Angry Birds 2 Will Save Rovio Through New Business Model

Since Rovio launched Angry Birds in 2009 as a premium title, and soon after, in 2010, converted to a freemium model, the dominating monetization strategies for mobile games have changed a lot. But Rovio’s business model hasn’t. Until now.

 

2009 is a long time ago. It was before Supercell even existed, King was still three years away from releasing Candy Crush Saga, billions of fruits would not be cut in Fruit Ninja for another 6 months, and free to play was honestly nothing but an idea.

It was a time where the mobile app stores were interesting but had not yet shown their full potential. This was when Finnish Rovio Entertainment released their 52nd game; a game about Angry Birds and bad pigs. A game that came to define an entire industry for years to come.

Back then, the entire Finnish games industry consisted of 1000 employees, generating a turnover of less than €100 million. In just 5 years, however, that industry would see its revenue grow to an astonishing €1.8 billion and boast 2500 employees.

In part thanks to Rovio, Director of the Neogames Finland Association, KooPee Hiltunen says:

“The total turnover of the whole industry back in 2009 was much less than the turnover of Rovio alone in 2014.”

“During the next couple of years, the digital distribution through Appstores proved to be the perfect storm for Rovio and they were able to utilize it fully with Angry Birds. Rovio´s success encouraged other Finnish game companies and teams to go to the mobile game market and Appstores, and the rest is history.”

 

Today, Rovio’s Angry Birds franchise consists of over 14 games, including several spin-offs such as Bad Piggies and Angry Birds POP!, and the series has received over 3 billion downloads.

But the business model employed by Rovio in its Angry Birds games has stayed almost the same ever since 2010, where the free “lite” and “ad-based” versions of Angry Birds were released.

KooPee Hiltunen of Finnish Neogames

In the meantime, however, companies such as Supercell popped up in the industry, and these studios helped move the free-to-play mobile industry into a brand new direction of micro-transactions.

“Basically, mobile F2P was almost non-existent back in 2009. It took another Finnish game company, Supercell, to fully discover and utilize the power of mobile F2P.”, Hiltunen says.

And this is part of the explanation why new Angry Birds games, with a total of 600 million download sin 2014 alone, can still top the free-to-play charts, while never showing up in the top grossing charts. Because if you don’t stay on top of the trends in the free-to-play market, even a large company like Rovio can slowly fall behind.

“The things you pay for have changed. Many of the details in the gameplay have changed. The F2P model has also changed the relation of the players and developers (community management). The first Angry Birds was created as a paid download game. Nowadays F2P games are developed to be F2P games and this is a very fundamental difference e.g. in game design.”, Hiltunen adds.

 

Yesterday, Rovio released Angry Birds 2, and as the name indicates, it is the first true successor to the very first Angry Birds.

And the new game takes Rovio from an outdated monetization model into the era of 2015 free-to-play in one huge leap, adding countdown timers, limited lives, micro-transactions, and more of the monetization tricks that we know so well from the free-to-play Kings of today.

“Gems can be used to buy new bird cards as well as extra lives. Once the lives were spent, a timer started counting down from 20 minutes, similarly to many other current mobile games. This means that the old mechanic of “darn, missed it, I’ll try again” no longer works.”, one of the first to try the new Angry Birds game, Finnish news media V2, writes.

But the real question is not why Rovio introduces these well-proven monetization strategies into their new game, which is built with free-to-play in mind right from the start, but rather why they have waited for so long?

 

The answer lies in the huge amount of products that surrounds the Angry Birds franchise.

For a long time, revenue from consumer products such as school backs, pencil cases, t-shirts, toys, and even candy, made up a huge part of Rovio’s revenue.

Screenshot of Angry Birds 2

Image from Angry Birds 2

So large a part, in fact, that Rovio didn’t have to rely on revenue from its games alone; as long as its games were played, consumers would keep buying the franchise’s consumer products.

And the model worked. In 2013, for example, revenue from all Angry Birds games on all platforms totaled €95.2 million, while the revenue from consumer products totaled €73.1 million.

But then, in 2014, the sales of consumer products fell to only account for €41.4 million in revenue. And although the revenue from games grew to €110 million in 2014, it wasn’t enough to make up for the loss in consumer products revenue.

Rovio, in order to make up for its less than impressive profit of 2014, have therefore had to focus more on its games monetization strategies and less on the rest of the franchise, spanning from consumer products to other media formats such as animated movies.

But according to Creative Director at Rovio, Patrick Liu, the change in direction made with the new Angry Birds 2 game is not only an answer to financial results, but also a way to bring Angry Birds into 2015:

“Angry Birds 2 is the game that Angry Birds would be if it were made today”, Patrick Liu says to V2.fi.

And while it is rarely possible to predict success or failure in the hyper-competitive free-to-play mobile industry, KooPee Hiltunen of Neogames is vaguely positive about the possible success of Angry Birds 2.

“Rovio has all it takes to create a new success story. Excellent development team, the most well known game brand in the world, networks, budget big enough, lot of more experience about the different business models than they had back in 2009 etc. This doesn´t guarantee success, but at least it´s an excellent starting point. Time will tell. Fingers crossed”, he concludes.

 

You can find the newest Angry Birds 2 teaser below:

 

Authors
Sune Thorsen

Sune is not only a gamer and writer who wishes his keyboard-typing-speed would translate directly into Nintendo 64 controller agility, but also the co-founder and CEO of NordicGameBits.

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