Angry Birds CEO Explains How The Company Embraces Piracy

from the not-so-bad-for-the-business dept

Wed, Feb 1st 2012 9:59am — Mike Masnick

I was in the audience to see Eliot van Buskirk interview Rovio's CEO, Mikael Hed, on Monday morning at Midem, but with so much going on at the conference (and then traveling), I'm finally getting a chance to write it up. Hed made a point of telling music industry execs that not only was the music industry's approach to piracy entirely wrong, he believed Rovio's approach was much smarter: embracing the piracy. I'd heard that Hed made it a special point to make sure that the interview included a discussion on piracy -- and brought it up two separate times during the interview -- saying that the company was basically doing exactly the opposite of the music industry:

"We could learn a lot from the music industry, and the rather terrible ways the music industry has tried to combat piracy."

He explained how the important thing for the future of Angry Birds was to keep building "fans" and that piracy can actually help with that. He noted that they were "embracing" pirates where they could, recognizing that it could help the company get more fans. Later, he noted that if there's too much piracy, it's the company's own fault for not providing access to the game in a convenient enough manner. His comments went even further than the comments from his colleague Peter Vesterbacka a few months ago about how the company used counterfeiting as market research to figure out where to invest.

Either way, it seems clear that Rovio has taken to heart many of the points that we've discussed here about proactive ways to deal with piracy: by recognizing that it's an opportunity, not a threat.

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Filed Under: angry birds, business models, embracing, mikael hed, piracy
Companies: rovio

62 Comments

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Loki, 1 Feb 2012 @ 10:07am

Well his plan/ideas certainly seems to be working. Freaking Angry Birds are everywhereeeeeeee.
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Mitch Featherston, 1 Feb 2012 @ 10:07am

Community
In other words: COMMUNITY.
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Anonymous Coward, 1 Feb 2012 @ 10:07am

I applaud this guy for speaking up and mentioning the labels in the process, and how what Rovio does in response to piracy has helped them in the long run.

Too bad the labels won't dare listen to him.
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Anonymous Coward, 1 Feb 2012 @ 10:18am

Re:
"It is difficult to get a man to understand something, when his salary depends upon his not understanding it!" - Upton Sinclair
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Anonymous Coward, 1 Feb 2012 @ 10:28am

These guys are very lucky that they came up with a product that both had appeal in their intended marker, as well as outside. They are also very lucky that the public latched onto it, and took it to places that they could not have planned for.

Basically, it's a firehose, and no matter what they do, they will look good. But this is the old blind mouse thing, as no matter what they do, they will get the cheese.
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Robert Doyle (profile), 1 Feb 2012 @ 10:28am

Re:
The labels won't listen because they recognize if they go down this road they are doomed. That is because there is a distinct difference between what Rovio does and what they do.

Rovio created the game. They are more than just the gatekeepers. The people most upset about piracy in Rovio's case are probably the folks at Apple.

Likewise, if the labels actually created to content, they likely wouldn't be as upset about piracy. They are just the channel, not the content.
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Chronno S. Trigger (profile), 1 Feb 2012 @ 10:31am

Did piracy ever really exist for them? You can play Angry Birds for free on Google+, you can download it for free on Android, and the people who can pirate games on iOS are few and far between.
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Gabriel Tane (profile), 1 Feb 2012 @ 10:35am

INB4
hurr hurr sounds like Hed is drinking Maznik's kool-aid.

Sorry... feeling plucky today. I like the fact that there's yet another example (because, you know, it won't work for everyone) of how you can turn piracy into a boon. And make a great success at it as well.

My example: Shared my copy w/ my two girls... Cost Rovio what? $20? $30? Now they both snatch up Angry Birds Merch wherever they can. Already paid Rovio over $100 last year alone.

Win!
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Anonymous Coward, 1 Feb 2012 @ 10:35am

True, but how many dvds and cds have they sold? None.

What can the RIAA/MPAA learn from that example?
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Anonymous Coward, 1 Feb 2012 @ 10:35am

Re:
Was waiting for our local gatekeeper shills to try to explain this away.

Was not disappointed.
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Nastybutler77 (profile), 1 Feb 2012 @ 10:36am

Rovio did a good job of milking this game for all its worth, but what are they coming up with next? This AB fad won't last forever. I'm waiting to see if they're a one hit wonder, or if they can continue to innovate. And I don't mean another AB "sequel."
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Anonymous Coward, 1 Feb 2012 @ 10:40am

Re: Re:
I'm still a little disappointed.
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Togashi (profile), 1 Feb 2012 @ 10:40am

yeah but this will only work for /big/ companies or SMALL ones. you can only do this if you either have an established /FAN/ base or you dont. more FUD from masnicks koolaid factory of Big Google.

