Is the Angry Birds Business Model Unique?

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Angry Birds Space just broke a new record becoming the first app to hit 50,000,000 downloads in only 35 days, two weeks better than Draw Something, the previous record-holder. Across all platforms, Angry Birds boasts over 700 million downloads.

With the Angry Birds business model officially a craze, publisher Rovio is monetizing everything from plush dolls, candy, toys, and even a potential movie.

Better yet, the market capitalization for privately-held Rovio is rumored to be several billion dollars. Not bad for a six year old company founded by three twenty-something’s from Finland.

Here’s the question of the day: Is the Rovio business model innovative? On the one hand, Angry Birds has grown into far more than a game and Rovio’s revenues are growing exponentially. Until now, mobile game companies have not successfully crossed the chasm into mainstream products. The traditional model for non-console games has been a freemium business model where upgraded users pay for additional features or goodies. Monetizing the 5% of users willing to upgrade is a decent model since the product has low cost. However, Rovio has created a model where most revenues are generated by peripheral items. This would indicate a very different business model than most game developers.

However, Rovio’s business model seems awfully similar to a toy company, Marvel comics, or Disney’s business model. These companies create powerful characters or brands and then license those brands to toy, apparel, cereal, and numerous other companies. The only difference between these traditional business model’s and Rovio’s is that the old school business modelers get paid to create the brand and then leverage it into other areas instead of give it away. Here are some additional examples:

  • Barbie dolls: Licensed for 50 years to movies, party favors, apparel, and more
  • SpongeBob: Licensed for toys, apparel, party favors, giant mascot dolls, and more
  • Internet sensation Fred. Started as the annoying high-pitched giggler on YouTube. Leveraged his internet fame to a Nickelodeon show and more
  • Sports stars: License name for shoes, Wheaties, apparel, public appearances
  • Star Wars: the mother of all licensors sold rights to everything but the kitchen sink
  • Harry Potter/Twilight/Hunger Games: books are a double threat because they first make money on the book business model then shift into the movie model for addition profit.

So, is the Rovio business model innovative? The answer probably lies somewhere between Rovio’s business model being nothing new and Rovio’s business model being completely innovative. The real lesson is most likely that a powerful brand can be leveraged in astounding fashion. Additionally, the growth of mobile communications is creating branding and business model opportunities for more than just bits and bytes. For those of us in the brick and mortar world, this axiom can be flipped- our brick and mortar assets can probably be leveraged into the digital world just like Angry Birds moved from digital to brick and mortar.

What lessons can be learned from the Angry Birds business model? Do you think the model is innovative?

Republished with author's permission from original post.

Jim Muehlhausen
Aside from his books "The 51 Fatal Business Errors and How to Avoid Them" and "Business Models for Dummies," Mr. Muehlhausen has been published in various publications including Inc., Entrepreneur, The Washington Post, MSNBC, The Small Business Report, The Indianapolis Business Journal, Undercar Digest, Digitrends, and NAICC Journal.

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