When people think of successful start-ups of the last few years, Supercell is not a name that will be familiar to many, but what they’ve achieved since they launched their mobile first game Clash of Clans in August 2012 has been nothing less than mind blowing.
Supercell, a Finnish company founded in 2010, had experienced game developers amongst its founding team, with CEO Ilkka Paananen and Mikko Kodisoja having sold their maiden start-up, Sumea in 2004 for $6million in cash and another $12million in stock to Digital Chocolate, for whom they then worked for 6 years.
Originally focused on producing social games on Facebook, Supercell raised $12million in a 2011 venture round led by Accel at a $52.3million valuation, shortly after which they pivoted to focus on creating mobile, specifically tablet and namely the iPad, first games.
The development process
Whilst many game studios have an autocratic executive producer green-lighting the work of designers and programmers, Supercell’s developers work in autonomous groups of 5-7 people. Each cell comes up with its own game ideas, which it then pitches to Paananen before developing a beta version, which, if the cell likes it, is then shared and played amongst the other cells.
If it passes that round of internal testing, an alpha version is produced and released into the Canadian App Store. Only if it’s a hit within that App Store, will the game be released globally. This staged approach has killed off 4 games so far, against the 2 success (Hay Day as well as Clash), with a cell opening champagne to toast their failure.
This is a really interesting and valuable lesson for any start-up, with Paanenan telling Forbes:
“We really want to celebrate maybe not the failure itself but the learning that comes out of the failure”.
Clash of Clans is free, but features vivid graphics and addictive gameplay. The staggering revenue it’s earned (Supercell have only published combined numbers with Hay Day, but 8 months after release the 2 games were making $2.5million a day) have seen it become a poster boy for the in-app-puchase business model.
In Clash of Clans, each player starts with a small medieval settlement in a forest clearing and builds it into a larger community, with an ever larger army to defend it and raid other towns.
The average user plays for short bursts 10 times a day: threats endanger players’ digital domains even when they’re logged off, so the game prompts frequent returns with text messages warning of incoming raiders, which not only require renewed engagement but also investment in re-enforcements or supplies. Clan players looking to quickly climb past the first few easy levels are paying $100 a pop for a chest of gems usable as currency within its virtual store.
A key lesson that can be taken from Supercell and applied across any app your planning on making, comes from listening to what Paananen cites as the reason for the company’s success:
“The huge irony here is that if monetization is not your number one priority, that actually leads to better monetization. When you prioritize engagement and retention – making a great game that people play often and want to play for a long time – they are happy to pay. We want to design games that people can theoretically play for years.
There was a time, especially in the social games industry, where people thought you could create great games based on a spreadsheet: that creativity and design wouldn’t really matter, because it was all about some maths.
Games are still a form of art, not a form of science. You can’t design fun on a spreadsheet. And if you want to make an industry for the long-term, if you can’t create fun games, there’s no future.”
In citing this focus on player engagement, parallels can be drawn with gaming hits from previous decades and platforms, like World of Warcraft and League of Legends. However, I’m sure Supercell still play close attention to the analytic performance of Clash to assess what aspects are working well for their players, and designing at least partly on that. Supercell’s approach then is not to ignore either the art or the science of game making, but to draw on the benefits of combining the two.
Supercell enjoyed an amazing 2013, indeed they were arguably the most successful mobile company in the world. On the back of their early success with Clans (and Hayday), they raised $130million at a valuation of $770million in a further round of venture funding in mid -April 2013.
Then, have conquered the Western App Store, they formed a strategic partnership to cross promote each other’s games with Gungho, the Japanese developer of Puzzles and Dragons. Paananen stating that the partnership came about through seeing GungHo boss Kazuki Morishita speak at industry conferences – “I really admired how humble he was about everything” - and sense that the 2 companies cultures might mesh well:
“We were interested in the Japanese market, so we got in touch with them, and there was an immediate connection on a personal level, but also on how we both think about game design. So we decided to do some cross-promotion.”
By October, that relationship had flourished to the point where GungHo (20%) joined with Japanese telco Softbank (80%), to invest $1.5billion for a 49% stake in Supercell. The company’s value quadrupling in just 6 months.
The power of mobile
A revenue generating (sorry Snapchat) company quadrupling its value from an already high $770 million is simply staggering and amply demonstrates the extreme power of the mobile platform that continues to grow globally. As Paananen himself put it, when discussing the Japanese investment:
“The combination of tablets, mobile and free-to-play business model has created a new market for games, one that will be accessible to billions of consumers, more people than ever before in the history of games.”
It’s this opportunity, that prompted us to create our Course teaching non-technical people how to go about turning their app ideas into an app. If you’re interested in learning how to make an app (and how couldn’t you be!), then start on a free trial with the first tutorial today.