Finland’s superstar mobile gaming company Supercell reported before-tax profits of $577 million on revenue of $1.56 billion, down from 2018 profits of $635 million on revenue of $1.6 billion. I guess you could call that a bad year.
Supercell’s earnings always crack me up. The Helsinki maker of Clash of Clans and Clash Royale is such a standout performer in mobile games that even its off-years or quiet years, like 2019, still mean that the company is printing money. And Supercell has only 323 employees, compared to console game maker Ubisoft, which has more than 15,000 workers and has annual revenues that aren’t so far from Supercell’s.
That gives you the idea of the efficiency of Supercell, which is one of the giants of the $86 billion mobile game industry. But rather than boast, Supercell CEO Ilkka Paananen wrote an annual missive that was more like a love letter to players, a way of explaining to them in an open way what the world looks like from inside Supercell.
The Finnish folks are humble about their capitalism. They don’t brag about it properly, as they have semi-socialist roots and don’t tout their financial performance. A case in point: In Paananen’s letter, the description of the financial performance of the company is buried in paragraph No. 34. And Paananen proudly points out that the company paid taxes of $110 million to Finland alone — something that any self-respecting chief financial officer in most capitalist countries would be embarrassed to acknowledge.
“Many of us who have benefited from our free education and healthcare financed by taxes feel proud that we can contribute to our society in this way,” Paananen wrote. “For us, the most important thing about good financial results like these is that they enable us to keep investing in making great games (including making our existing games even better) and think very long term.”
Paananen noted that this year, the company will turn 10 years old.
“That moves us closer to being able to measure our games in decades rather than years, which is a great reminder of why we are here,” he wrote in the annual letter. The letter shows us the eccentricity of the Finnish company, which was acquired by Tencent in a deal that value the company at $10 billion in 2016.
Supercell’s dream is to make “games that are played for years and remembered forever,” he said.
“When we founded Supercell back in 2010, our idea was simple: to create a new kind of games company that would be the best place for the best people and teams to create the best games – games for as many people as possible, that would be played for years and remembered forever,” Paananen wrote. “At the time, we were inspired by games like World of Warcraft, which many of our co-founders had played for years and years. For them, it was not just a game. It was a passion, a very important part of their everyday life, something that they played together with friends and also made new friends with. Our big dream was to create a similar social experience, and hoped that with a platform like mobile virtually anyone could be part of it.”
Killing your own games
Paananen said that 2019 saw several examples of the company’s values in action. Painfully, the company decided to kill Rush Wars, a game that made it into beta testing.
“The team behind the game killed it because based on the beta, they felt like this was not going to be a game that lots of people would play for years nor would it be remembered forever,” Paananen wrote. “The early gameplay was lots of fun, but it just did not carry over to the endgame.”
The only other company in the game business that operates this way and publicly talks about its failures (once in a while) is Blizzard Entertainment, which operates in the PC and console space mostly and acknowledges when it has to kill off games that don’t live up to their potential.
“I feel proud of the decision the team made. I cannot even imagine how painful it is to kill your own darling, something that you’ve poured your heart and soul into,” he wrote. “That said, this is how we all want Supercell to operate: We should only release games that are of exceptional quality, games that the players love and games that have a shot at being remembered forever. Very importantly, at Supercell these types of decisions are always owned by the team who is behind the game. We feel that it is critical that the people who are responsible for the game also get to decide about its future.”
Paananen said he has developed more and more respect for how incredibly difficult it is to create a new game. In 10 years, Supercell has only launched five games — Hay Day, Clash of Clans, Boom Beach, Clash Royale, and Brawl Stars. He views the ones that didn’t make it as opportunities to learn.
Keeping games going with big updates
During the year, the teams behind Hay Day and Boom Beach put out their biggest updates in the history of their games. Hay Day added “The Valley,” creating a new mechanic; and Boom Beach added “Warships,” a new way to play together with other people.
Millions of players still enjoy these games, even though they’ve been around for so many years, and that’s why the teams have put so much work into these updates. The Clash games and Brawl Stars also saw major upgrades.
Operating in cells
Supercell maintains that it is strong because it is driven by veteran employees. It has held its team size down deliberately, and has far fewer managers and executives than other companies. The teams are self-governing, and new projects often start with a handful of people. The decision to proceed with games or kill them off resides with those teams.
