Unlock the Editor’s Digest for free
Roula Khalaf, editor of the FT, selects her favorite stories in this weekly newsletter.
Supercell – the developer behind one of the most lucrative mobile games, Clash of clans – has released its first title in more than five years, as the Finnish company attempts to revive its fortunes in an industry facing its biggest slowdown in 30 years.
Ilkka Paananen, co-founder and CEO, told the Financial Times that preparations for the launch of Team breakers Wednesday was “stressful” as the Tencent-owned company looks to score another billion-dollar hit.
“We haven’t released a game in a long, long time,” Paananen said. “That’s because our teams have very high demands. We kill a lot of games [before they are released]. Now we finally have our game that has passed that quality bar.”
Supercell was an early success story of mobile gaming, launching titles such as Clash of clans, Hay day And Clash Royale. It was valued at $10 billion in 2016 when Tencent, the Chinese internet group, took a majority stake.
But after peak sales of €2.1 billion and profits of €917 million in 2016, Supercell’s revenues declined in subsequent years.
Supercell’s revenue fell 4 percent last year compared to 2022 to €1.7 billion, while earnings before interest, taxes, depreciation and amortization fell 8 percent to €580 million.
At the same time, the $200 billion video games industry is facing its biggest slowdown in decades as growth fueled by smartphone gaming and the latest generation of consoles reaches its limits. Consumer spending on mobile gaming fell 2 percent last year to $107.3 billion, according to Data.ai, which predicts low-single-digit growth through 2024.
Paananen said the mobile games industry as a whole has only had “six or seven” major new hits since then Brawl starsSupercell’s most recent global launch, in December 2018.
“The industry as a whole, including us, should probably take more risk to do things that haven’t been done yet,” he said. “What needs to happen is more innovation and more risk-taking. That is the only way to grow the market.”
Team breakers is a title featuring characters from all previous Supercell games that pits 10 teams against each other in four-minute matches. Paananen said the Finnish company had first had the idea for a ‘mash-up’ of its titles ahead of its 10th anniversary in 2020, but it had taken years to develop the right concept.
“Would we have wanted to release a game earlier? Naturally. But are we proud of waiting? Yes. Is it stressful? Of course it is, he said.
Most games companies release hundreds of titles with one or two blockbuster hits and dozens of flops. Supercell, known for its “cells” of about 10 employees per title, has popularized an alternative business model that has been widely imitated in the mobile industry: releasing a small number of games that are maintained for years with a constant stream of new features, characters and gameplay ideas.
Clash of clansreleased in 2012, remains one of the world’s top mobile games as measured by consumer spending, according to Data.ai.
“We want to last more than 100 years, just like Nintendo,” says Paananen.
Paananen restructured Supercell last year, allowing its existing games to have larger teams – Clash of clans now has 100 employees – while the number working on new titles remains smaller. It currently has a monster hunting game, mo.coin development.
“There is so much untapped potential in the mobile games market,” says Paananen. “We’re still scratching the surface. We must think bigger, act stronger. And be okay with failure.”