Angry Birds takes off in China

2013/4/18By Monica Zhang, Jane Jiang, China IP,[Comprehensive Reports]

Only months after its debut in 2009, the puzzle casual game Angry Birds had swept the world and become the No. 1 paid app. Numerous Chinese players were captured by the lovely birds. Three years have passed and the number of its fans in China keeps increasing. In May, Rovio announced that its Angry Birds series games had been downloaded over one billion times, among which 140 million came from the Chinese market. China became the second largest market for Rovio, preceded only by the US. In June, Rovio established its first overseas office in Shanghai and announced its plans to build theme parks and open retail stores in China. A month later, the first Angry Birds store began operating in Shanghai. Soon afterwards, Rovio opened another five stores in China in the cities of Beijing, Wuxi and Jinan. In addition, it also authorized an online store on Tmall.com to satisfy its fans all over China. In November, Niklas Hed, one of the founders of Rovio, stated that the number of Angry Birds’ Chinese customers had surpassed the number of American customers. As the world’s No.1 consumer of Angry Bird products, China helped slingshot Angry Bird profits. In the last month of 2012, Rovio announced its cooperation with Harbin city, saying that it would build the first and the largest Angry Birds Ice and Snow World Experience in the famous ice city and making the city a first stop for Angry Birds themed tourism. At present, the Angry Bird Ice World is open to tourists.
 
With the company’s rapid advancement, Rovio is no longer content with restricting itself to merely selling games. Instead, it aims at forging itself into a world class entertainment brand like Disney and Hello Kitty. With both online and offline services, it plans to increase offline revenues generated through the sale of various spin- off products, which the company hopes will account for up to half of the company’s total revenue. China will unquestionably be an important source of that revenue.
 
From “Gladly” to “Unfortunately”
Without a doubt, Angry Birds has gained much popularity in the Chinese market. However, with fame also comes the problem of copycat games and counterfeit spin-off products. Benefiting from the cute image of the birds as well as low prices, counterfeits flooded into the market with lightning speed and at a rate much faster than the genuine products coming out. However, as fans rushed to buy counterfeits, Peter Vesterbacka, Marketing Chief of Rovio, was in a surprisingly good mood. According to him, the voluminous sale of counterfeits helped demonstrate the tremendous demand for Angry Birds spin-off products. Chen Paul, VP of Location Based Entertainment also expressed his willingness to consider authorizing some of the counterfeit manufacturers to produce genuine products.
 
What motivated Rovio to adopt such an open attitude towards counterfeits is self-evident. When the birds had just began to fly into the Chinese market, the large supply of counterfeits may have actually helped the company to open the market and allowed demand to take deep roots in the heart of its Chinese fans. As a matter of fact, Rovio’s novel approach in handling counterfeits did draw the attention of media. At one point, coverage of the popularity of Angry Birds could be found among the headlines of virtually every Chinese newspaper and website.
 
However, as everyone knows, Roxio’s indulgence for the counterfeiting could not last permanently. As the Chinese market continues to open up to the birds, counterfeiters’ initial function of paving the road to popularity has gradually faded away and they have now become pure competitors. In order to achieve its goals of “making offline revenues amount to half of the company’s total revenue,” Rovio started to launch genuine products, seeking to incrementally replace counterfeits. To date, Rovio has entered into cooperation relationships with China Mobile, China Unicom, China Telecom on mobile games, and partnered with Letao.com, a well-known online shoe shopping website, to deliver a line of Angry Birds shoes. It has also opened online and offline shops which offer legitimate products to fans. But due to the negative effects of its soft touch on counterfeits, the sales are not satisfactory. The walk-in stores have not attracted as many shoppers as anticipated and the online store sales are also average in performance. Compared with cheap knock-offs, the high price of authentic products deterred customers who seemed unwilling to pay 78 yuan for a mug, 118 yuan for a plushy piggy bank, or 158 yuan for a red bird back cushion. The genuine products are simply too expensive for Chinese fans. In Rovio’s authorized Taobao store, there were only 700 purchases for the best seller—the red bird dolls; while most products failed to sell over 100 pieces. In contrast with the tremendous downloads of the game, the offline business seems bleak.
 
