New Rovio CEO Faces a Host of Challenges

Can the creator of Angry Birds be more than a one-hit wonder?

Is it possible to build a viable company (let alone an entertainment empire) on the back of a mobile video game app that may have seen its day? Good question, and Finnish tech firm Rovio is hoping a guy named Pekka Rantala has the answer.

Rovio is the company behind the Angry Birds mobile game, which slingshot its way into global pop culture in 2009. At its height, Angry Birds boasted of being the world’s most popular app—more than half a billion at last count. In case you’re one of three people on earth who haven’t tried it, the game lets players catapult birds into the fortifications of a gang of evil green pigs. Corny and addictive, the game was a blockbuster, clutching a spot on the Top 20 biggest revenue generating apps for 22 months.

In October of 2010, some guy named Justin Bieber even tweeted, “I love the game Angry Birds its [sic] so sick.”

But as Rovio has learned, the world of video game apps is even meaner than those green pigs. Tastes in mobile games changed rapidly. Case in point: Candy Crush Saga, currently ranked number two on Apple’s App store. (A game like Tetris only with jelly beans and gumdrops. Time killers, all.) But jellybeans don’t have personalities, and Rovio thought its birds were cute enough to create the avian version of Mickey Mouse.

It was not to be. The company’s 2013 revenues came in flat, while net profits of $37.2 million were less than half of what the company banked the previous year. Last week Rovio said Mikael Hed was stepping down after the company reported a slip in rankings on the Apple Apps store to 27. When Hed said, “I will be very happy to pass the hoodie to Pekka Rantala,” he may have expressed more than he realized.

Rovio’s challenge, of course, is creating games to equal Angry Bird’s popularity. A peek at the company’s site reveals many games that play variations on Angry Birds (including Angry Birds Star Wars, Angry Birds Rio, Angry Birds Seasons, Angry Birds Epic and so on)—but not much in the way of hot new franchises. Rovio was also slow to adopt the “freemium” model, which allows people to download games for nothing but charges them for upgrades later on.

To be sure, the company did plenty of things right, too. When it came to licensing characters, Rovio nearly gave Disney a run for its money. Angry Birds characters morphed into stuffed animals, party supplies and action figures. The company has also done a brisk business in school supplies—everything from backpacks to pencil pouches. In 2011, Adweek named then-CMO Peter Vesterbacka as a winner of its Brand Genius award, in large part because of Rovio's merchandising prowess. (Rovio still scoops nearly half of its revenue from its licensing business.)

As Rantala takes over the nest, it’ll be his job to make sure that Rovio isn’t a one-trick bird. Meanwhile, the company says that an Angry Birds feature film is still on target for the summer of 2016.

@UpperEastRob Robert Klara is a senior editor, brands at Adweek, where he specializes in covering the evolution and impact of brands.