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Angry Birds Maker Rovio's Profits Hit a Wall

With animation investments and a free-to-play shift, profits are down from $77 million to $37.3 million year over year.

Finnish gaming company Rovio, the maker of the Angry Birds game series, announced its 2013 financial results today, and they’re mixed: A slight increase in overall revenue, but a big drop in both profit and earnings before interest and taxes.

Between 2012 and 2013, revenue increased from $211 million to $216 million, but EBIT fell from $107 million to $51 million and net profits after tax dropped from $77 million to $37.3 million.

In a press release, the company called 2013 a “foundation-building year” as it pushes into new verticals like animation and shifts the monetization in its games. Producing a series of Angry Birds Toons and preparing a feature-length film for a planned 2016 release meant building “the biggest animation studio in the Nordics for the production of animated TV content,” the release notes.

When the first Angry Birds game launched in 2009, paid game downloads were still fairly common on the App Store, but in recent years the mobile market has shifted to free-to-play games that charge for things like power-ups, extra lives and extra levels. Last year, the company embraced the new model with gusto in Angry Birds Go!, which charged up to $50 for a single virtual car.

But the potential of free-to-play for a games company is real, so it’s no wonder that Rovio is trying to make the leap. Fellow Finnish gaming wunderkind Supercell grossed $892 million, for $464 million in EBITDA, last year. To put that in context, Rovio has grossed “only” $541 million in revenue since 2010.

The first Angry Birds game is currently at No. 59 on the paid iPhone charts, according to App Annie, while Angry Birds Star Wars is just below at No. 64. Four of the company’s games are in the top 100 paid downloads on iPad, while Angry Birds Go! is the No. 100 top-grossing game there. An independent game published by Rovio’s third-party arm Rovio Stars, Juice Cubes, is currently the No. 93 top-grossing app on iPad.

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