So you've got a blockbuster iPhone game. Now what?

March 16, 2012: 10:06 AM ET

Cut the Rope is one of the most popular iPhone games ever. Now the team behind it is gearing up to merchandise like crazy.

By Daniel Roberts, reporter

most_downloaded_apps_previewFORTUNE -- You've likely seen Angry Birds schwag -- t-shirts, hoodies, stuffed animals, key chains, backpacks, iPhone cases, even flip-flops. Now the makers of Cut the Rope, the fourth most popular paid iPhone app, are looking to do the same with Om Nom, their game's little green monster mascot.

The game hit 100 million downloads in February, including both paid and free version of the title, across all platforms. Its gameplay involves strategically cutting a rope so as to land a piece of candy into Om Nom's open maw. Om Nom is already a fixture on YouTube, where his parent company, ZeptoLab, debuted a series of official cartoons last year. Now, the Russian firm plans to take Om Nom to the next level, in part through a deal with Mattel (MAT). "All of this stuff comes down to design," says Misha Lyalin, CEO of ZeptoLab. "If people love the design and look of something, you can make it into all kinds of stuff."

The first result of the Mattel deal is an interactive board game similar to Mattel's $20 "Knock on Wood" game, which is based on the Angry Birds franchise. (That item is ranked number one in board games on Amazon.com (AMZN).) Another result of ZeptoLab's Mattel partnership is the creation of an Om Nom figurine with three touch points that mounts to an iPad for enhanced gameplay. That's done through what Mattel calls "Apptivity," which lets physical toys be moved around on the screen to achieve goals within a game. Mattel has made the same figures out of characters from other popular app games such as Fruit Ninja.

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In terms of ZeptoLab's actual involvement with the creation of these spin-off products, Lyalin says it's minimal: "I let the game companies do what they want to do," he says, lounging back in his chair with a smile. "They can worry about how many toys they sell and who they'll sell to. What I want to worry about is whether my gameplay is cool, whether the experience is stellar."

The company has also closed a deal with a second big-name toy maker. It co-branded the Om Nom character with Hasbro, which will use the green guy in its classic board games like Connect Four. And through yet another partnership, ZeptoLab will create a plug-in game that can connect to the A/V jacks on a television. The game-maker, JAKKS Pacific, will develop a standalone Cut the Rope branded controller. That firm has made similar products for major brands like Disney's (DIS) Pixar studio.

Plus, the company is still putting out new iterations of the game itself. Cut the Rope just recently released an update, for its Cut the Rope: Experiments game, called Bath Time. They will continue to offer up new editions -- much like Angry Birds "Seasons" -- but Lyalin knows there has to be a balance in terms of rolling out new versions or extra features like the iPad-attachable figurine. "When you sell a game for 99 cents you basically have to hit everybody," he says. "The way to do that is make sure you don't cut huge chunks of your audience out by adding some new feature that doesn't make sense to them."

In its quest to make Om Nom as recognizable as those spherical birds and fat green pigs, ZeptoLab will also be putting its franchise character on clothing. That deal has been signed with the apparel company LF USA and will bear fruit later in 2012.

Michael Pachter, a gaming analyst with Wedbush, points out that Angry Birds didn't invent the idea of marketing a game character: "Traditionally you see it most when they make a movie out of a game, like Resident Evil," he says. But that was a console game, and it's difficult not to think of Angry Birds -- still the most popular iPhone app ever -- as the originator when it comes to app-specific games and recognizable in-game characters. (Movie studios have also had a long, lucrative relationship with characters that could be turned into licensing cash machines.)

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Indeed, Leigh Alexander, Editor-at-large of game-developer web site Gamasutra, points directly to Angry Birds as the leader of a new trend. "I do think they [ZeptoLab] saw what Angry Birds was doing and thought, 'How can we leverage this brand across different media?' And I expect most games will now be designed with a view toward making an iconic character that can be made into a figure. That Cut the Rope character was developed very carefully and in a calculated way, with the intention of marketing it in the long term."

By splashing Om Nom onto clothing, toys, merchandise, and many other things that are not games, the company may risk overexposure. Pachter doesn't believe Cut the Rope runs that risk yet, but says, "Angry Birds does. They're in pistachio ads, they had a Rio version with a movie—they're every place. These guys aren't." Alexander, meanwhile, says that the people who could conceivably be annoyed by seeing the character everywhere likely just won't care. "The people who play games seriously aren't going to be affected by mainstream merchandise," she says, "while the kind of people who get obsessed with such apps, they'll go for it. Mainstream audiences love garbage. Think of all the people who went as an Angry Bird for Halloween."

Asked about whether Angry Birds has been a model for the process they've begun, Lyalin is cagey. "Yes and no," he says. "This stuff, it's not just like all mobile games do the same. Each one is different. And people tell us all the time, 'Oh, hey, why don't you just do what Angry Birds did,' but why would we do the exact same products as those guys did? We have a different brand." Indeed, they have a different brand and a different game. But it sure looks like many of the partnerships they're making are similar. And that might prove very wise.

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