Reports have surfaced that Sega Sammy Holdings Inc., a Japan-based entertainment conglomerate, is in advanced talks to acquire Rovio Entertainment Oyj, the Finnish gaming company that created the popular mobile game "Angry Birds."
The Wall Street Journal reports that the deal is rumored to be worth $1 billion and could be finalized as early as next week, provided there are no setbacks.
Sega Moves to Acquire Failing Rovio
Sega Sammy Holdings Inc. was formed in 2004 by the merger of Sammy Corp. and Sega Corp. and has since produced a wide range of entertainment products such as arcade games, toys, and animated video content.
Meanwhile, Rovio Entertainment Oyj, which is traded on the Helsinki Stock Exchange, rose to prominence with the release of "Angry Birds" in 2009, which became the first mobile game to reach one billion downloads.
With subsequent releases, TV spin-offs, and movies, Rovio has failed to replicate its initial success.
This has made the company vulnerable to takeover by larger competitors, especially since newer competitors have recently outperformed its aging franchise.
The Verge tells us that the franchise appears to have declined since its 2014 peak when Rovio reported declining profits and layoffs.
WSJ also reports that Rovio was previously in talks to sell itself to an Israeli rival, Playtika Holding Corp., for more than $800 million, but the talks fell through in March without a deal being reached.
Lesser Spending on Mobile Games
According to Newzoo BV, global consumer spending on mobile games dropped 6.4% last year to $92.2 billion. However, mobile games still accounted for roughly half of all game software sales, with the remainder spent on console and computer games.
The pandemic-induced slowdown in demand has resulted in a flurry of deal-making activity in the gaming industry, including Take-Two Interactive Software Inc.'s $11 billion acquisition of FarmVille creator Zynga Inc. and Microsoft Corp.'s $75 billion agreement to acquire Activision Blizzard Inc.
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Furthermore, Sony Group Corp.'s videogame division agreed last year to pay $3.6 billion for Bungie, the studio behind the Halo and Destiny series.
Suppose Sega Sammy Holdings Inc.'s acquisition of Rovio is successful. In that case, it will be yet another significant transaction in the gaming industry, with the deal expected to strengthen the Japanese conglomerate's position in the mobile gaming market.
However, given the ever-changing nature of the gaming industry, only time will tell whether the acquisition will be a profitable venture for both parties.
More About Mobile Gaming
According to a new DFC Intelligence report, mobile phones are the most popular gaming platform in the world. Based on the report, only 300 million of the world's 3.7 billion gamers play on consoles or PCs, while the remaining 3.4 billion, or 92%, play games on mobile devices.
DFC Intelligence notes that the core game industry's current focus is on reaching the 300 million hardware-driven consumers who buy dedicated systems to play games on consoles or gaming PCs. However, the global audience is growing at a much faster rate, thanks to mobile gaming.
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