How does Rovio make money from Angry Birds?

Rovio makes money primarily by selling in-app purchases, in-game ads and paid games under its Angry Birds franchise. Despite waning popularity, Angry Birds remains Rovio‘s cash cow accounting for over 75% of its game revenues.

Let‘s take a deeper look at how Rovio monetizes Angry Birds to the tune of over $300 million annually.

The meteoric rise of Angry Birds

Angry Birds was launched in 2009 as a simple, casual slingshot puzzle game. But its hilarious animated birds, silly pigs and easy mechanics made it insanely addictive.

Within a year, Angry Birds was a full-blown gaming phenomenon with 100 million downloads. Its popularity grew exponentially, especially after the release of Angry Birds Rio in 2011 which came pre-installed on mobile devices.

Angry Birds downloads jumped from 100 million to 2 billion between 2010 and 2012 (Source: Rovio)

Propelled by its overnight success, Rovio‘s revenues skyrocketed from just $6.4 million in 2009 to over $200 million by 2013. The Finnish startup was valued at $9 billion at its peak, more than major game publishers like Zynga or EA.

However, as hype faded, Angry Birds began to lose its grip. By 2014, revenues started declining as players moved on to candy crushers, clans and slithering snakes. But it remains a cash cow for Rovio over a decade later.

In-app purchases

The bulk of Angry Birds revenue comes from in-app or in-game purchases.

Gamers buy virtual currency like gems, coins or pigs using real money within the app. These are then used to unlock bonus levels, abilities, characters and other content.

For example, in Angry Birds 2, players can buy Mighty Eagle coins starting at $1.99 for 20 coins. More expensive packages go up to $99!

While only around 5% of players make in-app purchases, this big-spending minority generates major profits. Angry Birds 2 raked in $43 million from in-app purchases in 2021 alone.

According to data from SensorTower, players have spent over $500 million cumulatively on in-app purchases across the Angry Birds franchise since 2013.

In-game video ads

Rovio displays short video ads in between Angry Birds gameplay sessions. Players can optionally view these ads to earn gems or other rewards.

Analysts estimate Angry Birds titles generate over 100 million ad views per month. With a blended CPM (cost per thousand impressions) of $10-20, that translates to at least $1-2 million in monthly ad revenue.

Ad monetization accounts for about 15-20% of overall Angry Birds revenue. Top brands pay a premium to get their ads featured in one of the most popular mobile games ever.

Paid or premium games

While the vast majority of Angry Birds titles are free to download and play using the freemium model, some older games need to be purchased upfront.

For example, Angry Birds Rio and Seasons still charge $0.99 on app stores. Angry Birds Star Wars was a paid title as well before being discontinued.

Though paid games contribute negligible revenue today, early premium titles like these helped make Angry Birds a $30 million business prior to adopting in-app purchases.

Just how important is Angry Birds to Rovio?

Angry Birds remains deeply ingrained in Rovio’s DNA, despite diversification efforts. Here are some numbers highlighting its importance:

• 75% of Rovio‘s game revenues came from Angry Birds titles in 2021
• 90% of total company revenue was from gaming, mostly Angry Birds
• 23 Angry Birds titles have been released over the years
• Angry Birds celebrated its 10 year anniversary in 2019
• Cumulative Angry Birds downloads exceed 4.5 billion

Rovio legends Mikael Hed and Niklas Hed, creators of the original Angry Birds, continue to head the company’s strategy.

It is evident Rovio still relies heavily on milking the Angry Birds cash cow by regularly releasing new titles. An estimated 2-3 new Angry Birds games are launched every year.

Attempts to diversify beyond Angry Birds

Rovio has made multiple attempts to diversify its business beyond Angry Birds over the years:

• Acquired several small gaming studios to expand its portfolio
• Released titles in other genres like Battle Bay, Sugar Blast and Small Town Murders
• Expanded into movies, merchandising and theme parks

Unfortunately, none of these efforts have managed to recreate Angry Birds‘ astronomical success. Almost all of Rovio‘s revenues still flow from some flavour of Angry Birds.

For instance, the Angry Birds movie grossed $350 million against a $73 million budget which seems like a blockbuster. But it contributed under 5% of 2016 revenues.

Licensing and merchandising bring in only about 3% of total revenues currently. Distribution partners compensate Rovio to use the Angry Birds brand on toys, apparel, movies and more.

Has Angry Birds lost its wings?

While Angry Birds remains a cash cow, its popularity has certainly waned over the years due to:

• Intense competition – Candy Crush, My Talking Tom, PUBG, Fortnite, Roblox and countless others have captured gamers‘ attention.

• Changing gaming preferences – casual gaming has taken a backseat to more immersive, multiplayer experiences.

• Lack of innovation – core Angry Birds gameplay has become repetitive after minimal changes across titles.

• Availability of free alternatives – many similar physics-based destruction games are available for free.

Between 2012 to 2014, Angry Birds was generating over 200 million downloads each year. But by 2021, that figure had dropped by over 80% to 35 million.

Revenue has followed a similar trajectory after peaking at $306 million in 2012. Rovio now pulls in around half that amount annually from Angry Birds.

Year	Downloads	Revenue
2012	263 million	$306 million
2021	35 million	$150 million

Angry Birds downloads have fallen 87% in a decade while revenue halved (Sources: Rovio, SensorTower)

Bleak future without new mega hits

For Rovio, the billion-dollar question is – what after Angry Birds?

13 years since its launch, no other Rovio title has come close to replicating Angry Birds‘ magic. New games get relegated to the ‘also ran‘ pile soon after launch.

Rovio‘s 10 biggest games make up over 95% of its 380 million all-time downloads. Angry Birds alone has 46% market share.

This glaring lack of hit new IP remains the biggest roadblock to Rovio‘s future growth.

Industry experts believe Rovio is underprepared for a post-Angry Birds future. The publisher likely needs to score another global blockbuster to sustain its $1 billion+ valuation.

Final thoughts

In my opinion, Rovio should leverage the brand equity of Angry Birds to branch out into merchandise, movies and virtual reality games.

There could also be scope to make Angry Birds more social and multiplayer focused. I believe Rovio needs to get serious about M&A to buy hot titles and studios.

Refocusing on innovation and R&D to find the next Angry Birds is absolutely necessary to avoid ending up as yet another one-hit wonder.

To summarize, exploiting Angry Birds through in-app purchases, in-game ads and paid games remains Rovio‘s bread and butter for now. But unless the company can successfully diversify its portfolio, the halcyon days of its ill-tempered avians could be numbered.