On a recent visit with his two children to a toy museum in Espoo, Finland, Mikael Hed was struck by a display of action figures from George Lucas's "Star Wars" series.
"The only toys I felt were still very cool and still worth playing with were the 'Star Wars' toys," said the 35-year-old chief executive officer of the Finnish mobile-phone game developer that's still riding its first big hit, "Angry Birds," after designing games the past eight years.
Rovio Mobile Oy faces a long haul to convince investors that the touchscreen game where players stretch and release a virtual catapult to hurl birds at structures populated by green pigs will command the same staying power. After racking up more than 200 million downloads, Rovio now wants to make an "Angry Birds" movie, develop more game titles that appeal to the market of casual gamers, and open offices outside Finland to bring in more gaming and storytelling talent.
The company published 51 games for Nokia Oyj phones and other handsets before striking gold with "Angry Birds," which zoomed to the top of the iPhone charts last year before being rolled out for Android phones, desktop computers, and Barnes & Noble Inc.'s Nook e-reader. It's already on Nokia's just- announced N9 smartphone. A Facebook version is in the works.
Birds on walls
The 99-cent game is again the top paid app in Apple Inc.'s U.S. app store after being toppled by new entrant Heist in March. Angry Birds Rio, a version with a tie-in to the animated movie "Rio," is the third-most popular. The first run of "Angry Birds" in the top spot, a free version, lasted a record 275 days, according to website The Loop.
"We're working on a number of new concepts, but we're fully aware that 'Angry Birds' is probably going to be the dominant brand we have for quite a while," Hed said in an interview at Rovio's new office down the street from Nokia in Espoo, featuring living-room-style areas for laptop working and bird cartoons stencilled on the walls.
In March, Rovio received $42 million in funding from investors including Skype Technologies SA co-founder Niklas Zennstrom's Atomico Ventures as well as Facebook backer Accel Partners. It's "very possible" that Rovio will seek another venture-capital round before eventually holding an initial public offering, possibly in two to three years, Hed said.
Firms that get early-stage venture capital typically give 20 percent to 40 percent to their investors, said Nordea Bank analyst Sami Sarkamies. Based on that, the March deal valued the game maker at as much as $210 million at the time.
"If they are able to replicate the success of 'Angry Birds' with other titles, it may be a candidate for an IPO but with one title it's difficult," said Sarkamies. "The risk of not being able to do it and getting into trouble later on may just be too high."
Another risk is how long Internet valuations remain buoyed. Signs of a slowing U.S. economic recovery and the initial public offering of LinkedIn Corp. have sparked concern that the industry may have entered a speculative bubble.
Hed, a business graduate at Tulane University in New Orleans, helped start Rovio under the name Relude Oy when his cousin Niklas Hed began writing games with some classmates from what's now Aalto University. Rovio is chaired by Hed's father, Kaj, who first invested in the company in 2005.
Mikael Hed quit as CEO in 2005, feeling the company wasn't big enough for both him and his father, and the two agreed on his re-entry in 2009. In the interim he co-wrote August Jessor, a comic series about a police chief in a remote town.
Writers are developing a script for a full-length "Angry Birds" film that would fill in the backstory of the birds and pigs. Rovio has spoken to major movie studios and is working with partners of the caliber of Walt Disney Co.'s Pixar to produce and distribute the movie, Hed said.
"We are working on the mythology with the movie script and we don't want to shape the mythology too far until we have that one nail in place," the CEO said. "We've seen too many movies based on games that have not performed well."
Rovio has produced a special edition of "Angry Birds" with characters from the animated film "Rio" produced by News Corp.'s Twentieth Century Fox. A bird resembling Rovio's avians appeared in the film trailer, which was aired during the Super Bowl.
Meanwhile, Hed said demand for the touchscreen game hasn't peaked. Peter Vesterbacka, the red-sweatshirt-clad Rovio executive who holds the title of "Mighty Eagle" and handles relations with U.S. partners, told a conference in London this month that in China alone, Rovio is aiming for 100 million downloads with customized versions of the game.
"People are still migrating from old-fashioned phones to touchscreen devices, and in emerging markets, that's creating whole new audiences that may not have a TV before but now could have an Android device," Hed said. "Catering to that audience is important for any media company in the future."