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Rovio Had the Big Ambitions, but Not the Big Follow-Up Hits

After catapulting into the stratosphere, Rovio's fortunes have come crashing back to earth.

Ina Fried

Rovio is a textbook example of a company that knew how to shoot for the stars but could never find the hits needed to reach such far-flung goals.

Ina Fried

In its heyday, Rovio’s founders were building theme parks in China and Finland and speaking in grandiose terms about building an entertainment company that could be the next Disney. But while the company grew adept at new ways of strapping its flagship birds to all manner of consumer goods, it never really got good at the thing it needed most: Producing new hit characters.

That struggle has shown itself in Rovio’s most recent financials, with 2014 sales off nearly 10 percent and operating profits dropping by 73 percent.

Bowing to that reality, Rovio on Wednesday announced a massive layoff plan that will see the company slash 260 jobs and dramatically scale back the company. CEO Pekka Rantala said the company had an exceptional eagerness for new business ideas but acknowledged “we did too many things.” The new layoffs follow smaller cutbacks made last year.

Critics have been saying for years that the company risked being a one-hit wonder, but Rovio kept growing its staff, brushing off concerns that at the end of the day all the company’s fortunes were tied to the popularity of just a few angry avians.

“If everything we did was just about mobile games, I’d be more worried,” founder Mikael Hed said in a 2012 interview at the company’s Espoo, Finland, headquarters.

Rovio is moving ahead with an Angry Birds movie and its games and merchandising, but rivaling Walt Disney is clearly off the table.

“Fundamental changes are needed to ensure Rovio succeeds in its global ambitions to be the leading entertainment company with mobile games at its heart,” Rantala said.

Just scaling back won’t ensure a high-flying future for Rovio. Rovio’s game industry rivals — even the successful ones like Electronic Arts — have gone through their struggles after a string of hits came to an end.

It’s worth remembering that Rovio produced dozens of games that flopped before developing Angry Birds. And it has produced a lot of titles since without much success beyond the Angry Birds sequels and spinoffs, though it continues to find traction there. The company noted that its recently released Angry Birds 2 has already been downloaded over 50 million times.

This article originally appeared on Recode.net.