Supercell is an outlier in the mobile game world.
They seem to have never been in competition with others, but are thinking about how to beat themselves. In the past 10 years, they have created several disruptive mobile games, generating billions of dollars in revenue, and their team has only 300 people.
Their remarks about falling into the altar have also been frequent in recent years. After all, on the books, their income has declined for three consecutive years, and the sensational effect of new travel is not as good as before. Many people have put a question mark on their future.
Is Supercell really bad? not necessarily. From layout, products, team culture to mergers and acquisitions, the philosophy of this Finnish "small factory" seems to be working in one form. The mobile game market has swept over the past 10 years, and what has changed Supercell?
1. High risk and high return
Drawing lessons from verified games, changing themes, or doing micro-innovations step by step is the correct way to grab users in the eyes of many mobile game manufacturers. Only a few companies will try to disrupt the market with completely disruptive products. Subversiveness relies on intuition, great talent, and the courage to face high risks.
Supercell is obviously a firm implementer of the high-risk and high-return model. They have made 4 games that define new categories: "Cartoon Farm", "Clash of Clans", "Royal War" and "Wild Brawl". Compared to many companies that may only be able to make a disruptive product in their lifetime, this achievement is already extraordinary:
The first four games released in the past six years with a total revenue of more than US$12 billion have all entered the US$1 billion club. The products have long standby time. "Clash of Clans" is one of the most successful mobile games in history, with revenue of approximately US$6.5 billion. Successful globalization ( In 2019, about 40% of revenue came from the United States and 15% came from Asia.) The diversified product lineup achieved the above achievements with only 320 employees. However, even if we all know the achievements of Supercell, we cannot ignore the fact that their performance has declined in recent years. , Revealing more or less signs of non-compliance, will their aspirations of "a century-old shop" be shelved?
Supercell 2016-2019 financial performance
2. History backtracking
Everything about Supercell originated from the "cartoon farm". Released in May 2012, their first game redefines the farm category on touch-screen devices and took away the Zynga "FarmVille" market. In the 8-year life cycle, it contributed 2 billion + US dollars in revenue.
They continued to bet on mobile devices and then launched the "Tribal Clash", which quickly became a global fever and set off a burst of "tribal fever." This game allowed the industry to see the power of social interaction. The monthly flow of "tribal conflict" rose from US$50 million to US$200 million in a short period of time.
Along with the success of "Clash of Clans", Supercell also released "Broker of the Sea", a PVE version of tribal gameplay. To this day, "Battle of the Sea" is still Supercell's only game with a different global release strategy. And although it did not reach the level of "tribal conflict", its total revenue also reached 1 billion US dollars.
Revenue performance of Supercell's products from 2012 to 2020
2015 is the golden year of Supercell. With the success of "Clash of Clans", their annual revenue reached 2.33 billion U.S. dollars. Then in 2016, they launched "Royal War". The game was a huge success in the first year, with revenue exceeding 10%. Billion U.S. dollars, which allowed them to maintain an income level of 2.3 billion U.S. dollars in 2016.
But it was also at this time that Supercell's product architecture changed. The rise of the "Royal War" with the same IP and theme has to some extent poached the players of "Clash of Clans", and the performance of the latter began to decline. In 2017, the "Royal War" also began to show signs of decline, which reminded Supercell:
Beware of new products with lower income ability taking away users of old products.
Changes in revenue (RPI) from each installation within one year of each game’s first release
In the end, at the end of 2018, Supercell released a new IP and gameplay style that is very different from other products, "Wild Brawl", in order not to "play yourself". After that, the "tribal conflicts" and "Royal Wars" have stabilized, and Supercell has also stopped the overall sharp decline.
Third, the game that subverts the rules
1. The old immortal "tribal conflict"
The success of "tribal conflict" and its impact on the industry needless to say. With a total revenue of US$6.5 billion, it has been on the top 10 revenue list in the United States for eight consecutive years. The success of the game is based on four elements:
Fascinating gameplay: It shuts up those who say that mobile games have no depth. The design of "Tribal Conflict" is exquisite, balanced, and full of tactics. It can satisfy the players who pursue the ultimate technology and leisure entertainment at the same time, and has a particularly smooth and advanced experience. Revolutionary social experience: The introduction of tribal warfare brings the status of the game to a higher level. It allows players to have a common goal, work together, and discuss strategies together in depth. It also allows top players to have the opportunity to show their skills. Since then, Supercell has continued to develop its social experience with this as its core. Deep economic system: "Clash of Clans" has a deep economic system similar to gameplay. The "peak" in the game is more like an ideal direction than an actual goal (even for big R players). Unlocking new towns and new troops, the game slowly raises the threshold with a gameplay that makes all players feel comfortable, so that players’ consumption is psychologically worthwhile. Continuously iterative operation strategy: The team has maintained the dynamic balance of the game environment through weakening/enhancing for many years, and keeping new and old players have the same experience-this is also a point that many old games will forget. In addition, keep absorbing new things, such as the perfect integration of the pass system into the existing game mode. ——Prediction of the future of "tribal conflict":
There is a high probability that the game will maintain its performance in 2019 (revenue of US$1 billion) in 2020. Behind the "Clash of Clans" is the industry's top team. Its player base is very loyal and it is also the backbone of its social network. If you want to pull the "tribal conflict" off the horse, perhaps only Supercell can launch new products of the same type in the future.
