Rovio’s business model in a simple diagram, sketched by its senior VP

As the senior vice-precident of Rovio Asia, Henri Holm lives and breathes Angry Birds. Turns out he wears it too.

Decked out in a bright red Angry Birds hoodie, Henri was in Singapore on Friday, 1st June, with his son to launch the first-ever Angry Bird themed cable cars in the world, connecting Singapore Southern seaboard with Sentosa, the country’s famous island resort.

During the media interview, he sketched out for me (quite literally) Rovio’s business model, and how generating revenue is the natural consequence of fan engagement and brand-building. It’s pretty cool.

Here’s what it looks like when I recreated it on Photoshop:

As Holm explained it, Rovio’s strategy is to repeat the cycle of fan engagement and brand building in an infinite cycle. It’s quite clear that the Angry Birds games is just the beginning of Rovio’s relationship with its fans.

By expanding into movies, webisodes, merchandising, and carnivals, the company hopes to tell a compelling story that will keep fans coming back for more.

All this, of course, leads to more money for the company — some 30 percent of its revenue, said Holm, comes from merchandise. Engaged and loyal fans are more likely to download the next installment of Angry Birds, and beg their parents to buy some cute plushies.

This business approach is not entirely new, of course, and it’s no accident that Rovio is trying to be the next Disney.

But I thought it’s refreshing that their strategy has been succinctly illustrated with one simple diagram.

Here’s a scan of Holm’s actualy scrawl on my notebook (that odd shape above the diagram is a cancellation by me):