angry-birds-21

Is Rovio Worth More than EA?

The big question as of late is whether Rovio, the creators of Angry Birds, is worth more than all of Electronic Arts. Rovio is getting ready for an IPO and some have speculated that the company is worth upwards of 9 Billion, more than twice EA. Yeah, I said 9 Billion. However, my question is more like, “Is Angry Birds the Mario for smart phones as a platform or is it a fad based on the economy?

I’ll be honest, I was a tad shocked to see the estimation but not too shocked. I’ve seen crazy predictions before about the casual market, mostly dealing with Zynga. While doing some research on another product, I stumbled on a Yahoo article claiming just how big Rovio is. I find it unfathomable to even ponder the depths of what the heck someone is thinking here. Sure, Rovio has apparently made a billion off the game and selling merchandise. Who hasn’t been out to the local mall or clothing department and seen something with the Angry Birds characters on them? But, does this really equate into the company’s value to a staggering 9 billion? That’s the same amount as Nokia, the second largest producer of mobile products.

But perhaps I just could be wrong, which again brings us to the simple question. Has Rovio basically built the Super Mario for the smart phone platform? Perhaps they have paved the way that no matter what they do, Angry Birds is embedded into everyone’s mind. However, perhaps is it more of a fad for the times and thanks to the economy not doing so well. I mean for gamers who want to waste some time before classes start or waiting at the dentist office nothing is easier than taking out the smart phone to play the latest 99 cent game. If mobile is truly here to stay, as a platform for gaming and entertainment, then they could have very well developed the first lovable characters for the platform.

There are so many variables at play here. The economy is pushing customers into purchasing cheaper items and changing entertainment habits. There are worldwide changes too; developing countries using mobile devices for the first time. While I truly love my notebook and desktop, it’s understandable that most of the population in the world does not have the resources available to make such a purchase, hence mobile phones. I’m still skeptical on seeing a casual game company turn a simple game built for the big three mobile platforms into a 9 billion dollar company. Heck, we can use Zynga as an example.

Zynga has built a massive base mostly off of the most famous game they have produced: Farmville. Farmville is still the biggest money maker for the casual giant today, and finding more customers is turning into a nightmare. I’ve seen the value of the company sink on the market. It’s no wonder thanks to the amount of buyouts they have to deal just to keep the competition at bay. It is purely a dog and pony show. They have to have a certain quota of people playing their games on the Z Cloud to turn a profit. This means their games must touch a massive audience. Once a game has hit the peak, they have to find another monster and quick or its in the red sea of no return you go.

So while the giant of the casual games industry is struggling to find a large enough audience to keep itself afloat, Rovio comes along with its one hit wonder and keeps the momentum up and sees their books in the black. There is a reason EA and Activision Blizzard are not 30 Billion companies. They know what you have to do to stay afloat in their market. They know usually how long it takes for recovery R&D and the feeling in the pond, so to speak. It takes a tremendous amount of man power to produce video games for an audience that will live and die by the sword. Once you capture the audience, there’s a good chance you’ll end up with a fanbase.

Returning customers is key to surviving. I don’t see that in the casual market, hence why the big boys are constantly buying each other out because the audience moves so quickly. A recent report showed that only 40% of game developers in the mobile platform break even and that’s only on the iOS platform.

With all this in mind, what do you think about the casual market and is Rovio really worth the 9 billion? For me, I just don’t see it. Leave a comment  about your take on the casual market.



[fbcomments]