2. The "Royal War" with doubtful stamina
The success of "Royal War" when it was first released was explosive, with revenue of 1 billion US dollars in the first year, and aroused the imitation of many latecomers ("Star Wars" made by Netmarble, "Fall of Titans" made by Nexon and "Command and Conquer" by EA). But no matter how powerful the IP is, it cannot achieve the same success in the type created by the "Royal War".
However, the "Royal War" is also facing the problem of lowering after a wave of opening. After 2017, revenue fell sharply, falling 35% in 2018 and 15% in 2019.
"Royal War" revenue performance in recent years
Then why did the ruling "Royal War" decline so fast? There are several reasons for this:
The conflict of skill depth and ladder mechanism: The game has a very good gameplay design, but it is also very complicated and difficult to master. However, because the core of the "Clash of Clans" is not the clan war, the main single player PVP system of the "Royal Clash" will drop trophies because of losing, so that players dare not try new ways of playing. Linear upgrade income: The initial upgrade of the game is very cheap and rewarding, but as the number of levels increases, the upgrade cost increases exponentially, but the income only grows linearly. This makes most players feel that it is enough for the card to rise to a "almost" level. In addition, many of these modes do not require players to have advanced decks to participate, which makes "Royal War" more emphasis on technology, but also loses the incentive for players to upgrade. Card level with apex: The cards in "Royal Clash" have the largest level, which makes some players lose the motivation to continue after reaching the full level, unless they want to continue to improve their skills. "Clash of Clans" continuously raises the top-level threshold by unlocking new buildings, troop levels, etc. Of course, Supercell has also made a lot of efforts and innovative attempts to this, including the introduction of new cards, new gameplay (touchdown mode), etc. to encourage players to try more decks; the introduction of clan battles, which require players to be proficient in more decks. Help the tribe; the 2V2 mode that is fun and loses without deducting the trophy, also encourages players to try boldly; launches card currency exchange, enriches the way to upgrade cards, etc.
It is a pity that even though the "Royal War" continues to innovate and improve, the problem of its economic model has not been completely resolved.
——Prediction of the future of "Royal War":
If the game’s economic system cannot be changed, its revenue performance may fall by 10-15% in 2020. Supercell will most likely not increase the highest level of existing cards in the “Royal War” like the “Clash of Clans”. They need Find ways to continue to inspire players to explore and try more cards, and even introduce more innovative gameplay.
3. "Wild Brawl" to open a new world
After a very long period of testing and adjustment, Supercell finally came out with "Wild Brawl" in 2019, and achieved excellent results (first year revenue of 500 million US dollars). This not only shows their ability to adjust, "Wild Brawl" is also waiting to become their fifth game with more than $1 billion in revenue.
"Wild Brawl" is very important for Supercell: it helps them to open up new territory at the age group (young users) and geographical level (Asia-Pacific region). This allows them to promote new products without cannibalizing existing products.
But this also brings a new problem. This group of young viewers are more inclined to follow the trend and often flow between new popular works (see "Fortress Night"), so although the beginning is strong, "Wild Brawl" Continuous income also faces its own problems:
Low loyalty: The players of "Wild Brawl" are simple and purely based on skill. The cartoon style and the mechanism suitable for opening black make it popular with many young players. But young players are an unpredictable group, and they are more likely to follow the trend of change. Low commercialization ability: The revenue per installation (RPI) of "Wild Fight" is the lowest among Supercell products. This is the result of its insufficient depth model and young users. So similar to "Fortress Night", "Wild Brawl" requires continuous operations to win back its users: e-sports, linkage, community activities, and so on. But in addition to user-level issues, how to increase the ceiling of game commercialization is also something Supercell has to think about.
——Prediction for the future of "Wild Brawl":
With the launch in China, "Wild Brawl" will reach a new peak in 2020. But in the long run, the probability of "Wild Brawl" will continue to decline. The fair competition mechanism makes it difficult to make major changes to the economic system. It is also difficult for Supercell to maintain a small team model outside the game. More energy and manpower to do large-scale operations.
