Rovio, creator of the once-popular game Angry Birds, has announced it plans to lay off roughly 16 percent of its staff. If you're wondering how the Finnish mobile gaming giant could suffer such a fate, you must have missed the news released by The Guardian a few days ago.
Basically, the game is losing players. While it is still one of the most popular games worldwide, it has lost an estimated 63 million players since 2012.
The Angry Birds game series might be losing players, but at least the rate at which they're losing money due to the decline isn't as drastic. Where they've lost 24 percent of their players, sales have only declined 1.2 percent. Their merchandise is still a hot commodity – about 45 percent of their revenue comes from their Angry Birds-related products.
What's The Deal?
Sources within the company say the reason they're choosing to lay off employees is due to the fact they expected to grow a lot more than they actually did. The 16 percent they plan to lay off represents up to 130 people, according to CEO Mikael Hed. They plan to pare down their company to three areas with what Hed says have “the highest growth potential.” Those are media, games, and associated merchandise.
That means the Angry Birds Playground will likely get the axe, the educational program developed alongside the University of Helsinki to boost children's performance in the areas of math, music, science, and other subjects. Hed said that although the news is unfortunate, he'd rather put the initiative on hold and revisit it when they notice growth actually occurring.
Hed spoke to The Guardian about numerous launches in the works, saying that although the news is unwelcome, they don't want to take away from “delighting our fans with products they love.” It remains to be seen if this lack of growth will prevent many of these new products from launching.
How They Got Here
In 2013, Rovio went from 500 employees to 800, being likened to another big name in gaming, Finns Supercell. They made a staggering $892 million in 2013 alone from just two free-to-play games. It just proves that if you make the game addicting enough, people will certainly make those in-app purchases!
Rovio is also getting into the free-to-play arena, but hasn't really seen the success Finns Supercell has. However, the fact that Rovio has the merchandise element to its business model is its saving grace. Without the stuffed animals, books, toothbrushes, and pajamas, would Rovio remain standing?
Keep On Keepin' On
Despite the loss of employees and a dwindling user base, Rovio plans to release new games in the Angry Birds series like Angry Birds Transformers, and the recently released Angry Birds Stella. Rovio has also evolved the classic game, bringing Angry Birds Epic, a roleplaying game, and Angry Birds Go, a racing game, to the mobile gaming arena.
And beyond changing up its gaming strategy and cutting down its work force, Hed plans to step down as CEO, being replaced by Pekka Rantala, former Nokia marketing exec. Hed will become chairman of its animation division.