Rovio, makers of the popular mobile game, Angry Birds, announced last week that their Chief Executive, Mikael Hed, will leave the company in January. The move comes as a result of declining profits for the mobile giant.
As reported by the Wall Street Journal, Hed will be replaced by a former executive from Nokia, Pekka Rantala, who joined the company earlier this year. Rantala’s first task in reforming Rovio will be to diversify the company’s portfolio. Currently, Rovio relies on nearly half of its revenue on Angry Birds licensing, including deals with Hasbro and H&M, who sell a variety of Angry Birds themed products, such as clothing and toys.
Since Rantala joined Rovio, he has tried to switch the games' revenue model to a free-to-play model with micro-transactions inside the game. How this strategy would affect the gameplay of Angry Birds remains unclear, as this change has taken longer than expected to fully implement. Earlier this year, Rovio released a free-to-play Angry Birds RPG, which deviated greatly from the series’ formula gameplay, in the form of Angry Birds Epic,
The free-to-play model has been extremely profitable for Rovio’s main competitors, King Digital Entertainment, who make the Candy Crush Saga, and Supercell, who make Clash of Clans. As reported by the Wall Street Journal, King made approximately $1.8 billion last year. That’s nearly twice what Supercell made, who brought home $890 million. But both numbers dwarf Rovio’s revenue stream of just $220 million.
While that number is a slight increase for Rovio from its previous year, an increase in staff size, from 500 to 800 employees, along with other expenses, has resulted in plunging profits. Rovio’s 2013 net profits were down 52%.
Despite this news from Rovio, the company is still moving forward with several new games. The tenth installment in the Angry Birds franchise, Angry Birds Transformers, is due out on October 15. Rovio is hoping that Transformers will follow the example of its previous franchise cross-over, Angry Birds Star Wars. That game hit number one on the U.S. iTunes App Store in 2.5 hours when it was released in 2012.
What do you think? Are you excited for Angry Birds to change to a free-to-play model? Let us know in the comments.
-Source: The Wall Street Journal