4. The "cartoon farm" in a corner
Long before Supercell entered the mid-range game, its first release of "Cartoon Farm" has changed the popular platform and gameplay of the farm type. Eight years after its launch, it is still the most iconic farm game on touch screen devices (especially iPad).
However, in recent years, "Cartoon Farm" has also encountered "strong enemies". In 2018, Playrix's Vizor's "Klondike Adventure" grabbed part of the market share. In 2019, Playrix became their "dream town". With the opening of large-scale purchases, its market share has directly reached twice that of the "cartoon farm."
2017-2019 the share of each product in the farm management category
However, even though the download volume of "Dream Town" increased rapidly last year, the download volume of "Cartoon Farm" only declined steadily. This is because most of their users are organic, not through large-scale marketing. Brought.
——Predictions on the future of "Cartoon Farm":
Affected by "Dream Town" and "Klondike Adventure", "Cartoon Farm" is now the third leader in this sub-category. Whether it will fall to fourth place depends on Zynga's new launch of "FarmVille" in 2020. 3" How does it perform.
However, in the face of increased competition, the decline of "Cartoon Farm" is relatively stable, which proves that it controls its core users very well, and it is not easy for the same type of new games to take these users away. .
Finally, because "cartoon farms" do not rely heavily on market purchases, the CPI growth driven by manufacturers such as Playrix will not have much impact on them, but the gap between the two in scale will become larger and larger. .
5. The uncertain future of "Hay Day Pop"
Supercell launched their new game "Hay Day Pop" in the first quarter of 2020, which is a combination of "cartoon farm" characters and "dream aquarium" and elimination game. It is more like a product made by most companies through "micro-innovation" and is definitely not a disruptive invention of Supercell's signature.
The overall quality presented by "Hay Day Pop" is not bad. Its theme, art style, UI have been greatly improved, and some interesting innovations have been made in the core gameplay and mechanism. However, the common problem of monotonous and boring narratives in such games has not been resolved. It is closer to Playrix's old game "Dream Aquarium".
If Supercell is executed properly and can get a low enough CPI, "Hay Day Pop" may not perform too badly, but if "Hay Day Pop" performs generally and needs more support from operational promotion activities, will Supercell Will be willing to invest more energy in "Hay Day Pop" is still doubtful.
——Predictions on the future of "Hay Day Pop":
In view of the lack of innovation in the game, "Hay Day Pop" will not disturb the pattern of the entire category. This category still has a very stable market potential in terms of income, but it will be a bit far from the "1 billion dollar club" that Supercell is used to participating in.
Moreover, whether the game can survive Supercell's "chopper" is still unknown.
Fourth, the source of creativity
So the question is, what is the source of Supercell's creativity?
Their president Ilkka Paananen has also expounded their ideas to the outside world many times, and summed up their goals in three points:
Create an environment that can incubate innovation and create a constructive confrontational culture. Products must be judged internally by colleagues to allow the team to control the decision-making power of their own games-including whether to cut off the project. Many ideas are doomed to failure. This mechanism not only inspires the team to generate more ideas, but also allows them to keep on trial and error by reducing the impact of failure.
Although it looks simple, it is not easy to achieve these three points at the same time. It contains passion and creativity, but also requires rigorous analysis and control capabilities. The two often conflict with each other. Many companies can only achieve one point at most. Some companies are good at ideas, but often fail because of too long execution and deviations in direction; some companies only pursue safe short-term returns and completely forget about innovation.
There are also three points in the Supercell team culture that can help them achieve these goals:
Mission: Only make games that can be played by everyone, can continue to be played for several years, and can be remembered forever. This is very different from financial goals. Ownership: Supercell employees can freely form teams to realize their ideas, and determine the fate of their products. Small scale: streamline all unnecessary bureaucratic mechanisms, have extremely high demands on talents (preferably T-shaped talents), and only pursue the best Develop ideas. Culture, simplification, and innovation. This sounds like every company’s slogan, but what makes Supercell different is that they really "live" in this culture. This starts with "some people openly oppose "wilderness internally" Events such as "Rush Wars", "Everyone discusses whether to expand the team", and "Proud of them cutting down "Rush Wars"" can be seen.
