International Business Strategy: Rovio Entertainment Analysis

International Business Strategy
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Table of Contents
Introduction......................................................................................................................................3
SECTION A:...................................................................................................................................3
Identify 4 global megatrends and assess their potential impact on Rovio Entertainment’s
strategic position. From your analysis what are Rovio’s major threats and opportunities?........3
Section B..........................................................................................................................................7
Using the Business model canvas and relevant academic theory, critically analyse Rovio
Entertainment’s business models over the period covered by the case study. What are the
strengths and weaknesses of its key business models?................................................................7
Conclusion.....................................................................................................................................10
References......................................................................................................................................11
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Introduction
International business strategy is referred to the plan which guides commercial transactions
taking place between the entities in different countries. Generally, international business strategy
is referred to the plans and actions of private companies rather than governments. It is also
considered as a goal to increase profit (Ainamo, 2016). This study will be based on Rovio
Entertainment, best known for its Angry Bird smartphone game. The company was founded in
2003 and is based in Finland. The Angry Birds becomes the top-selling App on Apple’s App
store in 2010 and started the stream of business venture including broadcast and media, retail
stores, playgrounds and publishing. In 2010, Rovio entertainment was one of the largest
entertainment companies; though, after some years of significant growth, Rovio had to face
several challenges.
This study will state 4 global trends in the entertainment industry and its potential impact on the
company’s strategic position. The threats and opportunities of the company will also be outlined
in the study. It will then by using the business model canvas, critically analyse the key business
models of the Rovio Entertainment. All the analysis in the study will be supported by both
relevant theories and examples.
SECTION A:
Identify 4 global megatrends and assess their potential impact on Rovio Entertainment’s
strategic position. From your analysis what are Rovio’s major threats and opportunities?
In the current business scenario, entertainment trends in particular are in constant flux. The new
platforms, mediums and changing features are constantly changing the way people consume the
content. In 2018, there was a rise of game playing on the Smartphone and social media continued
to evolve into the entertainment hub (Helmhout, Deeg & Greenwood, 2016). In the current
Smartphone trend, gaming has become an important part in the entertainment industry. It has
become an unquestionable mainstream. Smartphone has become a clear winner in the giving
device industry, with 66% using it to play games. This has boosted the universal Smartphone
ownership at a global level. Gamers now have no boundaries. They no longer have to sit in the
basement, playing games in the PC console. According the data published by Ding 2018, mobile
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gaming revenues were computed for $70 million in 2018. This shows a year over year increase
of over 25%. In coming years, these numbers are expected to rise.
One of the primary reasons behind the stagnation of Rovio Entertainment is their dependency on
Angry Birds. It is only game that gave profit to the company. As per the case study, the company
focused a lot on Angry Birds and tried very hard to frame and brand it like Disney
Characteristics (Ainamo, 2016). Here are some of the global trends that have impacted the Rovio
Entertainment:
Social Games: In the current gaming scenario, social games have been on rise. Angry Birds
didn’t have any option of playing with an unknown, which is now a very important element.
According to the industry body, Entertainment Software Association, there has been an increase
in the popularity of social games by 50% from last year (Wei, Lu and Li, 2018). Together with
casual games, social games accounts for the largest share of online games. As for example, the
growth in PubG and Fortnite was mainly due to its social gaming structure. Social games are not
popular among the tech-savvy youth, but also the adults. As for example, Fortnite has been the
breakout star of the last two years, with 200 million players across the globe and with impressive
revenue of $2.4bn in 2018.
Freemium Games: There has been a noteworthy growth in the popularity of freemium games,
which is free to play games. According to the case study, until 2013, Angry Birds had generated
revenue through download fees. After that the company introduced their first freemium model.
Though it was downloaded50 million times in just a month, it failed to boost revenues and
disappeared from the grossing app store charts (Lutnick et al., 2018). Angry Birds was not
originally a freemium model, though with fans complained about the intrusive app purchases and
continuous un-installation forced the company to launch the free app.
Mergers and Acquisitions: A significant trend is visible from the mergers and acquisitions. In
order to grab more market share, game publishers are trying to conquer multiple platforms
utilized for gaming, mobile devices, social networks, browsers, etc (Esposito & Tse, 2018). As
for example, one of the global gaming leader, EA Games acquired mobile gaming companies
Glu and social game developer Playfish. Another example is Zynga, one of the largest social
game publishers acquired mobile gam app developer NaturalMotion to get a larger share of the
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