On March 6, the mobile app industry witnessed something that it had not seen since April 2010. No Rovio games in the US Top 90 chart of iPhone apps generating most revenue. According to Appshopper, Angry Birds Star Wars has dropped to #91 and Bad Piggies to #100 when it comes to making money. Both still fare well in the download charts at #8 and #13.
Something fascinating has happened in the app industry over the past two years; download volume performance has decoupled from revenue performance almost entirely. A few years ago, the original Angry Birds spent 22 months in the Top 20 chart of biggest revenue generating apps in America. The latest Angry Birds game struggled to stay 2 months in the Top 20.
The app industry revenue generation is now utterly dominated by free downloads that lure consumers into paying for in-game features month after month. The top-grossing iPhone app in America, Clash of Clans, is merely #70 on the download chart. Ironically enough, this emblem of the new era of mobile gaming was created by Supercell, a Finnish company now located in the old Nokia headquarters. Just 50 feet from the Rovio HQ.
The extremes in the mobile app market are only growing more pronounced. Rage of Bahamut, an addictive card battle game, no longer makes it to the Top 1'000 of iPhone apps. Yet it remains the #14 app in America when it comes to revenue generation, far above the new #1 download app, Temple Run: Oz. Very, very few people download the Rage of Bahamut. But those that do end up enslaved by it. Industry rumors peg the daily average revenue per active user of this game to be as high as 80 to 90 cents. That is an amount of money that translates a free download to a massive cash cow even if it gets only 0.5% of the Angry Birds download base.
Both Apple's iOS and Google Play ecosystems are witnessing the same phenomenon. It cuts across Americas, Europe and Asia. The age of download-driven revenue generation is over. This has left old mega-franchises like Angry Birds with strong ongoing download performances, but rapidly shrinking share of direct game revenue. It is possible that Rovio has been so busy chasing down glamorous marketing partners from KISS to NASA that it simply forgot to focus on developing basic game mechanics.
Of course, Rovio has plenty of fish to fry. It is about to launch a major new animated series; it is prepping a full-length animated movie; its amusement park, board game, calendar, candy and soda empires are growing rapidly. Rovio's franchise revenue growth could be quite spectacular in 2013. But at the same time, it is stunning that the game brand that has hit 1 billion downloads globally can no longer compete with far smaller rivals in direct revenue generation. The mighty Rovio is being beaten by dozens of 1-3 man development teams in the revenue charts across the world. Both Zynga and the mighty Electronic Arts suffer from a similar affliction: neither really figured out effective in-app revenue strategies early.
This lost opportunity is particularly galling when you consider how easily Rovio could have attempted a deeper monetization drive. Those games that currently rule the revenue charts help consumers build permanent fantasy farms, villages, towns, tribes and empires. Clash of Clans, Hay Day, Minecraft, Rage of Bahamut and other current revenue champions all have the same common feature: they give consumers the chance to build something permanent in a complex, vivid fantasy world. Consumers don't like paying for ephemeral things; they don't mind paying for something that has a permanent impact on the game universe. It would have been so easy for Rovio to build an Angry Birds world that would bind its fans into permanent construction projects years ago. It may still not be too late to do that. But Rovio has lost a huge opportunity to be one of the leaders of the in-app revenue revolution. It must soon find a way to be at least a competent follower.
