Sega gets an Angry Deal

Last week Sega agreed to purchase Rovio Entertainment for ~$776 million in a friendly takeover deal. This acquisition provides Sega with extremely popular existing IP in Rovio’s Angry Birds franchise such as Angry Birds mobile games, films, and merchandise. Sega can now leverage the new IP, across multiple channels, to generate revenue. The deal also signals a significant expansion for Sega into mobile gaming outside of its own domestic market of Japan.

Sega’s current mobile portfolio brought in roughly $436 million in in-app bookings in 2022, which is a solid performance but largely lagging behind domestic rivals Square Enix, Bandai Namco, Konami, and Sony. By comparison, each of these rivals generated more than $840 million from in-app bookings in 2022. The other contrast in this data is that Sega’s existing portfolio generated 91 percent of its revenue solely from Japan in 2022.

Sega now becomes a much more formidable player in the global mobile gaming market. Sega + Rovio puts the entertainment giant on stronger footing against its Japanese publisher peers. Combining the companies also provides SEGA with more western exposure, since Rovio (including Angry Birds) brought in ~$243 million in-app bookings across a swath of western markets in 2022. 

Sensor Tower data indicates that through the combination of Sega and Rovio’s portfolios, the new combined team will diversify its revenue stream by exposing the company further to western markets. Case in point, the new mix shows that the Japanese market would account for 57% of in-app bookings (as of 1Q23).

The combined company could potentially leverage data and expertise to be more efficient on a global scale.

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