From its aerie in sylvan Finland, Rovio gave us Angry Birds. Now it wants to be the Disney of the Internet age.
For more than 200 million people every month, Angry Birds land is a state of mind: a digital immersion in addictively cheerful destruction, a refuge from the boredom of subway commutes and doctors' waiting rooms, where the fine art of sling-shotting tiny, brightly hued birds at wooden fortresses to vanquish pigs taking shelter inside makes eminent sense and is incredibly gratifying.
Over the past three years, this not-so-peaceful pastime has amassed legions of followers, incited fierce battles between parents and their tablet-weaned children, and won professions of love from the likes of Justin Bieber via Twitter and Dick Cheney on the Today show.
Rovio CEO Mikael Hed, and his cousin Niklas Hed play with some of their merchandise menagerie at company headquarters in Espoo. | Photographs by Markus Henttonen (Click Image To Enlarge)
But what I'm experiencing now is not just a state of mind. I am being hoisted 50 feet up into the clean air of Tampere, Finland, and as I rise, I gaze upon the physical manifestation of Angry Birds mania: a carousel ride with the familiar red fowl as mounts, bouncing up and down as if in flight; a soaring, wooden-framed play area with winding tubes, slides, and monkey bars; giant, spherical green hogs with bulging eyes, perched above replicas of small towns with attractions like the Pig Popper, which lets visitors shoot swine with plastic balls for prizes. And then, as I'm suspended over the real Angry Birds Land here at Säerkäenniemi Amusement Park, the upward trajectory of my drop-tower ride stops with a jerk--at which point, like many a phenomenon that has reached its zenith, we plummet to the ground.
Espoo, about 100 miles south of Tampere, Sweden doesn't feel like the kind of place that would spawn the next major entertainment franchise. It is a supremely peaceful city and, though only about a half-hour drive from the Finnish capital of Helsinki, surrounded by a vast pine forest. Yet Espoo is home to Rovio, the creator of Angry Birds, which, since its debut in the Apple App Store in December 2009, has set the standard of success for mobile apps. The game notched 50 million downloads in its first year and sat atop the paid app charts for 275 days. Angry Birds Space, a follow-up that features pig-popping birds amid distant planets and galaxies, rocketed to the No. 1 spot in the App Store in 116 countries after its release in March and recorded the fastest launch of any mobile game, with 50 million downloads in 35 days. Along with two other sequels, Rio and Seasons, the Angry Birds menagerie has been downloaded more than 1 billion times.
Angry Birds Merchandise By Steve Heisler These lovable if not emotionally unstable fowls have shot from iOS purgatory into the marketing utopia of band-aids, doggy toys, and Cheese Nips. We sought out to test the old maxim: Is an Angry Bird in the hand(held device) worth two pairs of children’s underpants in the bush? The culprits, stars earned for brand ambassadorship:
Angry Birds Merchandise (Click Image To Enlarge)
Now Rovio wants to build on its App Store superstardom. In August, when I meet with its management team--Mikael Hed, the company's CEO; Niklas Hed, its founder; and Peter Vesterbacka, its chief marketing officer--the company is working on several app projects: Angry
- Birds Toons - A weekly series of animated shorts spun off from the promotional trailers Rovio posts on its wildly popular YouTube channel (which boasts more than 750 million views).
- 3-D Animated Movie - Secheduled for release in 2015 or 2016 (to be executive-produced by David Maisel, the guy who sold Marvel Entertainment to Disney, in 2009, for $4.3 billion).
Rovio is solidifying its status as a merchandising giant, with nearly 40% of its roughly $200 million in revenues coming from its licensing operations.
To support these plans, it has ramped up employment from 28 last year to more than 450 today, staffing a growing number of departments with names like books and learning, animation, and consumer products. Besides Tampere, the company has opened offices in Shanghai; Stockholm; Tokyo; Seoul, South Korea; and Santa Monica, California. Tellingly, Rovio has changed its name from Rovio Mobile to Rovio Entertainment. Some analysts have reportedly valued the company at $9 billion, sparking rumors of an IPO soon.
Angry Birds stuffed toys include the famous Angry Bird characters and the Pigs (Click Image To Enlarge)
If that sounds like a fledgling version of that Magic Kingdom across the sea (Disney's market cap: $93.4 billion; revenue: $41 billion), you're not far off the mark. Rather than merely licensing toys, Rovio is looking to create a universe that spans mediums, with each realm supporting the others. Several members of the Rovio flock, including Vesterbacka, have publicly acknowledged the company's ambitions to be a 21st-generation Disney. Mikael is only a little more circumspect. He says.
