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Business Analysis & Features

How Finns keep preying on success of Angry Birds

Spin-offs keep coming for Rovio, the firm behind the global phenomenon. Gideon Spanier reports

More than 1.7bn people around the world have downloaded the mobile games. Millions have bought the fluffy toys and the T-shirts. Some have even watched an "in-app" TV cartoon episode, launched earlier this year, or even visited one of the branded theme park sites.

Finnish firm Rovio's madcap idea of creating Angry Birds – a game that originally involved firing birds through the air to smash pigs – has become a global phenomenon. And the spin-offs don't stop.

Coming soon is a full-length Angry Birds movie after Rovio announced it had recruited two Hollywood veterans behind Disney's Wreck-It Ralph and Sony's Cloudy With a Chance of Meatballs to direct the animated 3D film.

No wonder many regard Angry Birds as mobile's killer app. Its "freemium" business model means the games are free and only a minority of users pay for premium services and in-app extras in the digital world.

But such is the brand's scale and reach that fans who might pay nothing digitally have been clamouring to buy tangible, physical products, which are almost entirely paid-for and generate valuable revenue.

Rovio doubled revenue last year to €152.2m (£129.3m) but merchandising tripled, and represented 45 per cent of turnover. Net profit was a chunky €55.5m after tax. "Consumer products originally started as an extension," says Naz Cuevas, senior vice-president of licensing. "It has essentially turned into an entertainment experience of itself – sometimes independent of the game."

Cuevas will be speaking about how Angry Birds disrupted the games market at Brand Licensing Europe (BLE), a three-day trade fair that opens at London's Olympia on Tuesday. She stresses games remain "the vital organ of the organisation", but adds "You should expect the other parts of the business to disrupt the market".

Jami Laes, Rovio's executive vice-president of gaming, who will also talk at BLE, says there is plenty of opportunity to generate revenue within the game itself. "When you have that kind of reach," he says, referring to the 1.7 billion downloads, "there are other ways to monetise it" apart from just persuading players to make in-app purchases. Examples include sponsorship, advertising and partner-ships such as a spin-off, branded Star Wars version of the game. Laes says the next big opportunity is "to merge both physical and digital" – to get a physical toy to interact with the device. That is what Rovio has done with its Telepods range of toys for its Star Wars game.

"When you take that toy and put it on top of the device, it 'speaks to the game,' " he says, explaining how the "interaction" allows the player to "teleport" that physical character into the digital game and "unlock" new experiences. "This is now a way to play the game in a new way," says Laes, adding that is "just scratching the surface" of what is possible.

Rovio, which is thought to be majority-controlled by the Hed family, who helped to found it back in 2003, is determined to be more than a one-hit wonder.

"We're here to stay not for 100 days but for 100 years," says Cuevas. Laes also has his eye on the future: "Even though you could call Angry Birds the killer app on mobile, I go to sleep at night thinking the killer app is what we're working on next."