How is Rovio likely to perform after its IPO? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Answer by Stan Hanks, CTO of Columbia Ventures Corp, on Quora:
Plus: Rovio will have a very, very large warchest of cash with which to do interesting things, and will have publicly traded stock, which is more valuable than cash for acquisition purposes.
Minus: Rovio will be managed like every other publicly traded company, evaluated on quarter-over-quarter success or failure in meeting analyst expectations.
Unless the CEO proves to be someone like Bezos, Jobs, or Chambers, who can persuade the analysts to agree with their view on how the company should be looked at in the coming quarters, it’s going to be a brutal surprise. Running a publicly traded company is nowhere near the same as running a private company. All the metrics are different, as are all the expectations.
Everyone - the public, the analysts, the tech pundits - are looking for “the next big thing” from Rovio. This is not unique to Rovio; even Apple - where there are perennial complaints about “nothing exciting since the iPhone” - faces that. So that’s going to be on the table, for a long time to come. Failure to deliver, or to explain that whatever did get delivered was a bigger thing than it appeared, will result in stock price decline and a new CEO if severe enough.
The logical thing would be for Rovio to turn into a slightly different spin of Electronic Arts and grow via acquisition. It’s a lot easier to find promising games from emerging studios and turn into a publisher of those games, or an owner of those studios, than to try to recreate success from zero. They’ve got the cash and stock with which to do that, so that’s what I’d be expecting to see.
There are other avenues which can be taken to monetize the Rovio properties, and I’d fully expect to see movement in that space as well - more and different merchandising, new media, content distribution, etc.
Of course, expanding the Rovio franchise as an ad distribution network is also in the cards. It’s a massive part of the revenue stream, and finding ways to increase the perceived value so as to increase both revenue and margin will be undertaken.
Hard to say how successful it all will be - it really depends on the continued popularity of the franchise, and the ability to create another new, big thing.
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