Rovio Entertainment Oy, creator of the “Angry Birds” mobile-phone game, said it’s in talks with Chinese companies including Baidu Inc. (BIDU:US) and Sohu.com Inc. (SOHU:US) to work on winning players in the world’s biggest Web market.
The discussions involve possible new methods of Internet distribution in China, Henri Holm, senior vice-president at Rovio Asia, said in an interview yesterday in Hong Kong, where he is based. The Finnish company is also in similar talks with Renren Inc. (RENN:US), after starting work with Tencent Holdings Ltd. (700), Sina Corp. (SINA:US), Youku Inc. and Qihoo 360 Technology Co. (QIHU:US), he said.
Rovio has recorded more than 100 million downloads for the “Angry Birds” game in China, helped by demand from users of phones running Google Inc. (GOOG:US)’s Android operating system, and Apple Inc. (AAPL:US)’s iPhone and iPad devices. China’s biggest Internet companies such as Baidu and Tencent are adding wireless services to diversify from businesses focused on personal-computer users.
“The number of smart devices is growing exponentially” in China, said Holm. Downloads of the game will increase “dramatically” in the Asian nation this year, he said, declining to provide a forecast.
Rovio, based in Espoo, Finland, last month introduced a new edition of “Angry Birds,” and in February started offering a version for Facebook Inc. (FB:US) users. Tencent, Sina, and Renren operate social-networking services in China, where Facebook’s website is restricted. Baidu is owner of the most-popular Chinese search-engine.
“We often have discussions with companies like Rovio, as we constantly look for potential partnerships and joint products that would further enhance our user experience,” Renren said in an e-mail.
Baidu talks to “many companies,” said Kaiser Kuo, a spokesman at the Beijing-based company. He declined to comment on the discussions with Rovio, citing internal policy. Sohu’s online games unit Changyou.com Ltd. (CYOU:US) has discussions with “many developers around the world,” said spokeswoman Angie Chang, who said she couldn’t comment on specific cases.
Rovio sees an opportunity for companies to place ads targeted at “Angry Birds” users as they play the game, according to Holm.
“Advertising is one of the ways we can monetize,” Holm said. In China, the majority of “Angry Birds” users play the free version, where advertising can be placed, he said.
Sales of “Angry Birds”-themed merchandise account for most of Rovio’s revenue in China, Holm said. Rovio plans to open its first retail store in the country this year, after starting a “mock-up” outlet in Shanghai in 2011, where purchases couldn’t be made, he said.
Rovio sells merchandise such as stuffed toys and coffee mugs through its online store, as well as retail partners in China.
“Angry Birds” players use a virtual slingshot to fire birds at structures populated by green pigs. The touchscreen game zoomed to the top of the chart in Apple’s online app store in 2010, before Android-based versions were introduced.
Rovio may offer an “Angry Birds” game that can be played on Web browsers running the HTML5 technology in China, said Holm, a former executive at mobile-phone maker Nokia Oyj. (NOK1V) Only about 10 percent of Internet users in China have access to the technology now, he said.
Rovio is “working towards” an initial public offering, though the location hasn’t been decided, Holm said. The sale won’t happen this year, he said, without providing a timing.
Last year, the Finnish company raised $42 million from investors including Accel Partners, a shareholder of Facebook, and Skype Technologies SA co-founder Niklas Zennstrom’s Atomico fund.
China had 513 million Internet users at the end of 2011, according to the government-backed China Internet Network Information Center.
To contact the reporter on this story: Mark Lee in Hong Kong at firstname.lastname@example.org
To contact the editor responsible for this story: Michael Tighe at email@example.com