gaming industry Life After Angry Birds

In her first interview since becoming Rovio Entertainment's new CEO, Kati Levoranta tells Handelsblatt about the success of Angry Birds, why it's so hard to create a second hit and how to make profits when most people download games for free.
Creating another superhit isn't easy.

Rovio Entertainment, the Finnish start-up that shot to fame with computer game Angry Birds, is now looking to follow up on that success.

But the company's new chief executive, Kati Levoranta, told Handelsblatt that won't be easy. The entertainment industry has changed significantly and people rarely pay for video games any longer, she said.

Ms. Levoranta took the helm at the company early this year after working for Rovio's legal department as general counsel. Working with such a creative company has been significantly different from her experience at her former employer Nokia Siemens Network, she said.

Looking toward the future, Ms. Levoranta said Rovio has a promising outlook in all of three of its divisions: gaming, technology and media.

Handelsblatt: Ms. Levoranta, you're a devoted triathlete. What was your last race?

Kati Levoranta: That was Ironman in Mallorca in September 2015.

How did you do?

My time was 14 hours, two minutes. For me, it was all about getting to the finish line, and so I took it fairly easy. What I love most about triathlon is that your training helps you to clear your head of work and, in general, to improve your own performance.

If you were to compare Rovio to a triathlete, what stage of the race would you say the company is in at the moment?

In triathlon, as you know, there are three very different disciplines. And you can only be successful if you’re on top of all three. It’s similar at Rovio. We have three very different business areas: Obviously, the games, and secondly the media business, with our movie coming out this May, along with an animated series and consumer products. And thirdly Hatch, the technology platform on which we run our games.

Most triathletes tend to have one weaker discipline. Which of its disciplines does Rovio need to work on?

We need to go back to our roots as a start-up, with fewer decisions made centrally. That’s why we created two largely stand-alone business units for the media and gaming businesses. In our technology division as well, there’s a massive amount of growth potential hiding under the surface. A lot of what we develop there is only used internally at the moment. But there is a huge business potential in Hatch too.

 

Angry Birds was the company's 52nd game.

 

Your predecessor left the company after about a year at the top. What went wrong there? 

Last year was tough for Rovio. We had to let about 200 staff go, about a third of our total personnel. Pekka Rantala led the company through these tough times. Now that the restructuring is complete, we are taking it up a gear again. It could just be that I’m more suitable for the job.

That makes it sound almost as if your predecessor was always just going to be the interim boss during the clean-up work?

Let me put it this way: He was needed for certain jobs, and once he had done those jobs, a change at the top was a natural consequence.

How has Rovio come so far?

After the success of Angry Birds, Rovio grew very quickly. In line with that, we took a lot of staff on but didn’t really anticipate that at some point, this peak demand would subside. After our explosive growth, you could say that we are back in business-as-usual mode.

To stick with the triathlon analogy: Did Rovio take the run too quickly?

We tried a lot of different things out. Not all of it worked.

What exactly didn’t work?

Okay, not worked is perhaps putting it a bit strongly. We tried to create other strong brands alongside Angry Birds, for instance. With a few of these ideas, we decided not to launch them onto the market straightaway. We also had a learning division that consisted of the Angry Birds Playground concept​. We’ve now outsourced that, because it’s not part of our core business. That division stands a much better chance of success within a dedicated company.

Before you came to Rovio, you worked in Munich for the joint venture Nokia Siemens Networks. What tempted you to make the jump from a major corporation to a start-up?

The step from Munich back to Finland was entirely practical. My husband is a pilot with Finnair and always had to fly from Munich to Helsinki for each job. Over time, that turned into a pretty tiring commute. And I continued to work for NSN in Finland for another 18 months before I moved to Rovio.

You came to Rovio as chief legal officer. Usually, lawyers like orderly processes and clear structures. A chaotic start-up environment must have been a nightmare for you.

At some point, I realized that at NSN, we had hundreds of processes. At Rovio, there were not quite as many. I looked at it as a massive opportunity: To be able to think really objectively about which rules we actually need and which ones we don’t. Obviously, even start-ups need structure. But Rovio employs mainly creatives, and they need as much scope as possible to stay creative.

Rovio Entertainment's Earnings-01 angry bird

In five years, will Rovio still be the company we associate with Angry Birds? The brand currently accounts for more than 90 percent of your turnover. 

Angry Birds is a fabulous brand. It has brought us enormous success and will continue to do so. But in five years’ time, Angry Birds will certainly account for less than 90 percent of our turnover. I firmly believe that Rovio needs to be a company successfully managing a portfolio of several different brands. We can develop these ourselves. Or we can have a look at promising brands outside the company. In five years’ time, we will be a company creating and marketing films and games and consumer products ​around a number of successful brands – that’s our core business. We’ll also see how far we can go marketing our technology platform.

If you look at the mobile game development sector, there’s hardly a single company that has managed to land more than one super-hit. Rovio’s got Angry Birds, King Digital Entertainment’s got Candy Crush, Zynga’s got Farmville. Why is the second hit so difficult?

The mobile gaming sector has changed massively. Instead of premium games you have to pay for, free games are the norm at the moment. It’s a real challenge to earn money with these. The premium games were first of all programmed and then launched onto the market, where they were either successful or unsuccessful. With the free games, it’s more about bringing out an initial version. And then you have to tweak it until you get your mega-hit which will earn you money – for instance, through in-app purchases. There are so many factors involved in whether it works that it’s really hard to predict.

That doesn’t sound very optimistic.

And yet I am very optimistic, because I know that success comes with time, with being constantly prepared to try things out, constantly testing new games and improving them, but also taking being knocked down in stride. At the end of the day, Angry Birds wasn’t the first game Rovio launched.

What number was it?

It was number 52.

 

Handelsblatt's Christian Rickens covers companies and markets. To contact the author: [email protected]