/amidoingitright?
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fogbugzd (profile), 1 Feb 2012 @ 10:41am

Re:
>>Basically, it's a firehose, and no matter what they do, they will look good. But this is the old blind mouse thing, as no matter what they do, they will get the cheese.

In other words, "Sure this works for a bunch of angry birds, but it will never work for washed-up rock stars*."

*Instead of "rock stars" you can insert "over budget movies" or whatever gatekeeper-warded group you wish to use.
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Anonymous Coward, 1 Feb 2012 @ 10:41am

Re:
It wasn't like that originally. Used to be a for purchase game only. I believe part of "embracing piracy" for them is saturating the market with their own versions and make money off the adds. Like you say there is no reason to pirate the game because there are tons of different ways to get a free legit copy.
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hothmonster, 1 Feb 2012 @ 10:43am

Re:
I would have went with, "Sure it works if you are Scandinavian but..."
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Colin, 1 Feb 2012 @ 10:45am

Re:
You're right, it's totally luck. It had absolutely nothing to do with them making a great product and following that up with smart business decisions. In fact, I think you've solved the mystery: the record labels are just really, really unlucky! They aren't terrible at adapting, things just aren't going their way!
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Hephaestus (profile), 1 Feb 2012 @ 10:49am

Re: Re:
I was thinking the same thing. It goes back to mikes dead guy meeting god story. They are being handed all the tools and not doing anything with them.
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fogbugzd (profile), 1 Feb 2012 @ 10:49am

Re:
>>This AB fad won't last forever.

True. But in a real capitalist system no one is guaranteed that their innovation will guarantee a permanent profit stream. Too many people in the IP industry have an entitlement mentality that says "I used to make a lot of money, but I am not now. It must be someone else's fault." If you don't innovate you loose. Unless, of course, you own Congress.
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akp, 1 Feb 2012 @ 10:53am

Don't be fooled. They're just as aggressive about defending their IP as anyone else.

I was on the receiving end of a C&D for daring to post handmade Angry Birds homage jewelry on Etsy. The description was clear that we weren't mass-producing, each item was handmade. We were still forced to take them down.

"Embracing piracy," my ass.
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Jim_G, 1 Feb 2012 @ 10:57am

Okay, sure this works for big-hitters like Rovio and for small companies and for medium-size companies, and for companies in between small and medium. Everyone knows that. But what about companies somewhere between smallish-medium and just plain small? HUH?
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Anonymous Coward, 1 Feb 2012 @ 11:01am

Re:
It's a freemium thing. Can obtain the game for free, but you must pay to unlock cretin features.
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Anonymous Coward, 1 Feb 2012 @ 11:06am

Re: Re:
Is it? I never found anything I had to pay to unlock, I thought it was just ad-revenue based these days.
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Chuck Norris' Enemy (deceased) (profile), 1 Feb 2012 @ 11:12am

Re:
That the **AAs can't sell dvds and cds anymore? They can make money other ways.
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Anonymous Coward, 1 Feb 2012 @ 11:15am

Re:
Sounds like they need a law so that they can just sit back and not innovate ever again - maybe the AB Copyright Act. That would set up themselves, their kids, and their kids' kids.
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Anonymous Coward, 1 Feb 2012 @ 11:21am

Re:
Piracy =/= trademark infringement.

This article makes clear they go after people that try to profit from their IP, not people who download it personally and don't then resell it.

Its clear in my mind your experience matches exactly with what they are saying as highlighted in this post.
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Robert Doyle (profile), 1 Feb 2012 @ 11:23am

Re:
Embracing piracy is not the same thing as not enforcing your IP. They are required to enforce it (or at least attempt to) lest they be deemed to have abandoned it.

Did they follow up or did you take the jewelry down and they left it at that?
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fb39ca4, 1 Feb 2012 @ 11:27am

Yay now let's all go pirate Angry Birds to make his company even more successful!
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Anonymous Coward, 1 Feb 2012 @ 11:29am

Re: Re:
There are plenty of other games out there that are as good if not better. These guys hit on a formula (intentional or accidental, we are not sure) that happened to hit as a game. From that, it took off and turned into a merchandise bonanza, something I am sure none of them ever considered in writing the game.

