Mobile Mavens

Rovio's risk: Are layoffs evidence of lean times ahead at the house that Angry Birds built?

Rovio's risk: Are layoffs evidence of lean times ahead at the house that Angry Birds built?

Earlier this month Rovio hit the headlines when the Finnish giant let 130 members of staff go thanks to "assumptions of faster growth" that are yet to materialise - 

As you might expect, the Angry Birds firm drew quite a bit of criticism when the news broke, with some branding Rovio a one trick pony. However, is the news really that unexpected?

So, we asked our Mavens:

Is there an argument to say this is a layoff that should have happened sooner, and that it's part and parcel of the ebb and flow in the mobile business?

Could this have been handled better, and what do you think it says about Rovio in 2014?

 

William D. Volk Chief Futurist Forward Reality

I still believe that Angry Birds is an amazing franchise. The problems Rovio faces are multi-faceted.

Rovio achieved most of its success in an era when paid apps were still a major part of the mobile marketplace's revenue picture. That is no longer the case. Free-to-play games dominate the top grossing charts.

As of today, the top thirty four top grossing iPhone apps are F2P, with #35 being Minecraft: Pocket Edition. As someone whose Apple II games were selling for $25 a pop in 1983, no one misses premium games more, but this is the reality we face.

I have total respect for Rovio and I believe they will continue to do cool games.
William D. Volk

The transition to F2P has been difficult for Rovio. The F2P Angry Birds Epic shows up at #110 in that chart. It's clearly an attempt to move from "in app items for power ups" type of game (what Rovio did with its first F2P efforts) to the sort of progress map and RPG basis for more successful F2P games. The problem is time.

King spent years achieving the highest "pay participation" rates in the F2P space. While most F2P games only see a few percent of players participating in the economy, Candy Crush Saga has achieved double-digit paying participation.

Rovio faces some difficult choices. I'm not sure the Angry Birds franchise lends itself to the 'Skinner Box' type titles that King and Supercell have perfected. The market will determine that.

Angry Birds is loved all over the world. Maybe a different model makes sense for it, perhaps subscription, even with lower revenue. Perhaps they should build a Clash of Caws game, with an wholly different game mechanic, but I'm not sure that's what fans of the game are looking for.

Is Angry Birds Epic the right move for the franchise?

Perhaps they need to create a different franchise or derive one form the existing one, as they did with Bad Piggies - much in the same manner as Nintendo has done.

As to the layoffs, no one likes doing them but typically when this happens, the company probably needed it to happen earlier.

One opportunity for Rovio that it may be missing is publishing. Player acquisition costs have approached the lifetime value, only a few games achieve profitability. Rovio could seek out the best independent developers and use their existing titles as a marketing channel for these games.

I predict we will see more developers move to the publisher model, as the app stores do a pretty poor job of curation on their own. We just did this with our Crickler word game, moving it from our catalogue to Magmic, simply because they had a good number of players of the sort to like this sort of game. 

Rovio could also use publishing to find the "Next Big Thing", which is one reason why triple-A video game companies are also starting indie sub-labels.

I have total respect for Rovio and I believe they will continue to do cool games.

Keith Andrew With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.

Re: The publishing thing – this is something Rovio has attempted to do twice, both with Rovio Stars and since then a more formal publishing enterprise.

Doesn't really seem to be taking off though.

Kevin Corti Principal Spidershed Media

I think William sums up the situation that Rovio finds itself in perfectly.

It managed to produce a "game of its time"; the perfect blend of play mechanic, instantly appealing and memorable character and theme, perfect on a small form factor touchscreen, with an accessibility and novelty (to the mass casual player audience) when the App Store was in its formative years and when there was precious little else to meet that need.

I often say that hardly anyone in this space truly knows exactly what they are doing, e.g. successes are very often propelled by no small dose of luck but that is somewhat flippant.

Everyone finds it hard to repeat such stellar success but the real winners win over the longer term.
Kevin Corti

What I actually mean is that the successes come from bloody brilliant execution (in all parts of the game design, development and marketing process) coupled with very significant 'timeliness'. Angry Birds exemplifies this perfectly for me.

