Inside track: Rovio

It would be no understatement to describe Angry Birds as the first bona-fide phenomenon of the smartphone gaming revolution. With over 1 billion downloads and 200 million monthly active users, it has brought portable gaming to the masses like nothing else before it. Ingenious in its simplicity – the game involves catapulting a flock of vengeful, multi-coloured birds into enemy pigs – Angry Birds has spawned countless movie tie-in games, merchandise, books, television shows, theme parks and even an upcoming Hollywood film.

The meteoric rise and rise of Angry Birds came just in the nick of time for its Finnish developer, Rovio Entertainment. Founded by cousins Mikael and Niklas Hed in 2003, Rovio (the word means ‘bonfire’ in Finnish) began life as a third-party studio, developing games primarily licensed from other publishers. By 2009 it had released more than 50 titles, but was struggling to make a success of its business. The recession bit hard and Rovio was forced to slash headcount from 50 to 12 in a bid to stay afloat. Management soon realised that a change in strategy was needed and began to focus on developing its own intellectual property to ensure its long-term survival. They were quick to spot the potential afforded by Apple’s App Store, which had opened its virtual doors the previous year and now came pre-installed on the iconic new iPhone 3, and set about creating an original game for this new platform in the hope of striking gold.

Licence to thrill: Angry Birds Transformers was released in October 2014 and is the latest in a number of movie studio partnerships

It turned out to be first time lucky. In March 2009 designer Jaakko Isalo showed the Rovio team an image of an idea he had for a new game; it showed a group of round, colourful, rather cranky-looking birds moving towards a pile of blocks. “People saw this picture and it was just magical,” founder Niklas Hed recalled years later. After eight months of development, including the addition of the catapult mechanic, Angry Birds was released on the App Store.

Thanks to its simple yet extremely addictive gameplay, Angry Birds found itself at the top of the charts in Rovio’s native Finland within weeks. In February 2010 Apple featured Angry Birds as its Game of the Week in the United Kingdom and the game’s inexorable global rise began; a few months later, it was leading the App Store charts in the United States as well.

The runaway success of Angry Birds gave Rovio a new lease of life and sowed the seeds of an audacious new corporate plan. The company reimagined itself from a simple development studio to a “next-generation entertainment powerhouse”, with the ultimate goal of becoming “Disney 2.0” or “Disney for the digital age”. To reflect this vision, it rebranded from Rovio Mobile to Rovio Entertainment in 2011. That same year it teamed up with 20th Century Fox to release marketing tie-in game Angry Birds Rio; another deal with LucasArts a year later spawned Angry Birds Star Wars.

So far, so textbook. But while these licensing partnerships might suggest a conventional approach to monetisation of the Angry Birds franchise, the attitude at Rovio was rather more anarchic. In early 2012 chief executive Mikael Hed raised more than a few industry eyebrows when, quizzed on the deluge of unofficial Angry Birds merchandise flooding the market – particularly in Asia – he mused: “Piracy may not be a bad thing; it can get us more business at the end of the day.” Chief marketing officer Peter Vesterbacka – whose official job title is “Mighty Eagle” – went even further, exulting: “We are now the most copied brand in China … It means we are more loved than Mickey Mouse and Hello Kitty.”

But while management may have seen an upside in knock-off merchandise as promoting awareness of Angry Birds around the world, existing and future licensees would be unlikely to take a similar view. If Rovio was to realise its ambition of becoming a fully fledged entertainment company, a more considered approach to the protection of its crown-jewel brand was needed. It was time to get its legal house in order; so in stepped new chief legal officer Kati Levoranta.

Change of attitude, change of team

When Levoranta joined in mid-2012, Rovio had become a serious corporate contender, with a workforce some 450 strong and a series of lucrative revenue streams driven by its phenomenally popular franchise; but it lacked the legal function to match. Her first task was thus to identify the tools that the company would need to meet the demands of its projected growth. “The legal team needed to be stronger and be able to fully support the company, not be a bottleneck during its growth phase,” she recalls.

From day one, Levoranta recognised that IP protection would be crucial to those plans. At the time, Rovio generated nearly 40% of its revenue through licensing, a figure which was rising steadily; as was the number of trademarks in its portfolio, which had reached some 2,000 registrations and applications worldwide. To streamline operations and increase efficiencies, key IP operations were moved back in-house. “IP matters were previously handled by an external trademark law firm in Finland,” she explains, “but we realised we didn’t need an intermediary anymore. So in-house staff took over all that work. The whole portfolio is now handled internally – we handle the portfolio and have direct contact with the externals, which gives us better visibility on pricing and ensures we can negotiate fees directly ourselves.”

Today, Rovio’s copyright and trademark department is a lean team of “two-and-a-half people”. One lawyer works full time on traditional trademark functions, such as filings, renewals and talking with the business about trademark matters. Another spends around half his time handling copyright and trademark issues, including providing cover at times when the primary trademark lawyer needs additional support or is out of the office. Finally, a dedicated counsel oversees brand protection issues, focusing on counterfeiting, piracy and other infringements.

These structural changes also presaged a tough new stance on enforcement. Management’s once-naïve belief that unofficial merchandise could speed the flight of Angry Birds was replaced overnight with a zero-tolerance approach. “We’re so famous and popular already that we don’t need piracy to promote the brand,” states Levoranta. “It’s flattering when your brand is copied, because it demonstrates that people want to have it; but obviously I don’t think it benefits the business in the long run. Our strategy now is to be quite strict about these kinds of IP issues, especially because we have some big licensing deals and we must protect our licensees and their business as well. Every infringer we find will be approached,” she concludes emphatically.

This position could not contrast more starkly with the company’s previous, rather haphazard approach to infringement, which was viewed as much as opportunity as threat. Perhaps the most extreme – and infamous – example was the 2011 discovery of an unlicensed Angry Birds theme park in Hunan Province, China; rather than concern, Rovio’s response at the time was that it was “looking forward to a partnership”.

China is also the source of much of the unofficial merchandise that finds its way onto the market and as such, warrants treatment as a “totally separate case”, says Levoranta. “We have our own counsel in China, who is cooperating with a local partner in order to try to tackle the market there,” she explains. “But it is not easy for Western companies. What we have learnt is that it’s always good if you can cooperate with officials, so when they have cluster-battles [against counterfeiting operations], you can join forces and be part of those. This has proven to be really beneficial.”

Expanding the portfolio: Rovio is seeking to diversify by developing new titles and spins-offs, such as Amazing Alex, Retry and Angry Birds Stella

Rovio’s official partners are likewise invaluable allies in its monitoring efforts, she continues: “Our licensees are our eyes and ears in the market, and we urge them to keep their eyes open and if they see something, report back so we can take action.” The sweeping extent of the company’s licensing programme means that this support network is vast, both geographically and sectorally. Angry Birds-branded products encompass everything from candy and plush toys to debit cards, jewellery and – as noted – theme parks, available everywhere from Europe to the Americas and Asia.

Ultimately, suggests Levoranta, such hawkish enforcement is the only way that a company such as Rovio can hope to maintain growth: “Once you permit others to encroach upon, dilute or degrade the brand characters, they face the problem of becoming just another character in the entertainment graveyard.”

On a different level

While the challenges of enforcing a brand that has fast become ubiquitous may be daunting enough in the physical world, they are well-nigh stratospheric in the online space for a virtual property such as Angry Birds. With 200 million active users a month, the game has a massive community of fans connecting with it – and in many cases, creating content associated with it. Its Facebook page has 27 million followers, for example; while Rovio’s own YouTube channel has received some 1.7 billion views and more than 1.9 million individual YouTube videos contain the words ‘Angry Birds’ in the title.

The sheer scale of this activity leaves abundant room for infringement. In an ideal world, Levoranta would advocate that each potential incursion be tackled on a case-by-case basis; although in reality the dizzying numbers game of the Internet makes this an impractical task. A search on handmade and vintage marketplace Etsy once again illustrates the extent of the problem: over 1,700 items for sale include exact term ‘Angry Birds’ in the description, the vast majority of which are unofficial products.

Complicating things further is the fact that the same hardline approach to enforcement that is taken elsewhere can seem excessive in the warm, cosy world of Etsy. Rovio ruffled the feathers of one merchant when it sent her a cease-and-desist letter for a listing involving a small clay bird figurine (not a direct copy of an Angry Birds character). She retorted on her blog: “My bird is just a bird. A bird that is angry. NOT AN ANGRY BIRD. Honestly Etsy, honestly Rovio… WHAT THE BLOODY HECK.” Another Etsy merchant received a cease-and-desist for selling a poster representing Angry Birds characters as aircraft, again prompting something of an outcry on social media.

While Levoranta would acknowledge that it is sometimes unfortunate when creative or innovative products are targeted, she insists that such an uncompromising approach is ultimately necessary to protect the value of the brand. “The challenge is that anyone can put anything online,” she observes. “There have been extremely good infringements and it’s sad when we have to tell them they don’t have permission to do it. But of course, there’s also a lot of crappy stuff that could do harm to our brand if people thought we made it. We are lucky that we generally have an audience that likes us and is willing to work with us if we approach them with any enforcement issues.”

But when it comes to online enforcement, the arenas of highest priority for Rovio are the mobile app stores where Angry Birds first made its name. Platforms such as Apple’s iOS App Store and Android’s Google Play host hundreds of new apps and games every day. Unscrupulous developers often seek to capitalise on the popularity of successful titles with copycat games, often tricking users into thinking that they are downloading an official sequel or spin-off. What is worse, many of these piggyback apps are made with malicious intent; they are often used as vehicles to surreptitiously install malware on users’ devices, for example.

For Rovio, it is a war of attrition. A search on the Google Play app store reveals over 100 apps that are heavily reliant on its intellectual property, many of which involve similar functionality to the original game. Their names likewise reveal the developers’ flagrant intent to exploit the goodwill in the Angry Birds brand: everything from Angry Flying Bird to Angry Bird Killer, Angry Bird’s Adventure, Angry Cats, Angry Frogs, Angry Robots, Hungry Bird, Clumsy Bird, Crazy Bird and Real Angry Bird. Unsurprisingly, many of these apps could confuse consumers into thinking that they originated from the same stable as the original title. It would thus appear that things have come full circle for Rovio: those same platforms that once catapulted it to prominence, left unchecked, now threaten to destabilise its brand.

Rovio tomorrow

And this is not the only reversal of fortunes that Levoranta’s team has had to contend with of late. As Angry Birds fans know all too well, what goes up must come down – and this trend has been very much in evidence at Rovio recently. Net profits were down 50% year on year in 2013 and this past November the company confirmed it was cutting up to 130 jobs in Finland (16% of its current workforce) as part of a move to “simplify” the organisation. Murmurings in the market would suggest that Rovio needs to look beyond its super-brand and continue to innovate if it is to ensure its longevity and prove itself more than a one-hit wonder.

To this end, the company is now seeking to diversify its portfolio, developing new titles such as Amazing Alex and Retry, and taking the existing brand into new areas including charity campaigns and educational initiatives. This all presents new challenges for Levoranta, who must ensure that the company keeps “a very clear direction in mind of where we’re going”. “There are so many activities ongoing and sometimes we need to try to figure out what the company’s focus is right now so the team can prioritise correctly, and that reflects in the legal work we do,” she concludes. “It’s been a phenomenal rise, and it was clear to me from when I started that there was so much potential in Rovio. We are all learning something new every day as the brand continues to expand.”

It would appear that the precocious, audacious upstart that Levoranta joined in 2012 has now entered the corporate equivalent of its difficult teenage years. Whatever lies ahead, its IP strategy will be crucial in ensuring that it can achieve its ambitious end goal of becoming Disney 2.0 when it grows up.

Personal dimension

What advice would you give anyone starting out in intellectual property?

Always take a more challenging job than you think you can handle. Because that’s the way to learn. And I think it applies to everything – not just intellectual property.

What aspects of your job do you find the most challenging?

The variety of things I’m handling in my current job is huge, to say the least, so I think sometimes I feel like I’m not an expert on everything. Sometimes it’s nice to have a lot of time to spend on detailed things and go really deep into certain things. At the moment it feels like things come and go, and I need to give my opinion very quickly – so that’s certainly very challenging.

What aspects do you find the most rewarding?

The most rewarding thing is that I have an amazing team; and when I see how they work – that they’re having fun and enjoy what they’re doing – that’s certainly very rewarding.

Who or what has been the biggest inspiration in your life so far?

It’s a bit boring, but my big inspiration has been my grandmother. She was not educated by any means, but she ran a business – a car dealership – by herself, and I think in those days it was fairly unusual for a lady to deal with cars.

What has been the highlight of your career so far?

There have been many highlights, in the sense that every time you accomplish something – you close a deal, you get over a litigation etc – that always feels good. I’d rather not go for one particular highlight; I try to find the highlights as the days go by. It’s more that if I think about working as a team leader, that’s the highlight – when you see you’ve been able to compile a team that is doing a great job.

What are some of your hobbies out of work?

I like sports – I run, play tennis, snowboard, a little bit of cycling and swimming as well. I’m a sports addict, let’s put it that way. I love reading as well – but I certainly get more energy out of sports!

Where is your favourite place to holiday?

I like warm places in general – so anywhere south of Finland!

If you could invite any five people (living or deceased, real or fictional) to a dinner party, who would they be?

I would invite my closest friends, more or less. I wouldn’t go with any famous people. I’d love to have my husband and then very good girlfriends for a dinner party – maybe even excluding my husband and just my close girlfriends!

And what would be on the menu?

Crayfish, shrimp, crab – lots of seafood. And champagne, of course.

As a child, what did you want to be when you grew up?

I wanted to be a policeman – that’s what my mum tells me, anyway.

Looking back at your 18-year-old self, what advice would you give her?

I would probably tell her to go abroad, study abroad, spend some years abroad, gain experience from different cultures and educate herself at the same time; and then come back at some point and use everything she has gained abroad to further herself when she return. I’d also say not to rush into work!

And how do you think your 18-year-old self would respond?

She would probably say, ‘Hey, thanks – good advice, I’ll try to figure out how to manage that.’ I tried out that advice myself in reality; but looking back, I should have done it even more. So I had an attitude that I wanted to be abroad, but I should have stayed abroad a bit longer.

What games do you have on your mobile?

Angry Birds, of course! The Transformers version is the one I’ve been playing most – it’s fast and rewarding. I’m not much of a gamer who likes to spend a lot of time figuring out strategy – it needs to be easy. And in terms of Candy Crush, we don’t mention that in the office….” [Laughs] “I met their lawyers recently and they do a really great job as well.