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The chief executive of Supercell, the makers of popular mobile games such as Clash of Clans and Brawl Stars, has attacked rivals for seeking to buy successful new titles rather than creating them.
Ilkka Paananen, co-founder and chief executive of the Tencent-owned group, said the mobile gaming industry had stagnated since 2021 while other entertainment sectors such as books, music and TV had posted growth.
“Some companies in our industry seem to have taken the approach that it’s so hard to launch new games, that let’s just give up on it,” he told the Financial Times. “They shift to a M&A strategy where every time somebody invents a new game, let’s just go and buy it. I have a big problem with that thinking.”
Paananen’s words have heft, as Supercell helped pioneer the free-to-play mobile gaming sector, making huge hits such as Clash of Clans, Hay Day and Clash Royale in its early days. Customers can play the games for free but can speed up the action or gain access to new characters and designs by spending money.
Supercell last year enjoyed record underlying revenues of €2.8bn, up 77 per cent on a year previously, as all six of its titles posted annual growth for the first time in a decade. It was valued at $10bn in 2016 when Tencent, the Chinese internet group, took a majority stake.
The Finnish games studio is notoriously selective about which games it releases, killing off many possible titles as they do not reach its high standards. Paananen has talked of trying to make games that last a century but Supercell has only released one new game in the past six years, Squad Busters in 2024.
Over that time, a wave of consolidation has swept through the industry in recent years. Take-Two Interactive bought Zynga, maker of FarmVille, for $13bn in 2022. Meanwhile, Activision Blizzard, which was itself taken over by Microsoft, purchased King — the studio behind Candy Crush — in 2016.
Playtika of Israel and China’s Tencent have both made numerous acquisitions of smaller game makers. However, Supercell itself has bought several smaller games studios, purchasing all of UK-based Space Ape last year.
The Supercell chief executive conceded that “it is incredibly hard to create new games in our space”. He pointed at research that suggested very little time in 2024 was spent on games created in the previous 12 months while a majority of time was spent on games created more than six years ago.
Supercell has rejigged its structure away from purely using small “cells” of no more than 10 people to work on games. Those cells still exist for games under development, but for those six titles — which also include Boom Beach — the teams are now allowed to be more than 50 people each.
Paananen said Supercell was “swimming against the current”, increasing its workforce by nearly a third to 686 people last year. Giants of video gaming such as EA, Ubisoft and Sony Interactive all have more than 10,000 workers but have laid off employees over the past year.
“The industry needs to look itself in the mirror. Why haven’t we been able to create new innovative game experience for players? It’s part of our responsibility to take more risk,” Paananen said.
His comments came as Supercell reported its second-highest underlying annual earnings before interest, tax, depreciation and amortisation of €876mn, up by 76 per cent from 2023.
But both its ebitda and revenue numbers were different when reported under accounting standards that defer sales — such as from in-game currency — until when they are realised, rather than purchased.
Their reported numbers were €1.96bn for revenues, a rise of 15 per cent from 2023, and €287mn for ebitda, a fall of about 50 per cent.