What they got is a firehose of public acceptance and demand, and no matter where these guys stand, they will get hit with it. What they are doing now is entirely reactionary, attempting to stay riding the wave for as long as possible.

Pet Rock, anyone? It's about the same thing, really. When the public gets bored, their t-shirts and stuffed toys will be bargain bin, and life will go on.

Do you honestly think they could do it again if they wanted to? I doubt it.
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Anonymous Coward, 1 Feb 2012 @ 11:32am

Re: Re:
This is true, if a company does not protect it's IP the law clearly provides a case for abandonment. TechDirt really has never discussed this subject. If you expect the media conglomerates to simply put up with piracy, would that not clearly be a case of abandonment?
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The eejit (profile), 1 Feb 2012 @ 11:34am

Re:
Uhh, so you didn't hear about Rovio licensing the actual counterfeit merchandise in China.

And as for the mouse analogy, it falls apart because, in the case of the MAFIAA, the mice have found a door to the cheese, instead of going over their bridge, and losing some cheese in the process.
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Anonymous Coward, 1 Feb 2012 @ 11:41am

Re: Re:
In other words, "Sure this works for a bunch of angry birds, but it will never work for washed-up rock stars*."
Masnick's Law strikes again!

Now we just wait for Stevens' Corollary:

"Any time Masnick's Law is invoked, there will be someone who doesn't understand it chiming in about how Masnick didn't invent the identified business model, and so it shouldn't be called Masnick's Law."
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Anonymous Coward, 1 Feb 2012 @ 11:48am

Re:
Rovio employs less than 40 people. If that is considered a "big-hitter" I would hate to imagine your idea of a "small company".
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Anonymous Coward, 1 Feb 2012 @ 11:48am

Re: Re: Re:
The part you are ignoring is they have a "firehose of attention" because they continue to find ways to make accessing and enjoying the game simple and easy. If they had locked it down and said 10$ to play and fuck off if you try to pirate it they would have never been able to saturate the market like they have. They embraced new forms of distribution and got as many people as possible to play the game for free, quickly, on their desired platform.

You are right they are riding the wave, which is the smart thing to do. Recording and movie studios are fighting the tide, which is often the point of this website. Go with the flow, embrace the tech, and listen to consumer demand NOT pretend its still 1989 and if you yell real loud with your fingers in your ear any tech that has come out since then will go away.
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Anonymous Coward, 1 Feb 2012 @ 11:51am

Re: Re: Re:
This is true, if a company does not protect it's IP the law clearly provides a case for abandonment.
No, it's absolutely false.

TechDirt really has never discussed this subject.
As far as I know, this is true, and I wish Mike would set the record straight - as the amount of misinformation about it (such as your post) is staggering.
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Anonymous Coward, 1 Feb 2012 @ 11:52am

Re: Re:
You really think they can learn that from this example?
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John Fenderson (profile), 1 Feb 2012 @ 12:02pm

Re:
I too was waiting for this kind of comment. Techdirt has presented numerous examples of people who have managed to make good money by addressing piracy in a better way, and each time the objection is made that there is something, somehow that makes that case an outlier that couldn't possibly be reproduced.

It's funnier with music though. Small musician does it? Well, it only worked because they're nobodies. Big musician does it? Well, it only worked because they were already big.

The fact is that there is nothing special about Rovio that made this approach work, outside of them having an excellent and appealing product. That it's a gravy train isn't the cause of their success (although their approach to pirates may have helped it become a gravy train).

I know this because I've done the very same thing and none of my products were at the blockbuster level of Angry Birds. However, all of my products, even the ones that weren't the most popular, have been profitable, and that they were pirated actually helped that be true.

Note to naysayers: I'm not saying piracy is good and should be encouraged. As a businessman, I'm neutral on that point. I'm saying that piracy is a permanent feature of the marketplace and there are ways to handle it that can hurt you and ways that can help you, and it's better to choose the latter.
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Anonymous Coward, 1 Feb 2012 @ 12:41pm

Re: Re:
You have to think though: Did they do good because they had a great plan and executed it, or did they just flop around blindly in the dark and hit one something by complete accident?

There are tens of thousands of other app style games out there, and most of the makers of them would love to make enough money to recoup the cost of the coffee they consumed writing them.

