Interested in learning what's next for the gaming industry? Join gaming executives to discuss emerging parts of the industry this October at GamesBeat Summit Next. Learn more.
Disclosure: The organizers of Slush paid my way to Helsinki. Our coverage remains objective. This is part one of a two-part interview. Part two runs Tuesday.
HELSINKI — Ilkka Paananen and most of his 130 employees at Supercell, the maker of the incredibly successful Clash of Clans mobile strategy game, are rich enough to retire. They just sold 51 percent of their Helsinki-based company to Japan’s SoftBank and GungHo Entertainment (the makers of the popular and lucrative Puzzles & Dragons puzzle-role-playing game) for $1.53 billion. That makes Supercell worth about $3 billion, or more than Zynga, the social gaming giant with 2,200 employees.
But Supercell’s CEO says the company did that deal not as its end game but to secure stability for good and to set about its quest of “making history” in the entertainment business. He believes his job is to get the best people to make the best games and provide the best environment for them to work in. They work in “cells,” or teams of a half-dozen or so. They toil on games, kill off the bad ideas, and test the ones that are promising. By doing so, Paananen hopes Supercell will make a lasting impact on the game business in the same way that companies such as Disney and Nintendo have done — and in an environment in which more than 1.2 billion people play games.
Paananen met with a group of media attending the Slush conference in Helsinki. The company’s headquarters is on one of the upper floors of an abandoned Nokia research center, one of the ghosts of Finland’s tech economy. Now much of Finland’s game industry and its government investment programs have been inspired by Supercell’s success.
Here’s an edited transcript of our group interview with Paananen. The pictures in this story were taken at Supercell’s headquarters.
Question: Tell us how you work.
Ilkka Paananen: What keeps it all together is our unique culture. We’ve organized into these small, independent teams that we call cells. That’s where the name “Supercell” comes from. We believe that decision-making power about games should be as close to the player as possible. Therefore, the individual developer should be able to make decisions about their own work and whatever affects their players. If you do that, you can optimize for speed, and you create a sense of ownership among the people who work on the games.
We’re also very big believers in the concept of “small.” Small teams move quicker. There’s less management and bureaucracy and process. That results in happier developers and better games. Again, at Supercell, it’s really the team that owns the game.
As you know, in the games industry, companies usually go through a greenlight process. We don’t have one, because we don’t need one. At Supercell there are two entities that have control. One is the team itself. During development, the only entity that can kill a production is the team itself. Even I can’t do that. Then, once a team ships their game to a test market, power shift from the team to the players. At that point, they become very metrics- or data-centric. They have metrics a game has to reach in order to proceed to a global launch.
To put it simply, at Supercell, two entities have control. During development, it’s the team. After development, during the beta, it’s the players. It really is that simple. Everything unfolds from there. We’ve tried to create an environment of zero bureaucracy. Just super talented people. The role of management or leadership—First of all, we have very few of those people. But our main goal is just to create the environment and then stay out of the way so that people can focus on their work.
We’re also fully transparent as an organization. Every morning, an e-mail gets sent out to the entire organization – from trainees to the CEO – that has all the key performance indicators for each game. The same information is always available to everyone at the same time. We believe that if you provide people with the right information, you don’t need to tell them what to do. They can figure it out themselves.
Further, we really do celebrate failure. It’s not that we pretend that failing is fun. When we need to kill a game production–Imagine a group of five or six people who’ve worked day and night on a game for many months. Maybe the game just doesn’t fly. Maybe there’s a poor focus group result. Maybe the game goes to beta and users don’t like it for whatever reason. Of course it’s not fun when we have to kill a game at times like that. But what we think is worth celebrating is the learning that comes out of that failure. When we have to kill a game, we always organize a party around it. The team gets up on stage and talks about what went well, what didn’t go well, what they learned. Then we hand them a bottle of champagne to celebrate what they’ve learned.
The fact is that, as a company, we’ve failed way more often than we’ve succeeded. Last year we killed at least five games. We launched only two. I fully expect that to be the case going forward. We’ll bring games out to beta and many of those games won’t fly. That’s the nature of the business. But we believe that if you don’t take those risks, you won’t get hit games either. If you want to do something innovative, you have to take risks. A natural outcome of taking risks is of course failure. This is what keeps the company together.
Question: What’s your mission?
Paananen: Our mission is to become the first truly global games company. For us, a truly global games company is one that has a hit game in the big western markets – in North America and Europe – and also in each of the big eastern markets – Japan, Korea, and China – at the same time. Our goal is to create games that somehow unite gamers all over the world. While we have a long way to go, there are some encouraging results I’d like to talk about today.
On iOS we have two games. Clash of Clans has been the number one game on the iPad top-grossing charts in 139 countries. Hay Day has been the same in 102 countries. With Clash, we got really excited about the Japanese market early this year. People thought that we were absolutely crazy. They said that Japan was just a big graveyard for western game companies. But we thought we’d give it a try. We’ve been quite happy with the results. At its peak, Clash made it to three on the iPhone top-grossing charts, and it’s still in the top five or top six. It recently launched on Android and also made it to the top 10 – same with Hay Day.
People ask us, what’s the secret? I believe that it’s because we think quite differently about these games. A lot of companies bring their games out on a fire-and-forget type of model. Put the game out, it goes up, and after a few months it comes back down. Our games have stayed on top for more than a year now. Hay Day was launched globally in June of last year and it’s been in the top five ever since. Clash was launched in August last year and it’s still the number two game in the U.S. after Candy Crush. They have that staying power.
Why is that? The number one reason is that when we founded the company, from very early on our goal was to create games that people would play for years, not just for weeks or months. Lots of the creative people at Supercell have a background as developers or as consumers of MMO games. We play a lot of games like World of Warcraft or League of Legends. Those types of games have a very long shelf life. Our dream is to achieve something similar, but for the mass market and mobile platforms. Again, it’s early days, but we’re quite happy about the results.
It all comes from this mentality of thinking of a game as a service, rather than just a product. One of our explicit missions is that every single week, we want to make these games better for users. They always have to become better.