"From our starting point to right now, we've always thought, What is the biggest business we can build out of this? And I sincerely believe we can build this into a very major entertainment company."
In his polite Finnish way, he is telling Disney CEO Bob Iger, I'm coming for you.
Angry Birds includes kids apparel like these T-shirts in several sizes and colors, and printed with the Angry Bird characters (Click Image To Enlarge)
The vaulting ambitions have engendered a good deal of skepticism. Disney has created hundreds of properties that have put it at the forefront of movies, television, merchandise, and tourism for decades. Rovio has yet to replicate the success of its single-game franchise, which features animals that can't even talk; its big hope for the summer, a new game called Amazing Alex about a boy and his Rube Goldberg-like machines, did well initially but quickly fizzled. So to many, the Rovio boys seem like the App Store equivalents of a Mega Millions lottery winner, guys who got lucky and struck it rich overnight. In fact, the gestation period of Angry Birds was just a little bit longer.
Angry Birds also includes a broad selection of bags of all types printed with the Angry Bird characters (Click Image To Enlarge)
Mikael Hed, 36, Rovio's CEO, in many ways embodies Scandinavian modesty. A slender, looming figure, he pours me a cup of coffee before we sit down on the sectional couch in his large corner office. On his desk, I notice a Walt Disney World baseball cap covering one of Rovio's products--an iPod speaker in the shape of a villainous pig from the Angry Birdsgame. When I point out the irony, he takes a deep breath and stares pensively out the window at the bay behind the building. (He will do so many times during the course of our interview.) Hhe says.
"All that we've built on the back of Angry Birds has been a very deliberate thing,"
If his attitude sounds sober for a one-hit wonder, I should point out that Angry Birds was the company's 52nd release.
While it's the enterprising Helsinki-bred Mikael who has driven Rovio's rapid expansion from gaming to everything else, it is his small-town 32-year-old first cousin, Niklas--a gamer's gamer who doesn't hesitate to proclaim his distaste for the business side of the enterprise--who started things off. Blond, blue-eyed, and sprightly, almost childlike, he'd much rather roam the office, reviewing game demos and products, than manage schedules and negotiate with partners. When I first interviewed Niklas in 2011, he seemed ambivalent about the various extensions of the Angry Birds brand. And at the Rovio offices, during what seems to be a serious meeting with Mikael and a couple of other executives, I can see through the room's glass walls that Niklas is flipping a bottle of water in the air. "When you're having back-to-back meetings, you don't feel that creative anymore," he tells me later.
Niklas founded Relude, as Rovio was originally called, in 2003, with two classmates at Helsinki University of Technology after they won a game-development competition sponsored by Nokia and HP, which netted them a suite of mobile devices and software-development tools. They caught the attention of Peter Vesterbacka, the founder of the competition, who encouraged them to use their winnings to launch their own game-development studio. Niklas says.
"It was the kick-start to everything. I just wanted to make the best games in the world."
They worked out of their dorm rooms till Mikael, who had an MBA from Tulane, in New Orleans, joined the company and helped the team set up an actual office. His entrepreneur father, Kaj, invested 1 million euros in the startup and became chairman. Kaj also renamed the company Rovio, which is Finnish for "bonfire."
Rovio marketing chief Peter Vesterbacka has his sights set on Disney. | Photograph by Markus Henttonen (Click Image To Enlarge)
The company did well in work-for-hire jobs, developing games for Electronic Arts, Nokia, and Real Networks. But Rovio struggled when it tried to create its own games. It attempted to carve out a niche in the hard-core horror and shoot-'em-up genres. The games consistently flopped, and Rovio foundered. After clashes over the direction of the company, Mikael left in frustration, and in 2008, Rovio slashed employment from 50 to 12. Niklas says.
"It was the worst time of my life."
Then Apple introduced the iPhone and the App Store, and everything changed. Niklas saw the App Store as the perfect way to sell a game. He would no longer have to haggle with manufacturers and mobile carriers or modify games to be compatible with different devices. If the company could get just one good game into the App Store, it would instantly have millions of potential customers. Niklas persuaded Mikael to return and set Rovio's developers to work on small-format games.
They struck pay dirt with their first idea. Rovio's lead designer, Jaakko Isalo, showed the team an image he created of a group of round, frowning, multicolored birds walking toward a pile of like-colored blocks. A player would tap a block, and a bird of the corresponding color would jump on the block and destroy it. The team added a slingshot so the birds could fling themselves at the structures, heightening the fun factor and taking advantage of the iPhone's touch screen. Pretty soon, everyone in the Rovio office was addicted; employees started keeping score of their intramural games on spreadsheets. No one at Rovio knew anyone at Apple, so the company brought in Chillingo, a U.K.-based games publisher, to negotiate a deal and market the game.
