Angry Birds…Don’t act like you don’t know what I am talking about.  If you are one of the many to own an iPod Touch, iPhone, or an Android powered smart phone, you are probably all too familiar with this grossly addictive game created by Rovio. For everyone else, I can best describe the game like this:

You use a slingshot to launch various types of birds at various types of structures in order to kill various sizes of green pigs.  Sounds fun, doesn’t it? Different birds offer different features mid-flight.  There are several levels and points are awarded based on how efficiently you can destroy the structures and, more importantly, the green pigs (some of which wear helmets).

For a more official description of Angry Birds right from the publisher, take a look at Rovio’s site.

So now that you have a basic sense of what this game is, it’s time for the important stuff.  This game is the number one paid app for the iPhone!  According to their website (see link above) they have achieved a number one paid app in the United States, the UK, Canada, Italy, Germany…and the list goes on and on.  Now, I’m not going to go on some rant about how such a silly game can be so addictive, yet so dominant in the iPhone application market…because what good would that do. After all, I too, have fallen victim to playing Angry Birds and have given up on trying to figure out why its so darn satisfying to kill green pigs.  Suffice it to say…it just is!

What I actually find more interesting is that Angry Birds for the iPhone costs 99 cents but the Android version is completely free, although the game displays little ads in the top right corner. This type of ad based model, usually referred to as adware, has also made runs in the desktop software market over the years.  As a longtime developer of desktop software, it always seemed like a large risk to offer your application for free in exchange for ad revenue. After all, if you were creating a program that you figured could sell for $35, it would be a gamble to think that you could just as easily have made that same $35 by displaying ads to that single user over the course of them running your software.  Only an extremely popular application, one that folks would run for long periods of time, could succeed in giving you your well-deserved payoff.  In most cases the reward was simply out-weighed by the risk.

With the boom of the smart phone application market, that has all changed. Users are accustomed to springing a buck or two,  for a phone application. A stark constrast to the thirty, sixty or even hundreds of dollars that are common for desktop applications. So, whether they realized it in the beginning or not, Angry Birds has become a very intriguing case study on the success of adware applications in the phone market.  According to gyratorytech.com, in December of 2010 Rovio was poised to begin making over $1 million per month in advertising revenue from their 7 million android users.  The article also mentioned there were 12 million iOS (iPhone/iPod) users. 

So, breaking this down a bit, 7 million android users can make Rovio in the neighborhood of $12 million annually in ad revenue, while it takes 12 million iPhone users (at $.99 each) to produce the similar $12 million.  Given these numbers, it roughly takes each android user about seven months to generate the $.99 in ad revenue that the iPhone user pays up front.  It would be really interesting to know how long the typical Angry Birds android user continues to play the game after they install it.

Obviously, what Rovio has done with Angry Birds is more the exception than the rule in terms of the money they are generating. Nevertheless, for those small developers out there creating phone apps, it would be silly not to give serious consideration to the free ad-based model.