Disclosure: The organizers of Slush paid my way to Helsinki. Our coverage remains objective.
Espoo, Finland — Rovio was virtually unknown in the gaming and entertainment businesses before it scored its biggest hit, Angry Birds, which was the Finnish firm’s 52nd attempt to make a hit mobile game.
Now, Rovio has left its little nest near Helsinki, Finland, and its ambition is to make Angry Birds as successful as Mickey Mouse. With nearly 2 billion downloads, the organization is well on its way to doing that. The Angry Birds empire includes games, books, plush toys, clothing, cartoons, and movies. Rovio’s goal is to surprise and delight the world with new forms of entertainment as a global media-and-entertainment company.
I recently visited Rovio’s headquarters in an Espoo high-rise, not far from the corporate offices of Nokia, just across a bridge from central Helsinki. The trip was part of a visit to Slush, the Finland-based startup tech conference organized with heavy Rovio involvement. I was able to catch up with various Rovio employees like Peter Vesterbacka, Mighty Eagle and chief marketing officer, while taking a media tour of its office. Thanks to the success of Rovio and Supercell (the maker of Clash of Clans), Finland is now on the map of the global game business. It has 180 game companies with 3,000 employees, most of them funded at the beginning by Tekes, the Finnish government’s technology investment arm.
Three students from the Helsinki University of Technology started Rovio in 2003 under the name Relude. Its founders were Niklas Hed, Jarno Väkeväinen, and Kim Dikert. They had participated in a mobile game development contest at the Assembly demo party, which Nokia and Hewlett-Packard sponsored. Vesterbacka organized it. The trio won with a multiplayer title called King of the Cabbage World. They sold it to Sumea, which eventually became a Digital Chocolate studio. In January 2005, Relude got its first round of investment from Niklas Hed’s uncle, Kaj Hed, who became chairman. The firm changed its name to Rovio (it means bonfire in Finnish) Mobile.
The legendary story was that these Finnish students created 51 games at Rovio before they created Angry Birds, No. 52. Most of the hits were selling around 500,000 to 1 million copies. The games had an average critic’s rating of 80 percent, which was very good. But a lot of them weren’t selling, and Rovio never thought to update an existing release. The Java platform that the company used to build its titles was too fragmented on a worldwide basis.
Then, the iPhone debuted in 2007. At the time, Rovio had 12 employees. When Apple opened the iPhone’s app store in 2008, the team sensed a huge opportunity. The roots of Angry Birds started to grow in early 2009. Jaakko Iisalo, a senior game designer, showed his colleagues a screenshot of angry-looking birds with no wings or legs. That inspired the whole team to turn that screenshot into a bigger experience.
The team knew that two-dimensional, physics-based artillery games were very popular. They needed to invent a slingshot because the birds didn’t have any wings. As the development proceeded, Rovio’s existing games were generating no revenues. By the end of 2009, the financial situation became desperate. At about this time, the mobile developer got marketing help from Vesterbacka, a former HP employee, who went by the title Mighty Eagle and later became chief marketing officer. And Niklas Hed’s cousin, Mikael Hed, joined as CEO. Mikael’s father, Kaj, remortgaged his parents’ home in an effort to save the company. Mikael pleaded with his father not to take that risk, but Kaj did it anyway. That gave the business enough cash to develop Angry Birds.
The iPhone had a dazzling display and a touchscreen. Rovio’s designers took advantage of the screen’s swiping function, which resulted in an intuitive way to control a slingshot and a user-interface feature that was unique to mobile devices. Console players didn’t swipe. They tugged on joysticks or mashed buttons. The iPhone was simpler than that, and it could reach a much wider audience of people who had never played games before.
In December 2009, the company released the final Angry Birds, an addictive and amusing puzzle title that took advantage of the aforementioned slingshot physics. People could spend hours with it or snack on it during a five-minute bus ride. It took about six months to hit the No. 1 spot in the U.S. app-store charts. At the time, 160,000 apps were available in the app store. Most had a life cycle in the top ranks that lasted two weeks. Angry Birds stayed at the top.
Then, it conquered territory after territory, and its iconic bird characters became the symbols of the modern mobile zeitgeist. Rovio continuously updated the release with new levels, as if it were operating a service. People have now downloaded the game in various variations almost 2 billion times.
“They finally hit the jackpot,” said Sara Antila, communications director at Rovio.
The studio succeeded in part because Rovio was one of many mobile companies to use the power of the iPhone and Google’s Android mobile operating system to disrupt console games and the Nintendo 3DS portable. Rovio sold its games for much cheaper prices, at 99 cents to $1.99. And it also made free-to-play versions, which either featured ads or in-app purchases, where a player could pay real money for virtual goods. Under this model, people could try out a game and invest money in it if they truly found it immersive. That was better than spending $20 to $30 on a Nintendo handheld title or $60 on a console offering, only to find it was a dud.
The trouble for mobile game companies was that the market soon saw a flood of hundreds of thousands of free-to-play titles. These studios had to take the risk of spending money to acquire users or face obscurity. But if the lifetime value of a customer for a free-to-play game was just $1.99, then a developer couldn’t justify spending more on that game per user in advertising expenses. Yet Angry Birds stood out as the first immediately recognizable brand among the pack. It could promote itself in a viral fashion, without spending much on ads at all. That became a powerful financial engine. Rovio rode this wave of disruption of the traditional game industry.
Angry Birds also rose above gaming, becoming a worldwide cultural phenomenon. An Israeli comedy show, “Eretz Nehederet,” satirized the failure of the Israeli-Palestinian peace process by featuring Angry Birds in negotiations with their enemies, green pigs. The video segment went viral on the Internet. TV comedians Conan O’Brien, Jon Stewart, and Daniel Tosh referenced Angry Birds in sketches. TV show 30 Rock referenced it, and celebrities like writer Salman Rushdie and the United Kingdom’s former Prime Minister David Cameron confessed to playing it.
Vesterbacka formally joined Rovio as an employee in May 2010. In Rovio’s book, Angry Birds: Hatching a Universe, he said, “I decided then that I was not happy with making Angry Birds big. I wanted to make it huge.”
During 2010, Mikael Hed set the course to turn Rovio into something much bigger. In March 2011, the company raised $42 million in venture funding from Accel Partners and Felicis Ventures. In July 2011, the firm changed its name to Rovio Entertainment, and it embarked upon the strategy to make the world into an Angry Birds universe, with its funny mascots adorning everything from clothing to animated cartoons and movies. By May 2012, Angry Birds hit 1 billion downloads.