Sega Agrees to Buy Rovio Entertainment

Sega has announced that it will acquire Rovio Entertainment in a deal valued at €706 million ($776 million). Rovio's board of directors has expressed support for the offer, which involves the acquisition of Rovio's outstanding shares and options. The transaction is expected to be completed in Q2.

The reason behind the deal is to leverage Rovio's expertise to boost Sega's intellectual property (IP) in the mobile space, including Sonic the Hedgehog, which has already enjoyed some success on mobile platforms. It aligns with Sega's plan to enhance and expand its brands globally. Rovio has faced challenges in developing additional IP beyond the Angry Birds brand, and this acquisition would give the company new franchises to work with.

According to the company, Rovio has a live-service platform called Beacon, as well as a large audience in the US and Europe that will help Sega grow in the mobile market. Sega also believes that it can apply its experience in maintaining and growing the Sonic brand to help expand and grow the Angry Birds IP, both in the games market and in other areas such as anime and movies, in which Rovio has already achieved some success.

"Among the rapidly growing global gaming market, the mobile gaming market has especially high potential, and it has been Sega's long-term goal to accelerate its expansion in this field," said Haruki Satomi, president and Group CEO of Sega Sammy.

"I am delighted to announce this transaction with Rovio, the company that owns Angry Birds, a beloved brand across the world, and home to many skilled employees who support the company's industry-leading mobile game development and operating capabilities. Historically, as represented by the Sonic the Hedgehog series, Sega has released countless video game titles on various gaming platforms. I am confident that, through the combination of both companies' brands, characters, fan base, as well as corporate culture and functionality, there will be significant synergies created going forward."

Rovio CEO Alexandre Pelletier-Normand added, "Joining Rovio has been an honor, and I am proud to have seen Angry Birds continue to grow as we released new games, series, and films. Less well-known but equally impressive is our industry-leading proprietary technology platform, Beacon, which holds 20 years of expertise, allowing tight-knit teams to develop world-class games-as-a-service products.

"We are thrilled at the idea of using our expertise and tools to bring even more joy to our players, enhancing and expanding Rovio's and Sega's vibrant IPs.

"Red and Sonic the Hedgehog: two globally recognized and iconic characters made by two remarkably complementary companies, with a worldwide reach that spans mobile, PC/console, and beyond. Combining the strengths of Rovio and Sega presents an incredibly exciting future."

The deal is not yet done

It is important to emphasize that while the Sega–Rovio deal may seem final, there are still potential obstacles that could arise. Several crucial milestones must be met before the deal can be considered a success. However, both management teams are expressing confidence, indicating that they are working diligently to ensure a smooth transition.

The question remains: could Sega's acquisition of Rovio be a turning point, signaling a trend of large companies purchasing formerly independent developers? It is possible, especially in the face of the challenges that companies are currently experiencing in 2023, compared to the growth seen during the Covid era. As a result, many companies may be seeking safe havens, and with Rovio's high price tag, there are sure to be others hoping for a similar windfall.