Angry Birds creator Rovio has announced the layoff of 130 of its staff. The reason given was that it basically overestimated the longevity of its popular mobile app and the demand for offshoot products. The layoffs amount to about 16 percent of its total workforce.
The Gaming Industry as an Extreme Model
The gaming industry was not surprised by a couple of things highlighted by this story. One of them was the short shelf life of a game. A second was the inability for Rovio to duplicate its success by developing a game that was close to the popularity of Angry Birds. It was, in effect, a one hit wonder.
This is a lesson in success and optimism for many small business owners, particularly those in the game development industry. The landscape is filled with games whose long term success has been won by continuing a series rather than trying to create a different version of a popular game. While gamers often complain about the lack of variety in games compared to 20 years ago, companies know that in order to continue reaping in the profits they need to sow a product that will keep players coming back for more of the same. Examples of this are the Call of Duty and Madden football series.
Optimism and Expansion
Game development is a different industry than most other businesses. At the same time, developing a game is similar to most other businesses in that they can also fall victim to the realities of being too optimistic, and rushing into hiring staff who will soon be laid off. Expansion and success usually go hand-in-hand, and judging when to hire and how many people to hire requires good business instincts and some experience. It is better to err on the side of working your existing people harder instead of hiring people for a few months and then having to let them go as Rovio did.
The CEO of Rovio said that the layoffs were part of creating a more “simplified organization.” This is an admission that it grew too fast with revenues and ideas, but the revenues could not sustain the ideas for very long. Organizational structures get out of control when optimism is not tempered with practical business judgment. In a small business, this optimism can be generated by a rush of clients demanding products and services the business is not yet ready to handle. Often the answer is to hire in new staff because the business owner is unable to say to the line of potential customers that they have to wait. The next success after Angry Birds could not wait.
Un-met Expectations
An uncomfortable reality Rovio must accept is that its fans have moved on to something else. The short attention spans of many gamers also parallel their unwillingness to commit to or wait for anything. When Rovio could not create Success Number Two, people went elsewhere looking for the next fad. As a company Rovio still existed, but not in the minds of its restless and bored one-time followers. The company ended up suffering from the same malady that its fans and laid off employees did – the sadness of un-met expectations.
Optimism nourishes the seed of success, and that is as it should be. But growth takes place with the right amount of sunshine and rain, and that is a lesson for all small business owners to remember.