I can't know the extent to which Rovio was aware of the timeliness factor but the way that they subsequently turbo-charged the brand building and broad commercialisation will feature in numerous marketing text books (if there are still such things) for decades.

Clearly, however, building upon the success of the Angry Birds brand to create and grow other brands has been a much more significant challenge (although most mobile publishers would kill for the sales figures that Rovio's 'lesser' successes have had).

Whilst I can't know what Rovio's accounts look like, I wouldn't assume that a seemingly high number of redundancies (130) means that it is in any real trouble. I'd wager that they hired based on a strategy of maintaining aggressive growth and are now 'only' growing merely pretty strongly. I think they have simply taken the foot of the gas somewhat.

I know that some will think this adds fire to the more general discussion about how repeatable success is in a mobile F2P world though, when so many of the successes are single games whose lesser siblings achieve much less.

All relative -  Boom Beach would be a massive success for anyother other than Supercell

Farm Heroes Saga and Pet Rescue Saga, for example, are only at about 20 percent and 10 percent of the sales figures of the significantly more mature Candy Crush? Supercell's Clash of Clans is still doing $1.3m/day whereas the newer Boom Beach is 'only' hitting $133,000 a day.

The point being, though, that everyone finds it hard to repeat such stellar success but the real winners win over the longer term. This is still an immature part of the industry with plenty of technology and business model innovation and overall market growth to come. If I had to bet on any one company being equipped to exploit that for the next decade, it would be Rovio.

Vladimir Funtikov Co-Founder Creative Mobile

Rovio took on a lot of risk when it decided to convert a mobile game into a global franchise, and a game studio into an entertainment company.

What Rovio has achieved is extraordinary.
Vladimir Funtiko

Over the years we might have got used to it, but what they've achieved is extraordinary. A one trick pony with a global brand and a 10-digit valuation. I could live with that.

It is playing a long-term game and in the long run it's not about how many people it employs but whether the customers still like the brand after x years.

Apparently Rovio miscalculated somewhere. It's not unexpected, but it doesn't answer the main question, and it doesn't say that much about Rovio as a company.

It's just something that happens when you grow and take on risks.

Oscar Clark Consultant, Co-Founder Fundamentally Games

Oscar Clark has been a pioneer in online, mobile, and console social games services since 1998. He is also author of the book, Games As A Service – How Free To Play Design Can Make Better Games.

Rovio has had a lot of ups and downs in more than 10 years. I fondly remember when we first put up Darkest Fear in 2004, the first proper Rovio game on Three and I'm still a huge fan of what that game's ambition.

Angry Birds remains phenomenal but given the market trends at the time and since it's incredibly difficult to plan and the pressure to employ more people as you are growing is very pressing - it's easy to get caught out by events.

That’s not to say that there aren’t mistakes and as others have said the move to freemium and to publishing hasn't been a smooth journey for them. However, they have a good team at the heart of the organisation and an ambition to be lead by brands rather than business models (most of the time).

What Rovio was making before Angry Birds

It does raise a more general question about the stability of the games industry as an employer in general. The last few years has seen (particularly in the UK) a lot of turmoil for employees of games companies; most notably the bigger publishers.

It's easy to get caught out by events.
Oscar Clark

There is a potential bigger problem behind this announcement which shows for me that mobile industry is not immune from the forces which affected the console market. I feel we need to find better working arrangements for developers on hit-based projects; and perhaps more thinking about delivering longer term projects such as Games As A Service.

I seem to remember reading in the IGDA developer satisfaction survey that game developers have had an average 3.8 employers in the last 5 years. That is something which I worry puts the stability of the industry as a whole at risk. Of course companies need to have the flexibility to grow and shrink without putting people's livelihoods at risk, just as employees need to be able to access a diverse range of projects to expand their skills; but something seems out of whack to me.

I don't have a good answer for how to solve it, but I think its something deeply entrenched in our industry that needs more discussion.

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.

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