With Angry Birds-Maker Rovio’s $42 Million Round, The Race Is On To Build a Durable Mobile Gaming Empire

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By Kim-Mai Cutler Comment

Rovio, the Finnish maker of the biggest mobile gaming smash hit to date Angry Birds, took an unprecedented first round of funding with $42 million from Accel PartnersAtomico Ventures, and Aydin Senkut’s Felicis Ventures.

This adds the company to list of mobile developers like TinyCo and Pocket Gems, which have all recently taken funding from top-tier venture firms. These funding rounds are set to fundamentally change the mobile gaming landscape, putting other non-funded players at a financial disadvantage when they want to launch new titles. (We wrote a piece on this yesterday.) Expect the cost of promoting new titles to rise significantly; we’ve already heard that the price to put a game into the Top 25 through a pay-per-install network has risen about 50 percent in the last two months to $30,000.

Rovio says Angry Birds has amassed an impressive 40 million monthly active users. During the Game Developers’ Conference in San Francisco last week, the company said it was nearing 100 million downloads.

While Angry Birds has been an extraordinary success, lots of questions remain —

1) Can Rovio create other valuable IP? Angry Birds, was somewhat infamously, the studio’s 52nd title and came after eight years of churning out other games. It has since focused much of its efforts in the last year on deepening the Angry Birds franchise through special seasonal releases and now even plush toys, of which about 2 million have been sold. However, the nine-figure valuation implied by the size of the funding round is surely predicated on a few other Angry Birds-like blockbusters. While Rovio can market new titles to its enormous existing base, can it do it again?

2) When will Rovio really experiment with free-to-play and in-app purchases? To date, Angry Birds has either been a paid title or it’s been free-to-trial with an upgrade to the full version. During the last year of its blowout success, other game developers have found financial success by making their titles free while offering some kind of in-game currency. Capcom Mobile’s Smurfs’ Village, TeamLava’s line of Bakery Story and Restaurant Story apps and Gameview’s Tap Fish are examples. Angry Birds has been so prolific with the paid app route that it has yet to experiment with virtual goods, meaning it’s potentially forgoing millions of dollars in revenue.

3) Can it succeed with social? Rovio has said it’s also bringing the Angry Birds franchise to Facebook sometime in the spring, but the game, as currently designed, is not social. Players are usually on their own, although there’s a light GameCenter integration. Like social gaming companies who have tried to find success on mobile, moving to a different platform outside of a company’s core competency can be quite difficult because the viral channels and nature of the device are different. Glu Mobile brought its action title Gun Bros to Facebook earlier this year and has amassed about 525,000 monthly active users, which is decent for a first-timer but far short of how a top-tier social gaming title performs.

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