“A major component of our mission – i.e. to be the best place for the best teams to develop games – involves keeping the company as small as possible,” Paananen wrote. “This is because we believe smaller size minimizes the amount of bureaucracy and processes while maximizing room for innovation. And, we all simply like to work in a smaller company! Anyway, last year some of our game developers actually got concerned that the company might be getting too big too fast as we grew to just over 300 in size. We had a big discussion about this and, as a result, decided to slow down our growth significantly until we feel confident that we can keep our culture intact despite the growth.”
Instead of using its profits to fuel new teams, Supercell decided to set up an investment arm and to invest in other studios — often in the Nordics — to help get interesting ideas off the ground and into the market. In 2019, the company invested in Luau Games in Malmö, Sweden; Ritz Deli in Oakland, California; and Wild Games in Stockholm.
2019 was the first full year for Brawl Stars as a global game. The game spent a very long time in development and in beta before the team decided to release it.
“What made things particularly interesting was that internally, prior to the beta, even Supercellians (the passionate gamers and developers that they are) had mixed feelings,” Paananen said. “Some absolutely loved it, others less so. There were heated discussions about the art style and controls, and even whether Brawl is ‘a Supercell game’ to begin with. But, the team kept working hard to improve the game, making massive changes to the game in beta.”
Brawl Stars became the No. 1 game in South Korea, one of the countries with the fiercest mobile game competitors. Supercell invested in that market, launching a place called the Supercell Lounge in Seoul, where players could gather to experience the game together. Supercell also held the first ever Brawl Stars World Finals and filled up the city of Busan with Brawl characters.
“Esports will be a significant part of Brawl Stars going forward,” Paananen said. “For us, it is very important that everyone will get a chance to participate. Because of this, just a few weeks ago, the Brawl team launched a monthly challenge in-game, through which anyone playing the game can try to qualify for this year’s championship! It has been hugely popular so far, more than two thirds of Brawl players have participated at this point.”
This year Clash of Clans will celebrate its 8th anniversary, while Clash Royale turns four. Both teams continue to work hard to improve the games for players, Paananen said.
Clash of Clans received two big updates with Town Hall 13 and Builder Base 9, both giving players a bunch of new stuff to build and battle with, including new troops and a first new hero since 2015: the Royal Champion. Clash of Clans and Clash Royale also introduced seasons and seasonal challenges as well as game passes.
New year, new teams, new games
Paananen said that new games are in various stages of development. Some are close to beta, some will be killed before anyone sees them.
“But, with some luck, you should see a game or two from us in beta this year,” he said. “And then it is up to you, if enough players like them, we will release them globally. This is still exactly how I feel about our pipeline of new games today! Lots of exciting new games in the works, and with some luck our teams will decide to release one or two of them to beta later this year.”
Paananen also gave thanks to the community.
“We are extremely grateful for all of the support and love we get from you,” he wrote. “We are inspired by the work you do every day and it drives us to work even harder to deliver even better games and experiences for you.”
He noted that Supercell also gave back to the community with the launch of Hive, a new kind of coding school in Helsinki inspired by the pioneering work done at École 42 in Paris. Hive is a tuition-free school where anyone can apply via an online test. It has no teachers or classes. Instead, students learn from each other by solving problems of increasing complexity.
“The launch was a massive success! So far 3,395 people have successfully completed the online test, out of which 142 students made it in and are now learning to code,” Paananen wrote. “We wanted to create an inclusive environment where everyone could learn how to code. So, it was great to see so many different people from different walks of life attending: Hivers’ backgrounds range from farming and kindergarten teaching, to musicians and business owners, to janitors and healthcare professionals, from 18 to 55 years of age.”
Lastly, he said that Supercell embarked on making the company carbon neutral. In September 2019, during the UN Climate Action Summit, a total of 21 games companies launched the Playing For The Planet Alliance.
Supercell on its part committed to offsetting 200% of its direct CO2 emissions last year, and 100% of those generated by players as they play the company’s games.
“So here we are about to start our 2nd decade. Ten years ago, when we started, we were inspired by companies like Blizzard, Nintendo and Pixar, that have been able to consistently create successful entertainment products that are loved by millions all over the world,” Paananen wrote. “We aspire to be like these companies that have lasted for decades, in Nintendo’s case for more than a hundred years, and will continue to live for many more. It is crazy to think that we are about to close our first 10 years as a company. Obviously it is early (we are not even close to 100 years yet!) but this is a nice milestone for us.”
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