After laying off 110 employees in late 2014, Rovio has now announced that they have to let go of an additional 260 employees – accounting to 37% of their total workforce.
Despite the recently released Angry Birds 2 reaching some 50 million downloads already, Finnish Rovio announced last week that they have had to lay off 260 employees.
The news comes at a difficult time for the 12-year old studio, but the down-sizing of the once 800-man large company might actually be a sign of a maturing Finnish company that saw a growth most games studios only dream about, when they first showed the world that mobile was a series business.
Rovio CEO Pekka Rantala wants the studio to re-focus.
“Rovio´s success encouraged other Finnish game companies and teams to go to the mobile game market and Appstores, and the rest is history.”, said Neogames Finland director, KooPee Hiltunen in a recent interview.
And in many ways, it seems that Rovio CEO, Pekka Rantala agrees – the layoffs are necessary for a new, and more agile, Rovio to emerge:
“This is personally a difficult decision. However, it is certain that a leaner and more agile Rovio is absolutely necessary to move forward and take the company to new successes in the future.”, Rantala says.
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More specifically, creating a more agile Rovio means going back to the core of Rovio’s business model, focusing on mobile games, animated movies, and merchandise.
For the past years, Rovio has experimented with various other ventures, including “Fun Learning”, which was a curriculum of games and digital puzzles aimed for three to six years old kids, as well as the Angry Birds Playground, which was an educational concept developed for kids in Singapore.
Projects like these have distracted Rovio from what they were best at. This was alright as long as the finances looked great, but following 2014’s operating profit decrease of 73 percent, the only proper thing to do is to focus, Rantala adds:
“Rovio’s growth and eagerness to explore new business opportunities over the past few years has been exceptional”. “As a result, we did too many things. In our current financial condition we must now put focus on where we are at our best: in creating magnificent gaming experiences, in producing an amazing animation movie and in delighting our fans with great products.”
Rantala calls mobile games, merchandise, and animated movies Rovio’s core business. So let’s take a look at the numbers for those areas.
First of all, the highly anticipated Angry Birds movie. Rovio has previously compared themselves to a full-blown media company like Disney or Pixar, and it goes without saying that to play in those leagues, you need to have a full-fledged animated movie.
Rovio has personally spent $110 million on producing the movie in Canada so far. And as part of studio’s core business, the recent layoffs won’t affect the people working on the movie, Rovio confirms.
Little has been confirmed about the movie so far, but Rantala said in a recent interview that it’ll offer something for both kids and adults:
“It’s a very, very funny movie. It’s a family movie but at the same time I can guarantee that young adults who go and check out the movie will love it.”, he says.
Angry Birds Lego sets will arrive in 2016.
Secondly, Rovio’s merchandise division has been going downwards since 2014, where the revenue from consumer products fell from €73 million in 2013, to €41 million in 2014.
However, with increased focus comes new opportunities, and the studio hopes that the new movie as well as licensing deals such as the new Angry Birds Lego sets, will help reignite the studio’s merchandise and licensing sales:
“The movie will help us get the licensing business back to growth. We are already seeing signs of pick-up in licensing business, and pretty soon we will be able to publish new major partnership deals…”, says Rantala.
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Lastly, the mobile division has actually done rather well, everything considered. The division increased its revenue by 16 percent this year, which is an increase to $119.3 million.
How Angry Birds 2 and its truly free-to-play business model will impact the mobile division revenue is yet to be seen, but it is expected to increase the revenue significantly.