Angry Birds maker Rovio’s IPO seen less likely

31 Aug 2015 | Author: | No comments yet »

Angry Birds maker Rovio plans layoffs in restructuring.

After the reorganisation, Rovio will focus on its three key business sectors including gaming, media and consumer products, said the company in a press release, reports Xinhua.Perhaps what is most shocking about the announcement is the fact that Rovio laid off staff en masse as recently as December of past year, when 110 employees lost their jobs. “Rovio’s growth and eagerness to explore new business opportunities over the past few years has been exceptional”. There are over 30 billion reasons actually: according to analyst firm Newzoo, revenues from mobile sales this year is expected to touch $30.5 billion by the end of 2015.

In a statement, Rovio CEO Pekka Rental admitted his company had attempted to expand too aggressively following the unprecedented success of Angry Birds. While releasing an Angry Birds movie would have made a lot of sense a couple of years ago, striking while that iron was red hot, now it feels like too little, too late. The company isn’t going anywhere anytime soon, but this move to cut 260 employees will make the studio a little more focused on specific things than being all over the place.

Rovio has offices in Espoo, Stockholm, London, New York, Los Angeles, Vancouver, Shanghai, Seoul and Tokyo – this isn’t your average indie game development shop. Rantala said that in the company’s present financial conditions, Rovio must focus on what it does best, which is, producing fantastic animation movie, offering magnificent gaming experiences and delighting fans with great products.

From a time when the game that pit adorably angered birds versus surly swines was all the rage, these days you never hear about anyone playing the game any longer. Since its initial success with “Angry Birds“, Rovio has expanded its brand into merchandising, an animated cartoon series, and even float-making for parades. While the game has already been dowloaded close to 50 million times in about a month, it seems the business model for the free-to-play title isn’t bringing in the numbers the company hoped for.

So what is it that causes games to hook into people’s collective fancy, to swell to astronomical levels of popularity and trendiness, then suddenly vanish from the collective conscious? As reported by TechCrunch and numerous other outlets today, Rovio is cutting 260 jobs, laying off what sounds like a pretty big chunk of its total workforce. It also seems that people are less and less interested in plush dolls: “The year on year decline of consumer product licensing revenues impacted revenue and profit”. Despite record breaking numbers of downloads for the Angry Birds 2 game earlier this year in the month following its release, the long-awaited sequel has already started to fall in the charts. The profit was dragged down mainly by the decline of sales in consumer by-products, which was nearly halved from 73.1 million euros in 2013 to 41.4 million in 2014.

There’s probably been too much time and money poured into the project now to abandon it, but the studio’s only hope now is if it can pull off some Lego Movie-like magic. It’s hard to imagine a studio once as important as Rovio now seemingly depending on what looks like a film that could go either way to regain its prominence. The massive lay offs will apply to all Rovio employees, excluding those involved in the production of the “Angry Birds” movie in Canada and the US. That fleeting high is the result of a very real chemical process taking place in your brain–when a neurotransmitter called dopamine gets released, which stimulates that part of your brain responsible for the feeling of pleasure. The company said the planned reductions would apply to the whole organization, excluding those working on the movie in the United States and Canada, and most of the cuts will hit its operations in Finland.

But in our mobile gaming example here we’re way down the spectrum of intensity–dopamine is basically the feel good hormone that plays a big role in our well-being. Scientists have conclusively proved that video games can activate the brain’s pleasure circuits, much like eating a slice of chocolate cake or hearing good news can.

The ones at the top of the pack–the ‘crack app’ developers that create games that are so inherently addictive–have nailed that formula of hooking users into regular and dogged spells of engagement. The mega hit mobile game from King Digital Entertainment that sees 356 million unique users from over 200 countries blipping away at those colored orbs every month. To hook first-timers in, initial gameplay is made to be easy so that sense of ‘achievement’ is attained quicker: from simply clearing a line to scoring a glorious ‘Sugar Crush!’, that pleasure-inducing dopamine is triggered at very frequent intervals. This nuance–the hint of unpredictability–plays a significant role in yearning to know how it’s going to end (contrast this with a Temple Run or a Flappy Bird, which can get frustratingly repetitive.) Over time the game gets progressively tougher, urging the brain to try harder to get at that next dopamine rush.

Which results in that casual addiction, manifested so perfectly in that accountant-looking chap on the local train, pointedly swiping away at his screen. Looking back at the mobile games that have won hearts over the last several years:–Angry Birds, Clash of Clans, Flappy Bird, Temple Run et al–there’s an intriguing pattern that seems to emerge: one that ties into the specific element of gratification. The game itself was built on the premise of a cause (pulling back that bird in the catapult) and effect (gratifying destruction of the pig’s hideout) playing out over about 6 or 8 seconds. Screen upon screen saw many variations of this theme, each delivering an unmistakable sense of fulfilment in that quest to score the elusive three stars.

This propensity towards games that deliver quicker doses of gratification (and dopamine) seems to be the order of the day among the legions of casual gamers.

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