Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Supercell, the Finnish mobile gaming group, will take more risks and explore new genres in an attempt to beat the multibillion-dollar successes of Clash of Clans and Hay Day, according to its chief executive.
Ilkka Paananen told the Financial Times there was pressure on the Tencent-owned group after Clash of Clans brought in more than $10bn in revenues in the past decade, akin to a band creating a “massive hit” and finding “everything you do is compared to the previous one”.
“We want to create something better and bigger than Clash of Clans,” he said in a rare interview. “That won’t happen unless we take even more risk . . . All kinds of risks. We shouldn’t be stuck in previous genres, we should try new genres and invent new ones”
Supercell, founded in Finland in 2010, is one of the most successful mobile gaming groups and was valued at $10bn when bought by China’s Tencent in 2016. But its most successful games are more than a decade old and it has only released five in total, each of which has earned at least $1bn in revenues.
It now faces a competitive mobile gaming market where global tech groups such as Microsoft, through its $75bn acquisition of King’s owner Activision Blizzard, are investing heavily to try to stay on top.
However, the market is in decline for the first time since the smartphone era. Gaming data company Newzoo said global sales from mobile games fell in 2023 to $92.2bn, down 7.3 per cent from a year earlier.
The last game Supercell released worldwide was Brawl Stars in 2018 while Clash Mini is still in beta testing despite being available in some countries since 2021. The company became famous for only using “cells” of about 10 workers on each game and celebrating killing off games that did not meet its high quality standards.
Paananen said that despite the new game drought he had “never been as excited as I am right now”. He restructured the company last year, splitting the creation of new games, where the cells are still kept small, from the further development of existing titles, where Clash of Clans now has 100 workers.
“Would I have liked to have seen a new game go out in 2020? Yes. Am I proud that our teams kept the bar high? I’m really proud,” he said.
He added that the one thing that defined Supercell was only putting out games that met its high quality standards.
“What is the price we are willing to pay for a value?” said Paananen. “Somebody told me a value is not a value unless it hurts sometimes. Quality at Supercell means we kill games that many companies would launch. It absolutely hurts and it’s sad.”
He said he had spoken openly within the company: “It really comes down to the question, are the best days behind or ahead of us? I absolutely believe they are ahead. I want to build something like Nintendo that lasts 100 years. We are still early in the journey.”
His comments came as Supercell reported a 4 per cent decline in revenues last year to €1.7bn, and an 8 per cent fall in earnings before interest, tax, depreciation and amortisation to €580mn. Both figures were below the record levels of €2.1bn and €917mn in 2016. It hired 156 people last year, taking its total to 540 workers.
Paananen said the mobile gaming industry should not make excuses for its lack of growth in recent years as there had not been any big innovative releases. “I don’t subscribe to the idea that there’s a glass ceiling and the best days are behind us,” he said, adding that Supercell had seen “good momentum” with revenues increasing in each quarter last year.
Asked about Tencent’s ownership, the Supercell chief said it had sought a guarantee of complete operational independence from its previous owner, Japan’s SoftBank, and that continued with the Chinese group. “It is the number one thing we cared about . . . through them we get a lot of help in China,” he added.
Read the full article here
