The Angry Birds once had grand ambitions. For a while the mobile game in which irate cartoon birds do battle with egg-stealing green pigs seemed to be everywhere – on t-shirts, kids’ backpacks, even plastered on the Sentosa cable car.
In 2009 the app market was in its infancy. Today it is bigger and much more fragmented, with many more games making it harder for developers to gain market share.
First released in 2009 and chalking up more than 2.5 billion downloads, the first Angry Birds and its offshoots spawned a pop culture phenomenon, especially so in Asia were it came close to challenging perennial favourite Hello Kitty.
Now it seems the Angry Birds have had their wings clipped. Amid plunging earnings Rovio, the Finland-based start-up behind the game, announced in August it was shedding 260 staff – a third of its workforce – saying it had tried to do “too many things” on the back of the Angry Birds brand.
The move marks a comedown from just a few years earlier when Rovio executives spouted ambitious plans to make Angry Birds a global digital entertainment franchise with theme parks, educational programmes and other spin-offs.
But with consumer fatigue setting in, Rovio is facing the harsh reality that one success does not a sustainable business make.
Good timing
The Angry Birds have been knocked off their perch in the app store rankingsThe firm is now pinning its hopes on the recently launched Angry Birds 2 game and an upcoming Angry Birds movie to reignite the brand. Analysts are sceptical of its chances.
Strategy expert Professor Andrew Delios of NUS Business School says that with the release of the first Angry Birds game Rovio was fortunate to ride the initial wave of the smartphone boom, capitalising on both an engaging concept and good timing.
“Their success was a consequence of good design and luck,” he says. “But for every success like it there are thousands of failures. Many for no particular reason other than simple bad luck.”
In 2009 the app market was in its infancy. Today it is bigger and much more fragmented, with many more games making it harder for developers to gain market share.
Delios says that in the case of Angry Birds and Rovio, the best option might simply be for the owners and creators to take the money and run – cashing in on the remaining brand value by selling the firm and investing the funds in a new project.
“Tying further spin-off products to the game, as Rovio has tried to do, could create value but only if complimentary capabilities are present,” he says. “What we’ve seen is Rovio learning the hard way that without these capabilities such ventures bring with them high risk and high cost.”
Instead of focus on its own in house spin-offs, Delios suggests Rovio might have done better to secure licensing deals or tie-ups with companies that had the experience and capabilities they themselves lacked.
Overstretched
Professor Kulwant Singh, head of the department of Strategy and Policy at NUS Business School, agrees that Rovio seems to have overstretched itself.
Startups are inherently ambitious, but that can often lead to them overestimating their capabilities and striking gold with a mobile game, no matter how original, doesn’t necessarily translate into being good at other things.
“Most organisations lack the competencies to succeed against competitors in very different businesses,” Singh says. “I would have advised greater focus with more investments into future generations of games and related apps.”
The challenge for many start-ups and small firms – and the reason why many fail, especially in the tech space – is that they are unable to progress beyond their first product. Success, Singh says, is about striking a critical strategic balance.
“They need to develop competencies for the next generation product while also trying to maximise the present product. At the same time they need to grow the organisation, hire people and formalise operations, all of which requires heavy investments and business expertise and which most start-ups lack the resources for.”
From virtually nowhere in the late 2000s mobile gaming has ballooned into a global industry forecast to be worth more than $100 billion by the end of the decade. But while this rapid growth has built a potentially lucrative market, it is also a very fickle one.
Dazzled by triumph
NUS Business School Professor of Marketing Ang Swee Hoon says Rovio did well to capitalise quickly on the runaway popularity of the Angry Birds brand. But she says a common fault with tech start-ups is that they tend to be dazzled by initial triumph while failing to see that runaway successes can rapidly run out of steam.
“The app industry has only been around for a few years, but we’ve seen many times that mobile games especially tend to have an extremely short life cycle and low consumer loyalty,” says Ang.
In order to avoid the one-hit wonder syndrome, she suggests start-ups consider recruiting staff from diverse backgrounds, bringing a broad range of perspectives to the firm. Likewise they should aim to keep a flat organisational structure to allow rapid cross-fertilization of ideas needed in a highly competitive and fast-changing industry.
But even with these measures, scoring hits in mobile gaming retains a large element of luck.
“For all the games that are released, true successes are thin on the ground,” says Ang “And those that do succeed find themselves constantly facing the entry of ‘me-too’ competitors.”
After all, where once Angry Birds dominated mobile screens today it is Candy Crush that reigns supreme.
Meanwhile tomorrow’s next big thing is just a download away.
