Rovio Entertainment Oyj (ROVIO.HE) posted an unexpected fourth quarter net loss on Wednesday as it spent more trying to attract new players while being hit by the costs of its cloud-based game streaming service .
The company behind the Angry Birds mobile game franchise said it recorded a net loss of 0.7 million euros ($ 0.76 million) in the quarter, compared to a profit of 4.3 million euros over the same period last year, as income fell 1.5% to 71 euros. .6 million.
A forecast by FactSet analysts predicted a net profit of 1.1 million euros for a turnover of 79.2 million euros.
User acquisition investments, advertising and marketing costs to attract gamers, increased 18% in the quarter to $ 27.5 million as the company pushed its Angry Birds Dream games Blast and Sugar Blast.
“During the end of the year, we significantly reduced user acquisition investments as the returns on those investments did not meet the expectations of our ROI model,” said Managing Director Kati. Levoranta.
“Our user acquisition investments at the start of 2020 are at a much lower level than in the 3rd and 4th quarters of last year,” she said.
Daily active users of its games in the quarter fell to 5.9 million from 7.0 million, while total gross bookings edged up to 67.0 million euros from 66.7 million euros . Gross bookings represent in-app purchases and in-app advertising sales.
Rovio has now decided to end the funding round of its 80% -owned cloud-based game streaming service Hatch Entertainment amid heightened competition and slower-than-expected deployment of 5G networks and devices.
Hatch will now focus on Hatch Kids, a subscription-based and streaming digital entertainment and entertainment service for children and families, and target annualized cost savings of € 6 million.
The Finnish developer plans to release between one and three new games in 2020, but the timing of new game launches depends on the games’ progress in the phased launch. Rovio has therefore stated that he will not give a revenue forecast for the year 2020.
However, he expects an improvement in adjusted operating profit.
Rovio maintained its annual dividend at 0.09 euro.
Write to Dominic Chopping at [email protected]