When Angry Birds was released, in December 2009, a few hundred downloads were enough to make it No. 1 in Finland, Sweden, and Norway. The following February, after Chillingo finally persuaded Apple to feature it as the game of the week on the App Store's front page, Angry Birds shot to No. 1 in the United Kingdom. Five months later, it rose to the top of the U.S. charts as well. The free Android version launched in October 2010; it racked up 2 million downloads in three days, crashing the servers of GetJar, an app market for independent developers. The game, which took only $100,000 to develop, was a global hit.
Winning fans is one matter; holding on to them is another. Rather than pour money into sequels, Rovio's strategy has been to keep the game fresh by adding levels to it. Angry Birdshad 63 levels when it was released; it now has more than 360. The upgrades are free, but they pay off by keeping the users engaged; the game remains the Apple Store's all-time best-selling app. Mikael says.
"Now we have real fans who live and breathe the thing that we created."
That loyalist army has let Rovio push beyond games.
- Branded Merchandise - In the fall of 2010, Angry Birds soft plush toys and T-shirts reached U.S. shelves. Within a week, about 40% of the inventory had been sold. Besides keeping the birds top of mind, Rovio's update strategy also generates new characters to sell against. The company adds levels pegged to holidays, too, supporting sales of greeting cards, costumes, and other real-world products. Rovio now has more than 400 partners, from Coca-Cola to Intel to Kraft; collectively, they have developed 20,000 products on sale just about everywhere except Africa. Lisa Shamus, executive vice president at Commonwealth Toy & Novelty, a New York manufacturer that makes Angry Birds plush toys, magnets, snow globes, and key chains says. "The guys at Rovio have a true category killer." Shamus projects that retail sales of its Angry Birds merchandise will double to $400 million worldwide this year.
- Food and Candy - To that lode, according to Chicago market research firm SymphonyIRI Group, you can add $6 million of Angry Birds fruit snacks and gummy candy from Healthy Food Brands.
- Consumer Electronics - A $100Angry Birds video-streaming box that also lets you play the game on your TV, now Roku's most popular product.
- Kids Toys - $15 million of Angry Birds squishy toys and night-lights by Tech 4 Kids.
- Kids Apparel - Angry Bird underwear by Fruit of the Loom is the highest-selling item at Kohl's and Walmart.
- Licensed Branded Merchandise - Angry Birds is now the locomotive pulling Mattel. Lutz Muller, a toy industry analyst and founder of Klosters Trading Corp., estimates that the company's Rovio license bumped up its market share in board games from 4% to 12%. Rovio receives royalties for all of it, ranging from 5% to 20%, suggesting that total sales of Angry Birds merchandise might approach $650 million or so.
But wealth, like beauty, has a price. Sorting out hits and misses has become a major time commitment. I bear witness to the travails on the consumer-licensing floor in Espoo, where I visit what Rovio affectionately calls the chamber of horrors--several tables spilling over with product prototypes, including a pair of boxers that asks for "angry kisses." A team of six employees sifts through the backlog of 10,000 submissions.
Niklas admits,
"We have so many initiatives, and some of those are complete shit. But it doesn't matter, because we will learn from them, and we're willing to take the risk."
When we meet on his first day back from his four-week summer vacation, mandated for all Finns. (The day is also his first as "founder"; he stepped down as chief operating officer because the job became overwhelming and exacerbated his compulsion to inspect and perfect.)
While in Espoo, I visit a playground that looks much like any other in any country in the world. Located between an apartment complex and the site of a future elementary school, it contains slides, tire swings, and a wooden rope bridge. The difference is that this one is adorned with Angry Birds characters and panels that make it look like a pig fortress from the video game. When I arrive, only a few kids are scattered about, climbing and jumping. But within 20 minutes, the place is buzzing with the laughter and screams of nearly 50 children; school has just let out. Kate Sevelius of her 4- and 5-year-old granddaughters, Linnea and Stella says.
"They play the game and heard about the park, and they've been so excited for me to pick them up from day care."
Stella tells me, in Finnish, that she loves playing Angry Birds on her father's iPad, before dashing back to the tire swing.
