Finnish upstart rival Supercell knocks Angry Birds off its perch

Last updated: March 8, 2013 5:31 pm

Upstart knocks Angry Birds off its perch

By Tim Bradshaw in San Francisco and Robert Cookson in London

Angry Birds has become a familiar sight at the top of Apple’s app-store leaderboard. Rovio’s blockbuster mobile game and its many spin-offs first topped the iPhone’s charts in early 2010 and is now back at number 1 in the US and other countries after a week-long promotional giveaway.

But the apps market has changed radically in the three years since Angry Birds first burst on to the iPhone. While Angry Birds and its 99 cent spin-offs, Bad Piggies andAngry Birds: Star Wars are still getting plenty of downloads, they no longer lead the app pack in generating revenues, ranking towards the bottom of the 100 “top grossing” apps of Apple’s store.

That’s not bad in a marketplace of more than 800,000 apps. But where Angry Birds once was atop the revenue charts now sits Clash of Clans, a free title from Rovio’s Finnish neighbour Supercell.

Over the past year, the “freemium” model has come to dominate mobile games. Players of Clash of Clans can purchase extra “gems” for $5 to $100 at a time, which are exchanged in the game for cannons and towers to defend from plundering barbarians and attack invading goblins.

Ilkka Paananen, chief executive of Supercell, said: “As an industry, we’ve trained hundreds of millions of consumers to believe that games should be free to try.”

“Had Clash of Clans charged a download fee, it would have [substantially] reduced the number of people who play it.”

Rovio has long offered in-game extras to its Angry Birds games, for power-ups such as its 99 cent Mighty Eagle, but they do not seem to have remained as lucrative in the face of competition from the likes of Electronic Arts’ The Simpsons: Tapped Out, Backflip Studios’ DragonVale and Kabam’s Kingdoms of Camelot.

“Over 90 per cent of the top-grossing apps in the last quarter had in-app purchase monetisation and the vast majority were free,” says Jack Kent, mobile analyst at IHS Screen Digest, a media researcher.

Many apps choose to offer a free initial download and then charge for extras to encourage more players to try out the app, at a time when being discovered in a store of hundreds of thousands is increasingly challenging.

“When you are a company the size of Rovio and have hundreds of millions of users, you can serve that audience through a mix of business models,” Mr Kent says. “New entrants have to go with the free model because they have to get awareness. Last year a lot of new companies got to the top of the charts.”

As an industry, we’ve trained hundreds of millions of consumers to believe that games should be free to try

– Ilkka Paananen, chief executive of Supercell

Rovio says that making the app free for a week is merely part of one of its regular promotional pushes. In any case, the company is less reliant on revenue from app downloads than it was. Rovio’s business now includes a wide range of merchandise including toys, playgrounds and, from mid-March, a new Angry Birds cartoon series, to be screened online.

As the Finnish company looks beyond apps to its merchandising business for additional revenues, its ambition to become a new, digital Disney will require more characters than Angry Birds. Last July’s release of Amazing Alex, its first new franchise since 2009, was popular for a few weeks then fell steadily down the rankings.

Figuring out how best to make money from app stores is fast becoming games developers’ top priority. AppAnnie and IDC, a market researcher, reported last month that in the fourth quarter of 2012, spending on mobile game downloads to smartphones and tablets exceeded that on dedicated handheld consoles such as the PlayStation Vita or Nintendo DS, for the first time.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: