I'm not trying to be a smart ass. I would really like to know what you think Rovio should have done. Hopefully with your advise I'll know what to do if I ever have such a huge success.
I think it boils down to, they're a company that is very good at making games. From a casual outside observer's point of view, they seemed to think they could jump straight into being very good at animation and merchandising. They made, what, 30 or 40 games before angry birds was a hit? They didn't seem to have the same level of commitment to 30 or 40 iterations of animation, or merchandising.
It's fine to expand into new markets, companies do it all the time. You probably don't want to bet the farm on something you're not very very good at though, unless it's threatening your survival. Western union moving from the telegraph to money transfer is a pretty iconic example.
Compare to Mojang (survivor bias warning...) they're still pretty small. I haven't played it, but Scrolls is supposed to be really fun. Haven't heard anything bad about Cobalt either. I was very excited for x10k or whatever the space programming game was. They did a ton of merchandising, but they didn't do it in house (as far as i can tell). They took the check from lego and let the big toy maker do their thing.
Do what you think is best, but even if there's some non-game thing that makes sense, ask yourself if you really want to go head to head with Hasbro or Pixar. Really understand what you're getting yourself into.
If you've had a one-off hit that you know is a one-off hit, maybe the best thing to do is to sell off sequel/merch rights to the highest bidder or any employees who want to continue, then wind up the company. Of course, that judgement is the hard part. Maybe they really did believe they could continue making games that would be just as big.
Yes you are trying to be a smart ass. But you're wielding sarcasm like a 5 year old with a chainsaw.
I already outlined what they should have done; not flood the market with sub-standard crap until everyone's sick of them. Pretty obvious if you're not blinded by greed.
And what sort of authority are you? How many multi-hundred-million-dollar companies have you run that you make it sound so easy and obvious?
I'm not forcing you to read my opinion, if you don't like it, move on.