Supercell, the maker of wildly popular mobile games including “Clash of Clans” and “Clash Royale,” is now a part of Tencent, the Chinese mobile and media conglomerate that bought an $8.6 billion stake in the gamemaker from the Japanese tech giant Softbank.
The jaw-dropping acquisition, announced Tuesday, brings Supercell’s total valuation up to $10.2 billion, roughly doubling its valuation from last year. Softbank paid $1.5 billion for its majority stake in Supercell in 2013.
Supercell, based in Finland, has just 180 employees. In 2015, it announced $964 million in profit on $2.3 billion in revenue — all made on just three mobile titles. Not only that, those three games — “Clash of Clans,” “Hay Day” and “Boom Beach” — have had remarkable staying power on the top-downloaded charts for iOS and Android. “Clash Royale,” released earlier this year, has been equally successful. That incredible run has made Supercell arguably the most visible and successful mobile game company at a time when mobile games are exploding in popularity.
Of course, sky-high valuations for mobile game firms aren’t new. Just four years ago Rovio, maker of “Angry Birds” was drawing headlines and estimated valuations of at least $9 billion. Since then, the firm has faced significant job cuts — 38 percent last fall — and has watched the shine come off its name. Similarly, King — maker of “Candy Crush” — enjoyed a lot of hype headed into its 2014 market debut, but disappointed on its opening day. It was subsequently bought by ActivisionBlizzard for $5.9 billion in 2015.
Selling its Supercell stake, then, does seem to pull the embattled Softbank out of a risky, if profitable, area of business.
And Supercell isn’t necessarily doomed to follow in the footsteps of other mobile-focused companies. The firm appears to have a different approach than Rovio, mostly by designing a game that draws in players for a long period of time but encourages them to play in short bursts, which works best on mobile devices. And it obviously does a pretty good job of getting people to spend money on what’s ostensibly a free title. It’s also known for killing off titles that don’t meet its quality control standards, even if they are fairly far into the development process.
That philosophy is similar to Riot, also owned by Tencent, which actually makes just a single game: the giant and still-growing “League of Legends” — considered by some to be the most popular game in the world.
The deal certainly puts Tencent in a stronger position as a gaming powerhouse. With this deal, Tencent is set to take 13 percent of this year’s $99.62 billion mobile gaming market, according to analysis from Newzoo. And growth prospects are pretty good, considering Tencent has the world’s largest gaming market — China — on its home turf, where Supercell titles were already gaining popularity.
For players, however, these boardroom machinations shouldn't have that much of an impact. A blog post from Supercell's chief executive, Ilkka Paananen, said that Supercell will continue to operate independently — much as it did under Softbank — and that Tencent knows better than to mess with a good thing.
"They understand that our unique culture of small and independent teams (or 'cells' as we call them) is what makes Supercell," Paananen wrote, adding that the game developer will remain in its hometown of Helsinki.