But before you want to learn to replicate the culture of Supercell, there are two important factors that cannot be ignored:
High turnover rate: It is rumored that Supercell once cut half of the new recruits after 6 months of use. This also takes into account that they are recruiting the world's top talents. Their team atmosphere is not to meet the needs of superiors, but to reach the level of colleagues. Of course, this is not a vicious competition, but a very efficient output. Honest feedback: Supercell’s internal feedback threshold is very low. For games under development, it is basically mandatory for everyone to give the team honest and meaningful feedback. Sometimes opinions from peers are more powerful than those from superiors. 5. The impact of market changes on Supercell
In the past few years, the mobile game market has undergone significant changes. The number of new games has become less and less, and it is difficult to shake the position of old games. The goal of games is no longer to get more users and increase the value of each user’s income; at the same time, the Matthew effect is becoming more and more obvious. The top three games in the category can often occupy 60-80% of the category market Share.
The number of new games that land on the App Store each year
The number of active games in the App Store each year
Changes in the market make it more and more difficult for products that want to enter the top of the best-selling list through micro-innovation. Supercell subversive products are also easier to succeed and participate in those losers who learn from the "Royal War". So when Supercell made micro-innovation games like "Rush Wars" and "Hay Day Pop", everyone was not optimistic.
On the other hand, Supercell will also start struggling to maintain the scale of online operations. Their desire to maintain a small scale conflicts with the need to operate existing games. For example, "Wild Fight", a major update once a year is not enough. Keep your players firmly in the game.
If Supercell continues to insist on maintaining the 300 elite model, then outsourcing may be the next step, but this requires more management costs and will cause the loss of ownership, which is also contrary to Supercell's philosophy.
Another way is to stop operating some old games with mediocre performances, such as "Shock of the Sea", which will also be a good choice, but it is not like Supercell's style.
Finally, there is resource promotion. Supercell is rich in gold and has the ability to do large-scale marketing activities, but they mostly target very top marketing channels, such as TV, competitions, big billboards, and Internet celebrities. This is very suitable for their high-profile products, but they still lack precision marketing in the face of new players.
6. M&A strategy
Supercell has made great achievements in making games, but its mergers and acquisitions performance has been lackluster. They have invested about 100 million US dollars in 4 years:
2016: Frogmind (US$10 million, 51% shares); Shipyard (US$4 million) 2017: Space Ape (US$60 million, 62% shares) 2018: Trailmix (US$5 million); Redemption Games (US$6 million); Everywear Games (US$6 million) 2019: Luau Games (US$4 million); Wild Games (US$1 million); Ritz Deli (amount unknown) These companies have very limited output:
Frogmind made two good-looking games: "Lost Land: Brawl" and "Thunder Star Football". Both games are very Supercell, but the biggest challenge they face is the lack of continuous output. After Space Ape was invested by Supercell, they said that they wanted to shift more energy from operation to creative development, but after that they only released "Quick Line: Road to Vengeance" and cut off another follower. "Wild Brawl" is very similar to the game "Rumble League". With the help of Supercell, Redemption Games brought in more talents and better polished its team culture. But in terms of growth, Supercell can provide limited help to small and medium-sized teams.
"Lost Place: Brawl"
Supercell's one-sentence summary on finding partners is: those teams who want to become Supercell. This of course allows them to cooperate better, and it is also like a mutual choice. But in fact, Supercell can give them much more than they can give Supercell, and it seems that it is difficult for them to really get the true story of Supercelld.
For small teams, obtaining Supercell’s investment is obviously a good thing, which means unparalleled stability, but at the same time, their room for growth is also doubtful. After all, who will take over most of the remaining shares?
Looking ahead, Supercell can try to make some changes in this area, such as doing more portfolio management, investing in companies with independent development and operation capabilities (such as Peak Games, Tactile Games, and Lilith), just like they do games ——Increase research in this field and do our best.
Seven, the future of Supercell
Innovation will inevitably bring huge uncertainty in time and output, and Supercell is already a leader in making disruptive products in the current mature mobile game market. Their creative process is difficult to quantify, and it is difficult to maintain a constant annual growth in output, but the good news is that we all know that their official works have never disappointed.
Therefore, it is meaningless to judge whether they are "the peak has passed" based on their short-term financial performance. The real key to them is that their decision-making is the true quality of the new tour. We can see that Supercell still has a very high desire and pursuit to make disruptive products, compared to "micro-innovation" to maintain market share. Cutting off "Rush Wars" is an example (the future of "Hay Day Pop" Still to be determined).
But if Supercell wants to better maintain its successful position without losing its team culture, they can try to do more refined marketing, increase their operational investment in existing games, and drive their growth through mergers and acquisitions. User and revenue growth.
Imagine in the parallel universe, Supercell has never been acquired, and in order to maintain organic growth they continue to acquire other manufacturers (such as Gram, Peak and even Playrix), Supercell may become a company with completely different scale and culture. We no longer need to discuss whether they are no longer supernatural powers, nor do they need to make suggestions for their development, but it is certain that they will not become like today-a game company that makes the world look up.