Sega set to acquire Angry Birds developer Rovio Entertainment for £625 million

Japanese video game developer and publisher, Sega, has agreed on a deal worth £625 million to purchase Rovio Entertainment, the Finnish video game developer behind the well-renown Angry Birds franchise.

Sega, known by many for creating Sonic the Hedgehog, is seeking to step up its growth levels and stay competitive within the world's gaming market. This purchase of Rovio Entertainment can allow Sega the opportunity to do so as Rovio Entertainment's main staple, Angry Birds, has built up a great legacy in the 14 years since its launch.

Angry Birds was previously reported to generate over 50 million downloads as well as 200 million minutes of gameplay per day. By the time the sequel to the first game, Angry Birds 2, arrived six years after the first in July 2015, the game had downloads exceeding three billion.

The gaming market is set to become grow even bigger and become more lucrative, with Statista reporting that this year the revenue is projected to reach just over £300 billion. Revenue is projected to have a yearly growth rate of 7.89 per cent, leading to a forecasted market size of over £400 billion by 2027.

Partner and specialist corporate and commercial lawyer at leading London commercial and media law firm Simkins, Stuart Smith, has given his take on the purchase by Sega, mentioning wider opportunities for the Japanese video game developer. He said: "This deal would give Sega a stronger foothold in the increasingly lucrative mobile sector, something that even a platform holder like Nintendo has been trying to access in recent years."

Smith also touched on the filmmaking aspect and potential of this deal, adding: "With the huge success of the new Super Mario movie, I suspect that Rovio's experience in adapting Angry Birds for the cinema will also have caught Sega's eye."

The Super Mario Bros. Movie has managed to generate a global box office earning of nearly £550 million in just under two weeks since hitting the cinemas. It is also the highest-grossing video game adaptation in history, dethroning 2016's Warcraft, and is the highest-grossing film of 2023 so far.

The two Angry Birds films which Rovio co-produced, 2016's The Angry Birds Movie and 2019's The Angry Birds Movie 2, grossed around £280 million and roughly £120 million respectively. The box office performance of the first movie means it sits at seventh place in the all-time worldwide box office list for video game film adaptations.

In looking at what this deal between Sega and Rovio Entertainment means for the future, the specialist corporate and commercial lawyer believes "this announcement suggests that the pace of M&A activity in the gaming world isn't slowing down anytime soon."

With the potential of more gaming mergers and acquisitions on the horizon, the video game industry will be estimated to continue showing dominance and popularity worldwide. This is as more opportunities in coming up with new gaming-related ideas can be undertaken and tapped into.

Smith feels the potential increase of mergers and acquisitions in the gaming landscape can benefit those involved, especially in the mobile gaming sector. He says it is "good news for successful mobile publishers and developers, especially those who own popular IP ready and waiting for a big screen crossover."

The other major acquisition within the gaming industry involves Microsoft, owner and creator of Xbox, looking to purchase video game holding company, Activision Blizzard, for a price of $69 billion. Activision Blizzard is the owner of popular video game franchises such as Call of Duty, Candy Crush, World of Warcraft and Overwatch.

There have been some obstacles with getting the deal through, given that Sony, owner of PlayStation, is opposed to the deal going through. Amidst concerns the UK has over the acquisition due to the Xbox and PlayStation rivalry weakening, Microsoft has told the UK regulator that they are willing to license Call of Duty to Sony for 10 years.