The Angry Birds brand is in big trouble
Falling consumer product business, which includes toys, clothing and brand licensing, adds to problems of the Finnish company which has yet to see a repeat of the success of its original Angry Birds game launched in 2009.
Mobile gaming is a risky business. There's little-to-no brand loyalty from consumers to the studio themselves, meaning that once interest inevitably wanes in a title, the companies can be left high-and-dry. And there's also the unpredictable virality of apps: One can become an international sensation overnight, and then fade away as quickly as it came.
Rovio is now feeling these effects: The Finnish company said its 2014 operating profit fell to $10.7 million from $39.1 million in 2013 and $82.3 million in 2012.
Its total sales fell 9 percent last year to $169.6 million. Revenue from mobile games, however, increased 16 percent to $118.5 million as new games such as Jolly Jam and Angry Birds Stella Pop! helped its total annual downloads to reach 600 million.
"Sales of consumer by-products did not move according to expectations, and surely we are unsatisfied over the result of our licensing business," chief executive Pekka Rantala said in a statement.
The struggles are a sign of the dangers of becoming overly reliant on a single flagship brand.
The company's ambition is to become an entertainment brand on a par with Walt Disney, expanding the Angry Birds brand into a spin-off TV series as well as educational playground concept. It is working on an animated movie, expected to premiere in 2016.
Rantala said he was confident over the future and promised to come out in the coming months with major partnership deals related to the movie.
The original Angry Birds game, in which players use a slingshot to attack pigs who steal birds' eggs, is the No.1 paid mobile application of all time, according to Rovio. But failing to build on these past success with new products has left the company in a precarious position.
It's in stark contrast to King Digital, the company behind the wildly successful Candy Crush Saga. King Digital has had a rough couple of years, including the most disastrous IPO of 2014 and flagging interest in its key games. But in February 2015, stocks soared after the company announced that, for the first time, less than 50% of its revenue was coming from Candy Crush Saga. It had succesfully diversified its portfolio, proving there is life for the company beyond Candy Crush.
In contrast, Rovio was forced to cut 110 jobs last year - 14 percent of its total workforce.
(Reporting By Jussi Rosendahl, editing by David Evans)
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