Angry Birds maker Rovio's profit hit by Hatch expansion

FILE PHOTO: A company sign and an Angry Birds game character are seen at the Rovio headquarters in Espoo, Finland March 13, 2019. REUTERS/Anne Kauranen

HELSINKI (Reuters) - Rovio Entertainment ROVIO.HE, the maker of the 10-year-old Angry Birds mobile game series, reported a drop in quarterly profit on Thursday, citing expansion costs related to its 5G gaming platform Hatch.

The Finnish company, which listed its shares last year, said second-quarter operating profit fell 11.3% to 5.3 million euros (£4.88 million) on sales that were flat at 71.8 million euros.

Rovio said profit was squeezed by Hatch Entertainment, a spin-off business that is developing 5G streaming access to mobile games the way Netflix NFLX.O does for movies and Spotify SPOT.N does for music.

Hatch, which is 80% owned by Rovio, signed a partnership agreement with Samsung 005930.KS in April and has announced partnerships with Vodafone VOD.L in the UK, Spain and Italy.

“The decline in operating profit was attributed to Hatch Entertainment’s expansion to new markets,” Rovio CEO Kati Levoranta said in a statement.

Rovio’s gross bookings from its games grew slightly, rising 0.6% year on year to 65.2 million euros, including 14 million euros from newest game Angry Birds Dream Blast, launched in January.

This week, to mark the Angry Birds brand’s 10th anniversary, Rovio is releasing a sequel to “The Angry Birds Movie”, its successful 2016 venture into the film industry.

Reporting by Anne Kauranen; Editing by David Goodman