Mobile games maker Supercell hit by first big profit fall
Helsinki — Mobile game maker Supercell reported a 20.5% drop in 2017 core profit on Wednesday due to falling revenue for its five-year-old hit game Clash of Clans.
Supercell, founded in 2010 and valued in 2016 at about $10bn, has grown year to year on the back of the continuing success of its hit games.
Rather than launching a variety of titles for different audiences, it has focused on a handful of games and killed off those which it did not expect to become top-10 global hits.
The Helsinki-based company, majority owned by China’s Tencent, said earnings before interest, tax, depreciation, and amortisation fell to €729m in 2017 from €917m in 2016. Revenue dropped 14% to €1.8bn from €2.1bn in 2016.
"In the West our games are not growing at the pace they used to. We also did not release new games last year," said CEO Ilkka Paananen.
Supercell has a catalogue of four games — Clash of Clans, Clash Royale, Boom Beach and Hay Day — which have about 100-million daily active players. It derives a significant amount of its revenue from in-game purchases that players make with their smartphones.
Supercell said in 2018 it will look for new growth opportunities in China and Asia.
It has also released a new multiplayer game, Brawl Stars, for test users in selected regions. But Paananen said its wider release was still under review.
"In the short term, it would be tempting to put a game out fast to fix the numbers, and to keep the growth going. But none of our development teams wants to be the one to release our fifth best game."
Supercell, which has kept its operational independence and Helsinki headquarters, first entered into a deal with Japan’s Softbank in 2013. Tencent bought Softbank’s stake in 2016 for $8.6bn and has increased its shareholding to 83.6%.