Sega’s $775m acquisition of Rovio has not gone well.
Japanese giant Sega said in its latest financial report that the deal failed to create “economic value”, and that Rovio will now be focused on restructuring.
The companies will also be reviewing their free to play game portfolio and plan to ‘lower the priority’ of F2P games going forwards. Around 100 staff working on Sega-Rovio’s free to play games have already been transferred onto other projects.
Sega’s financials also state that Sonic Rumble Party’s performance has been “weak” and that declining Angry Birds 2 revenue has “bottomed out”.
Rovio will be focusing on its Angry Birds IP and licensing to improve earnings going forwards. It plans to release Angry Birds 2 in mainland China and launch another new game in the series this fiscal year. There are also high hopes for the third Angry Birds movie, set for release in December this year, which should also boost licensing revenue.
Rovio’s sales decline is illustrated in the investor presentation below. For FY2026 Rovio sales were €181m, around $213m. Sega forecasts further decline for 2027, down to €158m (~$186m). Rovio sales have declined every year since the Sega acquisition was completed in 2023.
Rovio’s woes dragged earnings and profitability down across the whole company, said Sega, after a $200m write-down in Rovio’s value in Sega’s previous set of financial results.
“Due to certain titles performing below plan, as well as sluggish performance of existing mainstay titles and delays in the launch of new titles at Rovio, overall performance remained sluggish,” said Sega.
“As a result, the Entertainment Contents Business recorded higher sales but lower profits compared to the prior fiscal year.”
Sega also said it would be suspending “large-scale M&A activities for the time being” as a result of Rovio’s underperformance, as well as problems surrounding the acquisition of gambling company Stakelogic.
