👉 Background: Sega is the Japanese gaming company that is well known for Sonic the Hedgehog and Total War franchises in the early 1990’s. As for Rovio, they’re the company behind Angry Birds - the game that has been downloaded 5 BILLION times.

👉 What happened: Now, Sega has announced it will be acquiring Angry Birds’ maker, Rovio, for $776 million USD. And for an app that has had 5 billion downloads, that kinda sounds like peanuts.

👉 What else: This deal is actually a 19% premium to their closing price before the announcement. And it’s largely to do with Rovio’s business model...which hasn’t quite worked.

What's the key learning?

💡Get your business model right… or forever hold your peace. When Angry Birds was first released, it had a very simple business model - customers could buy-it-once-and-play-forever... And the price was just $1.

💡Angry Birds wasn’t and still isn't able to generate a recurring revenue from their wildly popular game. As a result, they’ve created a number of other freemium sequels with recurring payments. But these just haven't taken off.

💡Angry Birds still has the know-how of building engaging, addictive mobile games... So maybe Sega’s got a new set of heroes just waiting for a mobile game franchise to propel them into the stratosphere.

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