plans for an animated Angry Birds film a few years down the road, there's no telling if the public will care by then.

However, we should be looking at Rovio's Angry Birds as something else: A symbol of how much the video-game industry has changed with the increasing domination of smartphone platforms like Apple (AAPL) iOS and Google (GOOG) Android.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs