Angry Birds maker Rovio Entertainment's growth stalled in 2013, according to financial results for the year that show the company's revenues grew by just 2.5% year-on-year.
Rovio reported revenues of €156m (£128.4m) for 2013 compared to 2012's €152.2m – which represented more than double the €75.6m that Angry Birds made in 2011.
Rovio's net profits also halved from €55.5m in 2012 to €26.9m in 2013, as the company invested in new games, its ToonsTV cartoons network, and its upcoming Angry Birds feature film.
47% of Rovio's revenues in 2013 came from its consumer products division, which spans toys, books and other licensed products. In 2012, that percentage was 45%, meaning that Rovio's non consumer products revenues actually fell slightly in 2013: down 1.2% to €82.7m.
When Rovio announced its 2012 financial results, the company said Angry Birds had ended that year with 263m monthly active players. It has not provided an update on that figure with its 2013 financials, although the company says its games have now been downloaded more than 2bn times.
"After three years of very strong growth, 2013 was a foundation-building year," said chief financial officer Herkkop Soininen.
"We invested in new business areas, such as animation and video distribution, ventured into new business models in games, and consolidated our strong market position in consumer products licensing."
Rovio's chief executive Mikael Hed stressed the milestones of 2013, including the fact that ToonsTV has now generated 2bn views of its cartoons, up from 1bn in September 2013. The network launched in March that year, and is accessed through Angry Birds apps, the ToonsTV website and partner broadcasters and cable services.
Rovio's headcount continued to grow last year, from around 500 staff at the end of 2012 to 800 at the end of 2013. But the company has faced a challenge in adapting its games to the increasingly-dominant "freemium" model on the app stores of Apple and Google, focused on games that are downloaded and played for free, but make their money from in-app purchases and advertising.
Kart-racing title Angry Birds Go! – released in December 2013 – was Rovio's first game designed from scratch for the freemium model, including currency and virtual items sold for up to £69.99 in an in-game store.
The game won't have had a major impact on Rovio's 2013 financials, but it doesn't appear to have set the app store charts alight: at the time of writing, it is the 125th top grossing iPhone game and 79th top grossing iPad game in Apple's US store, for example, having so far failed to dislodge free-to-play kingpins like Clash of Clans and Candy Crush Saga.
Clash of Clans developer Supercell made $892m in revenues (£529.6m – so four times Rovio's total) from its two mobile games in 2013, ending the year with a headcount of just 132 staff. Meanwhile, Candy Crush Saga developer King's 2013 revenues were $1.9bn (£1.1bn) according to documents filed for its recent initial public offering (IPO).
"It’s pretty clear that free-to-play as a model monetises the best, but no matter what model you use, you have to make great games," Rovio's marketing boss Peter Vesterbacka told The Guardian in March 2014, after criticism from some reviewers of Angry Birds Go!'s in-app purchases.
"It is what it is. It’s the most efficient model out there for sure. But I would say that it’s also a good model for the fans: you don’t need to spend any money unless you want to, and unless you enjoy the experience."
In 2014, Rovio is working on a new range of games and characters called Angry Birds Stella, skewed more towards girls, while continuing to explore selling physical toys linked to its digital games – its Telepods products with Hasbro – and preparing for the release of a new freemium game called Angry Birds Epic.
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