In October 2012, Rovio changed its attitudes towards fakes, and published an article titled Beware of Counterfeits on its Chinese official website, saying that Rovio “unfortunately” notices that the Chinese market is flooded with fake Angry Birds products, and calls for its fans to support authentic spin-offs for safety and quality warrantees. Not only did the article detail the possible negative impact of purchasing copycats, it also listed all sales channels for genuine Angry Birds commodities.
 
From acknowledging the positives of counterfeits to “we unfortunately see,” it is clear that Rovio’s posture towards fake products has changed. Recently, Henri Holm, the Senior Vice President of Rovio Asia accepted China IP ’s invitation for an interview of. He expressed his opinions on combating counterfeits. He stated that although Rovio is not a litigious company which will hire an army of lawyers to go after counterfeits, it will definitely take every necessary action to protect its IP and trademark rights. He said that Rovio is still open for cooperation with companies that appreciate the Angry Birds brand and are willing to service its fans better. Meanwhile, it will not take a weak or timid stance towards those illegal manufacturers who damage fans’ interests.
 
“There is a lot of education to be done in China and there are a lot of companies who don’t necessarily know or understand what IP is,” said Mr. Holm. “The Chinese government has been extremely helpful to us, and we have been working together to correct such matters. We can see there is a great need for IP protection throughout China, especially after the 12th 5 year plan was announced. At present, the Chinese government is making sure that China is able to climb up the value chain of innovation.” He mentioned that at the current stage, it is really important for Rovio to work with government officials, get the support of local governments and better understand their capabilities.
 
Mr. Holm said that the chief motivation for Rovio to uphold its IP rights is to safeguard the health and safety of its fans. “We are protecting the copyright and trademarks that belong to Rovio. At the same time, we are safeguarding and looking after the fans who love the Angry Birds brand. We are looking to delight and surprise the fans by giving them the best possible experiences.” He thinks that the Angry Bird brand is based on the mobile game. Rovio has begun to authorize various products; whoever seeks to partner with Rovio must live up to its quality and safety standards. Rovio hopes that with qualified products, fans will be attracted to follow the brand, which will in turn help to promote the game. It also believes that with authentic products to meet market demand, knock-offs will eventually be swept out.
 
Reportedly, in 2012, Angry Birds copycat games were frequently found to be carrying computer viruses, which invades users’ privacy, creates shortcuts for advertisements and downloads apps automatically without providing users notification. In January 2013, Rovio launched free downloads for Angry Birds Rio. The company did not explain why, maybe it was just a New Year’s gift, but it certainly helped the company to shift fans from copycat games to the authentic version.
 
Angry Birds playing China card
Rovio is on the road to becoming a first rate entertainment media company. It presently sees its goal to delight fans as much more important than it fight against piracy. In 2012, Rovio launched the new game called “Bad Piggies” in which the lovely green piggies are heroes, as opposed to being the “bad guys” as they are in Angry Birds.
 
“Our fans, the hundreds of millions of people connected with this brand, were asking on social media all over the world ‘how about the piggies?’ So we decided to develop a game all for the piggies. Not only that, piggies are also all over the social media channel, so they can talk about things that are important for them.” Mr. Holm remarked when talking about the new game, “We do everything to delight and entertain the fans. And this is always about what the Chinese fans want, the piggies are super cute and very active, they have now become the superheroes in their own game.”
 
To further explore the Chinese market, Rovio has made many moves. The company delivered game versions targeted directly at Chinese fans. “One of our strategies is ‘Angry Birds to China, China to the World,’” said Mr. Holm. “We have issued game editions in seasons especially for Chinese fans, such as the moon festival version and the dragon Chinese New Year version. These versions have been popular not only in China, but also outside of China. That is a really important part of our strategy.”
 
Mr. Holm told our China IP journalist that in China, there are over one billion mobile phones, among which 200 million are smart devices, and the number keeps soaring up. Android system allowed Rovio access to these 200 million players who can all become users for authentic games. To Rovio, the best way to promote its offline products and establish the fame of the company is to expand the popularity of the game. In order to provide Chinese fans with unique user experiences, Rovio organized many offline events, and plans to locate an Angry Birds theme park in each and every city of China as well as cooperate with China’s world famous places of interests. Building an icy world in Harbin is the first test flight of the birds.
 
However, to fulfill Rovio’s intention of building itself into a second Disney, Rovio still has to breakthrough and create more individual characters. As the Amazing Alex met its Waterloo in 2012, figuring out how to cultivate new images with high IP value like the birds will become the chief issue facing Rovio.
 
 

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