AB isn't a "success model", it's just a happy accident.
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Josh in CharlotteNC (profile), 1 Feb 2012 @ 12:43pm

Re: Re: Re:
This is true, if a company does not protect it's IP the law clearly provides a case for abandonment. TechDirt really has never discussed this subject.

We talk about this all the time. Look up any story involving Monster Cable. Or the Kellogg's toucan story. Or any story about a companysucks.com website. Most cases Techdirt covers involves a company overreaching far beyond what trademark law covers into situations where there is absolutely no consumer confusion. Monster Cable is not going to lose its trademark to abandonment if they fail to sue Monster Mini-Golf because there is no consumer confusion that the companies are related.
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fogbugzd (profile), 1 Feb 2012 @ 1:07pm

>>Yay now let's all go pirate Angry Birds to make his company even more successful!

If you try to pirate the game, here are some things to consider:

1) You probably don't need to pirate it. You can probably play it for free using a Rovio approved channel. Rovio still makes money from the free version by selling advertising in the game.

2) From the user perspective, not all types of free are equal. In this case "free from Rovio" means that you have to put up with ads (so maybe not entirely free). On the other hand with a pirated copy I have to search out the game and then run a major risk of spyware. So the pirated version is not entirely free, either. It is possible to compete with free, because in the final analysis the authorized version of free is probably a better deal for both the user and the company than the pirated version of free.

3) If I do successfully pirate a safe copy of the game I have not really cost Rovio a penny because I most likely would not have paid for it if that was the only option. However, I might buy some AB merchandise or introduce the game to someone who will pay for it or use the ad-supported version. I might even get hooked enough that I go looking for "AB Seasons" or some other version of the game and end up playing a paid or sponsored version of the game. In addition, if enough people play a certain game it starts to get the attention of investors and other potential business partners. So even if you do go pirate the game you may make them more successful.

So you were correct.
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Anonymous Coward, 1 Feb 2012 @ 1:43pm

Re:
Nope, apperently the shills are going with, "it wasn't a plan its just a happy accident, its unrepeatable and not worth attetntion."
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Anonymous Coward, 1 Feb 2012 @ 1:46pm

Re: Re: Re:
Mostly execution partially luck. But go ahead and just write off all the smart moves and hard work they did to get that market saturation. Angry Birds isn't a household name purely by luck and accident. But hey if you dismiss it you don't get to learn from their success, your loss really. Just don't try to write any laws to prop up your outdated model.
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The eejit (profile), 1 Feb 2012 @ 2:51pm

Re: Re: Re:
Well, they keep somehow managing to get paid lots of money at the top for doing fuck-all about the problem they're there for.
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The eejit (profile), 1 Feb 2012 @ 2:53pm

Re: Re:
1) It was a troll
2) Reddit would like to have a word with you.
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Colin, 1 Feb 2012 @ 3:30pm

Re: Re: Re:
There are tons of people writing, so JK Rowling was just lucky.

There were tons of people playing music, so The Beatles were just lucky.

Or maybe it's a quality project and people are rewarding them?
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Anonymous Coward, 1 Feb 2012 @ 3:55pm

Re:
Yeah... I'm sure the fact they are backed by Google have nothing to do with it whatsoever.
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LC (profile), 1 Feb 2012 @ 3:55pm

"We could learn a lot from the music industry,"

But I think both the music AND film industries could learn heaps more from you.
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Anonymous Coward, 1 Feb 2012 @ 6:59pm

Re: Re:
Artists did you read that?
Google can make you a millionaire dump labels and studios and ask Google how to do it.
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Anonymous Coward, 1 Feb 2012 @ 7:08pm

Re: Re: Re:
That just shows that no matter what the market conditions are if you have a great product in your hands you will sell it.

Piracy in those cases are not a problem and in fact act as an enabler unlocking new markets, aside from functioning as a lighthouse to direct their efforts where demand is strong, you compete with free and win.

They can do this and don't need to interfere destructively with other lower level of the market that they can't cater to, they enable the other markets that they don't intent to be in to be attended by others and that keeps their products in the minds of a lot of people and that translates to bigger sales.

