Are Angry Birds (or Rovio) Really Challenging Disney?

By Gina Fegan, CEO, D-Media Network

Slush Gathering, HelsinkiI’ve just come back from the aptly named ‘Slush’ gathering for digitally savvy people, held in Helsinki. The morning gloom and evening dusk seemed to merge but the light levels didn’t affect the warm welcome and no nonsense approach to start-ups, entrepreneurs, media and telecom giants, sparking interest in their bright ideas and new technologies. The trend towards applying creative digital solutions to address major social issues was clear, with healthcare solutions and quality of life tools in abundance. There also seems to be a general drift towards the recognition that if people are engaged and entertained in a playful or elegant way they will use the product and this may change their behavior. Imagine enjoying filling in your expenses form!

I was there for a meeting of the European Digital Think Tank and introductions to some Russian and more Finnish digital media focused clusters of companies. As a tangible and relevant action from the group, we are planning an event to visit St Petersburg early summer 2013. It will be centered on a program of facilitated company-to-company meetings. There is an option to go by boat from Helsinki to St Petersburg – the Digi Boat trip? Get in touch if you are interested in joining the group.

I digress; my personal takeaway from the event was the Rovio story. We all know about Angry Birds – it came from nowhere, some tiny Finnish start-up, and they hit the jackpot.  A massive success, but it was mainly free – so how does that work? Then the criticism: “there is not real business model. These games companies make a fuss and are all hot air, you couldn’t plan an industry on a hit like that.” Or could you?

Cut to today, when Rovio are planning to increase their ‘active’ users from tens of millions to hundreds of millions, with a target of reaching one billion active daily users.  Has anyone ever done this before? Is there a model? Yes. They are pitching themselves against Coke who, I believe, serve-up one billion units a day.

It may sound fantastic but, given their past experience, they may be right. As a principle, they never take anything for granted, and they always surround themselves with people who are the best in their particular area to learn from – so in film that would be Lucas, wouldn’t it? Yes, they actually are making the film ‘Angry Birds Star Wars’. Sounds a bit weird? Well the CMO, Peter Vasterbacka, described it as a bit like peanut butter & chilli – it is a bit weird but you get to like it and it may become addictive…

Back to a bit more reality, they currently have tens of millions of active users and they are profitable. Their main markets are the US and China (China has just surpassed the US) and they expect the revenue from the physical goods to exceed the virtual goods sometime next year. Thinking about it, that’s a reversal of the majority of businesses seeking to expand online, isn’t it?

Angry Birds MerchandiseSo high can they go? The approach from the start has been to focus on the single brand of Angry Birds. And it’s not true that they came from nowhere, they had developed 52 games before Angry Birds. How could they afford to do that without making money? Or going bust?  With a wealthy backer, which gave them the space to be able to take risks  and experiment, also the experience that when they had a hit they had to maximize it. Listening to co-founder Niklas Hed, it seems they launched their first physical ‘Bird’ almost by accident, but they knew it was going to fly as the first woman passing the stand with the ‘prototype’ bird attracted the question ‘What’s that?’ ‘You’ve heard of Angry Birds…?’ ‘Yes, of course!’ The online store was born and linked to the game. Overnight they had Paypal contacting them directly and refusing to release their funds as it looked like some kind of money laundering exercise – hundreds of thousand of pounds from nowhere… literally overnight.

Moving on to the soft drinks and chocolate. Angry Birds is the number one soft drink in Finland and the chocolate is moving in the same direction. The basic concept of finding the best partner who shared their vision started with a new salesman in a Finnish soft drinks company seeing Angry Birds, thinking ‘why shouldn’t we be part of that?’ and picking up the phone to Rovio. He was passionate, their quality has track record, and Rovio were ambitious. The rest is history.

The empire is expanding – but Disney? Well, there was this article in Forbes magazine basically suggesting that they were a flash in the pan, unlikely to last, and comparing them to the might and longevity of Disney.  They hadn’t really thought about it but weren’t too happy with the negative comparison – hence the animated feature film created on the basis ‘we can get into your business too’. Then came the reflection on theme parks… Hearing how much Disney invest in the construction of any single new theme park they thought ‘no, not for us, it’s too high a risk, too much investment and too much time to plan and construct.’ Solution?  ‘Your neighborhood theme park’, creating the best playground in every neighborhood. They have stuck to their principle and found one of the best constructors of children’s play areas in Finland with a long and successful track record to partner up with and I believe the first wave are about to open. So starting with 10’s in Finland the plan is much bigger…

If they realise their ambition, they will be competing directly with Disney in the licensing, merchandising and theme park areas of revenue generation.

Bad Piggies! (From 'Angry Birds')Interesting, isn’t it?  This is a real example of how starting as a bright idea in the virtual world, combined with hard work, luck and ambition, can take you to the top. Oh, and I forgot the wealthy backer providing the chance to fail upwards! So from a policy perspective, could we create another Rovio? Unlikely, but we could provide the fertile ground from which bright ideas get the chance to germinate, change the rules to provide fertilizer to encourage growth, facilitate the pollen of collaboration and wait for the fruit to ripen. Like the organic simile you can’t guarantee results but you can tip the odds in your favour.

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