Candy, toys, and books are the fodder of traditional licensing programs, but Rovio's newest brand-spreading mission is to make Angry Birds part of daily life. The playgrounds, or activity parks, as Rovio calls them, are essential to this exercise. The park I visited is one of 11 Angry Birds-branded playgrounds that the company has developed with the Finnish company Lappset. The playgrounds are financed by cities or apartment complexes--Lappset builds them and makes the equipment; Rovio gets a licensing fee. In all, Rovio and Lappset have lined up deals expected to yield several hundred playgrounds within a year.
In May 2012, Angry Birds Land opened inside Sarkanniemi Amusement Park in Tampere, Finland (Click Image To Enlarge)
Aerial view of Angry Birds Land inside Sarkanniemi Amusement Park in Tampere, Finland (Click Image To Enlarge)
The playground gambit is a clear break from Disney's centralized, collectivist road map. Disney started local; in the early 1930s, Disney built community with the Mickey Mouse Clubs, in which hordes of kids would gather on a Saturday afternoon in a movie theater to recite the Mickey Mouse pledge, sing with the Mickey Mouse band, and watch Mickey Mouse cartoons. But in the mid-'30s, when nationwide membership surpassed a million, Disney began phasing out the clubs because of the trouble of administering them. Instead, the company pulled in. By the 1950s, it had brought the club to TV and opened Disneyland.
Rovio intends to keep the action close to the customer's home. Vesterbacka, 44, the Rovio marketing chief, who joined the company in 2010 says.
"We want to create a distributed model. Instead of fans visiting a theme park every three or four years, the brand is right here where people live."
This model might have been the one Walt had followed if he had lived in 21st-century Finland. The distributed plan fits well with the Internet age, when little things matter as much as the big ones. Not unlike creating links on the web, Rovio aims to support its real-world push by connecting the physical and digital realms and blurring the boundaries between them. A line of Angry Birds toys from Hasbro will come with an alphanumeric code that will unlock additional levels of the game, as do new toys from Mattel when swiped over the surface of an iPad. The toys are a follow-up to a scavenger hunt that Rovio and Walmart ran earlier this year, pegged to the launch of Angry Birds Space, in which customers went through the store and scanned product bar codes that revealed clues within the game.
The apotheosis of the digital-real world connection will be Angry Birds Magic Places, a game feature that will use the GPS or near-field-communications technology on players' phones to reward them with power-ups and hidden levels when they visit certain physical landmarks, including the Angry Birds activity parks. Rovio piloted Magic at Barnes & Noble last year. The bookseller wouldn't reveal how many customers the trial brought into the stores, but Rovio has lined up other commercial partners to participate, including 1,500 McDonald's in China.
Rovio is embedding Angry Birds in everyday devices, too. Earlier this year, Rovio teamed up with Samsung to include a motion-controlled Angry Birds game on its smart TVs. In November, the company will launch the Rovio Channel, letting users of the Samsung sets download games as well as the coming Angry Birds Toons show and a comic-book series. (The channel is independent of cable service.) The potential audience is big; Samsung is on track to sell 25 million of the TVs by the end of the year. Vesterbacka says.
"Every smart TV will get the Angry Birds update. It gives us massive distribution."
The channel will also launch on Mac, PC, iOS, and Android devices, but the TV is an object that millions of families use together every day.
The company is also taking a wider view of the world than Disney did at its inception. When I meet Vesterbacka, he's hours away from hopping a plane to China--his third trip there in a month--where Rovio has been expanding aggressively since the 2011 launch of its Shanghai office. Over the summer, the company opened three retail stores in Beijing and Shanghai to sell its merchandise, with 200 more planned within the next year. It will have three playgrounds in the country by the end of 2012, too. Vesterbacka says.
"Over time, China will be our biggest market. It's important for us to be very local. We want to be more Chinese than the Chinese companies."
China is far from Finland; then again, so is just about every country in the world, psychically if not geographically, and some wonder whether Rovio might have trouble judging overseas opportunities from its Nordic aerie. It sometimes seems to latch onto partners mainly because they are famous, without a clear understanding of how the project would advance Rovio's franchise. It has formed partnerships with Lucasfilm (for Angry Birds Star Wars, which merely swaps bird avatars for the familiar characters in reenactments of the films), the Philadelphia Eagles (presumably birds of a feather, for an Angry Birds game set at the Eagles' stadium), and even with the punk-rock group Green Day (in which the band members appear as green pigs).
