Outfit7 Ends The Year With 270M Downloads and Big Plans Around Merchandising

Outfit7, which has built up an expansive empire of talking character apps, is ending the year with 270 million downloads and close to 80 million monthly active users.

It’s an unlikely success story given that the company was founded by a group of Slovenian search engineers and is formally headquartered in Cyprus. But it’s one that’s emblematic of the egalitarian nature of the Android and iOS platforms, where companies from countries like Finland and Slovenia can emerge as leading developers.

As for next year, the company plans to dive more into merchandising and the freemium model. The company recently signed a deal with brand licensing agency Beanstalk to bring out T-shirts, mugs and other paraphernalia to retail chains like Hot Topic.

Outfit7 started off the year with a mixture of paid apps and then free, advertising-supported ones. Then it started selling creative ways to interact with characters inside apps. For example, if users went for in-app purchases with Talking Ben the Dog, he would perform chemistry experiments which would sometimes blow up in his face.

Outfit7’s latest app is Talking Pierre the Parrot, who does cowboy dances and smashes teacups on the floor. Buying the upgrade in the app gets him to splash water around.

Even though Android is overtaking iOS in terms of active usage for companies like Facebook, Outfit7 says most of its business is still on iOS. This mirrors data we’re seeing suggesting that iOS is producing about four times the revenue that Android is able to support for top-grossing developers.

“The lion’s share of all our revenues this year have come from iOS,” said Paul Baldwin, the company’s chief marketing officer. “But we expect 2012 to be a two horserace.”

The company has its products out on both Android Market and Amazon Appstore, where it’s seeing downloads in the five and six figures per day despite Amazon’s smaller base. “Both stores have become extremely viable for us over the last quarter,” Baldwin said.

The company has been through a couple of big changes this year. It hired a new chairman Narry Singh after the previous chief executive Andrej Nabergoj stepped down and went on to found his own company Iddiction. Nabergoj told us in the beginning of that year that smartphones were the new children’s toys and Outfit7 had the potential to become the next Hasbro or Mattel. He envisioned seeing as many as 500 million downloads by year-end. (But 270 million is definitely not shabby at all.)

Baldwin is still sticking to that original vision of being an entertainment brand and more than just an app developer. However, unlike Angry Birds-maker Rovio Mobile, Outfit7 is exercising a little more humility.

“I’ll leave the outlandish comments about going public on the Hong Kong stock exchange to Rovio,” Baldwin said. “Those guys have done a fantastic job, but their statements are about shock value, which I get a kick out of, if nothing else.”