Now when you try to exclude everybody from the market and control it absolutely what you get is falling sales I thought that was abundantly clear in the case of labels, that tried to ascertain absolute control over the market failed and were severely punished by the public for it.
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bongo houzi (profile), 1 Feb 2012 @ 7:55pm

Re: Re: Re:
embrace the absurdity
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bongo houzi (profile), 1 Feb 2012 @ 7:58pm

Re: Re: Re:
That's the beauty of creativity; you never know how it will be accepted or interpreted. If I want to hols your hand grabs enough people maybe down the road you get abbey road.
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bongo houzi (profile), 1 Feb 2012 @ 8:02pm

Re: Re: Re:
That is the essence of good creativity; spontaneous, happy accidents. John Lee Hooker used to compose lyrics on the fly, in the studio. Sometimes diamonds, sometimes turds but always interesting.
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bongo houzi (profile), 1 Feb 2012 @ 8:08pm

Re:
That's the real problem; not understanding the difference between "piracy" (read infringement) and counterfeit merchandise.
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bongo houzi (profile), 1 Feb 2012 @ 8:09pm

Re:
and it would
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Anonymous Coward, 1 Feb 2012 @ 10:41pm

Re: Re: Re: Re:
The part you are ignoring is that the game was free anyway, so "piracy" isn't really the issue here. They only evolved to paid version and ad supported models later on (as they attempt to milk the cow dry before it dies of old age).

"You are right they are riding the wave, which is the smart thing to do. Recording and movie studios are fighting the tide, which is often the point of this website."

There are so many difference here, that it is hard to know where to start. They aren't "riding the wave", that suggests planning and preparation. Rather, they were swept up by a wave, and by chance, they look great at the top of it. It wasn't a plan... they are just riding it out until it collapses. It is a short term deal, where they make as much as they can because they likely will never hit it again.

An industry (music, movies, software, whatever) cannot just ride itself into the ground to appear "good" for a moment. Riding the wave is a short term mentality. Mastering the waves and coming up with a way to bob to the top of the waves without being swept away in them is key for longer term plays, and that sometimes involves fighting against the current to stay in place. It means that you only move with tech or demand to the extent that it improves your current position in the long run, not the short run.

That is why many delivery formats for music have come and gone, and the "industry" rarely fell for them, no matter how good they seemed.

Many consider the entertainment industry to be slow. It's not slow, it's just careful and doesn't get caught up in the "technology of the week". They haven't selected many dead ends in the last 50 years (the last big one would be the large laser discs, which some in the movie world loved... everyone else smartly waited for the second and third iterations that brought us the CD and DVD).
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Anonymous Coward, 2 Feb 2012 @ 12:27am

Re: Re: Re:
So if it's a happy accident, why are you against models that would facilitate turning it from an accident to a consistent reality? Oh, that's right, your lot is anti-competition.
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Prisoner 201, 2 Feb 2012 @ 1:26am

Re: Re: Re: Re: Re:
"The part you are ignoring is that the game was free anyway, so "piracy" isn't really the issue here. "

This is more insightful than you think, and probably not in the way you intended.
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PaulT (profile), 2 Feb 2012 @ 1:55am

Re:
So, you're saying that because they created a quality product with wide-ranging appeal, their success was inevitable? That because they spent their time innovating, making a good game and then selling it correctly, they made money? That if they had just created a mediocre game that was just a clone of a million other games out there, they would have had a much harder time? that they may have failed, and whined about "piracy" instead of correcting their mistakes?

By jove, I think he's finally getting it!
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PaulT (profile), 2 Feb 2012 @ 2:14am

Re: Re: Re:
I have the iOS version (i.e. paid for) so I'm not sure if this applies to other versions, but you can purchase the "eagle" feature to get you past a level you're stuck on. They also make money through selling merchandise.
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PaulT (profile), 2 Feb 2012 @ 3:09am

Re:
Hopefuly, they're working on the followup right now, and it will be as interesting and innovative as the original Angry Birds was.

If not, hopefully they'll realise that any lost sales have nothing to do with "piracy", but their own failure to deliver an equally compelling product.

We shall see...
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PaulT (profile), 2 Feb 2012 @ 3:13am

Re:
"I was on the receiving end of a C&D for daring to post handmade Angry Birds homage jewelry on Etsy. The description was clear that we weren't mass-producing, each item was handmade."

What does that have to do with piracy? You infringed on their trademarks, and attempted to profit from them by producing knock-off physical goods. That's a totally different thing to piracy.
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Anonymous Coward, 2 Feb 2012 @ 10:00am

Re: Re: Re: Re: Re:
"it's just careful and doesn't get caught up in the "technology of the week""

yeah, this whole internet fad will run its course soon, no need to get onboard.
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