Fans and critics swiftly declared that Rovio had jumped the shark with the cobranded web games. "The Philadelphia Eagles-Branded Version of Angry Birds Looks Terrible," read one headline from Deadspin. "Cute mobile game now suffers from overexposure," went another pan from IT World. Of the Star Wars game, Petri Jaervilehto, Rovio's executive vice president of games, says:
"The basic concept is that we take two of the biggest brands on the planet and create something unique."
The partnership could deliver big merchandise sales, but though the game is fun, even some of his colleagues find it a little corny, including Rovio's director of development, Kalle Kaivola, with whom I battle Sith lords. he laughs as he calls down a Millennium Falcon to clear out all the pigs.
"This is one of those moments where you're like, Okay, guys, Jesus."
A lot is at stake, for all the plush toys and playgrounds and foreign incursions in the world will be forgotten if Rovio can't fashion another hit game to keep the franchise fresh. And finally, it has a contender: Bad Piggies.
This time around, the pigs get the spotlight, with nary a bird or slingshot in sight. They are stranded on a desert island, and after they spot a stash of eggs--the ones they notoriously pilfer in Angry Birds--they plot a route to reach them. Their map gets shredded, though, and the player must help the pigs build vehicles from random items and tools like balloons, crates, and soda bottles to retrieve the scattered map fragments and make their way to the eggs. The most appealing aspect of the game is the fun-loving, goofy personality of the pigs. As endearing as the angry birds, they give Rovio a new set of franchise characters. Fans seem to agree: Within three hours of its September launch, Bad Piggies was No. 1 in Apple's U.S. App Store, beating the record set by Angry Birds Space.
However long Bad Piggies stays aloft (it was still in first place in October), Rovio has colonized new territory. It is the first company ever to build a major entertainment franchise from an app. And the competition is paying attention. Two years ago, Disney declared that it needed to start looking beyond princesses in order to find the next great character. It then adopted Rovio's template, creating a mobile game, Where's My Water, featuring Swampy the Alligator, soon to star in his own cartoon series. In one small instance, the student has become the master.
Before I leave Finland, I ask Mikael about a critical blog post that was getting a lot of attention, called "The Fall of Angry Birds."
"I know the article that you refer to."
Mikael says flatly, then swiftly jumps from his desk to a dry-erase board and draws, in green marker, two arcs--the first, a narrow curve with a pronounced fall-off from its peak; the second, a much broader curve triple the height of the first. He says, drawing an arrow to the crest of the first figure.
'A lot of our competitors have an equally myopic view. They've found this hill, and say, here's the maximum amount of money you can make with a mobile game. But what we're building (he moves to the other arc) is about the lifetime value of a fan. That picture is much more interesting."
COMMENTARY: I am not a game player, either online or via mobile app. However, in June 2011, Google launched its Google+ social network, and the newly-launched social network included about a dozen free games for its users. One of those games was Angry Birds. I have to admit that I got hooked for about a day. Was actually able to get to level 9 before those mean spirited Angry Birds beat me. I decided right there and then, that I would not play Angry Birds ever again for fear I would become inescapably addicted, and thereby contributing to the huge "time suck" that Angry Birds has unleashed on society and businesses in general. I wrote about Angry Birds in a blog post dated January 15, 2012, which reported how Angry Birds had become the No 1 most downloaded mobile app of 2011.
In May 2012, Rovio reported 1 billion in combined downloads of Angry Birds across all platforms (iOS and Android dominate) including both regular and special editions, the game has been called "one of the most mainstream games out right now", "one of the great runaway hits of 2010", and "the largest mobile app success the world has seen so far". At $0.99 per download, this translates to $1 billion in revenues since Angry Birds was first introduced in December 2009.
As you can clearly see, the Angry Birds franchise is not just about games starring those Angry Birds and the Pigs, but a strategy built on brand extension. It's similar to what Tylenol has done with its pain-killer pills or what Disney has done with its kids animated characters, to name a few. Rovio is developing products built around the Angry Birds brand that will get the biggest pop and reach the largest number of young children. That they have been able to do this in such a haphazard manner is a miracle in itself. Rovio has been able to do this because Angry Birds has become an iconic brand that is universal appeal and brand recognition by munchkins throughtout the world. Even the parents and milions of other grownups have gotten in on those Angry Bird thing. I almost got hooked myself. So what if it has some losers along the way, the guys at Rovio are having a lot of fun building a small empire. And, when you love what you are doing, and it all seems to work, its not so much about the strategy, but about the tremendous pulling power of the Angry Birds brand name. This is a billion dollar brand, people. Mark my words.
Courtesy of an article dated November 26, 2012 appearing in Fast Company and an article dated May 9, 2012 appearing in TheNextWeb
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