Supercell: The billion dollar start-up

“The dream is to become a global games company,” says an ambitious Ilkka Paananen, just three years after the formation of the Finnish studio.

It may technically just be a start-up, but this Helsinki developer has quickly become one of the biggest games studios in the world thanks to its huge success from mobile and tablet games Clash of Clans and Hay Day.
The two titles frequently top the App Store charts, at one point making the firm $2.4m a day. According to App Annie, during November last year the studio made more revenue from its two games than any other iOS developer, including EA and its 969 titles.

Its success isn’t just confined to Europe either, a quick look on the App Store will show both its two titles have become a worldwide sensation, topping the charts as far as the US, Australia and Japan.

This near-global reach didn’t go unnoticed, attracting the attention of telecomms giant Softbank and GungHo Entertainment, the latter of which develops Japanese mobile hit Puzzle & Dragons. This match-three title is one of the few games that has been able to meet the success of Supercell’s own, and was recently said to be making around $4.9m a day on average.

After a close partnership between Supercell and GungHo to cross-promote their titles, the publisher and its parent company Softbank splashed out $1.5bn to buy a 51 per cent stake in the Finnish outfit.

Three years after it was born, Supercell is now worth $3 billion.

“The opportunity that has us excited I guess is this dream to become a truly global games company,” Paananen tells Develop of the young studio’s lofty ambitions.

“Meaning that we would want to unite gamers all over the world to play the same game franchises. It’s still very early days for us but Clash of Clans is showing some signs that maybe it could be this type of franchise. It’s been number one in US, Europe, as high as number two in China and as high as number three in Japan.”

He adds: “If you want to create history, that takes time and patience. Now obviously that we’ve been doing so well and the financial position of the company is so stable, then you do have all the time in the world to get there.”

Small beginnings

The studio wasn’t always set on creating a global company and a long-standing heritage however. Paananen freely admits when the developer’s six founders originally set up back in 2010, they could not have envisaged striking such a chord with consumers.

“Of course we’ve always been ambitious and had big dreams, but still, this goes well beyond our dreams.”

Supercell’s entrepreneurial CEO has experience of setting up his own companies in the past, founding Sumea in 2000, which also worked on mobile games for feature phones.

The firm was later sold to Digital Chocolate in 2004, where Paananen stayed as MD of Europe and then president until early 2010. After leaving, he later opened up his own studio, Supercell.

The original plan was different from how it has made its name. It initially set out to create cross-platform titles for the browser, Facebook, mobile and tablet.

Its debut title was set to be a real-time Facebook MMO, called Gunshine, which it would also port to mobile, with the same world accessible from any device.

But after 14 to 15 months of development, the studio abandoned the title, despite attracting half a million unique monthly users. It may have been a tough decision – but one that Paananen says the team has not looked back from since.

Gunshine appears not to be the only casualty of that decision. Paananen says in Autumn 2011 the company “basically killed everything we were working on” and put its sole focus onto tablet and mobile.

“We realised that by definition you really need to build the game from the ground up for mobile,” he says. “The UI on the tablets and smartphones are so different from the mouse UI you have on desktop. We realised you can’t match those together if you want to create the best possible experience on mobile.

“So therefore we decided that, okay, let’s focus solely on tablet and mobile, and that’s probably the best decision we’ve ever made.”

Celebrating failure

Unperturbed by the cancellations, the studio quickly set out on five new games, a few of which even launched in beta in Canada. The high quality bar and extensive use of performance indicators and metrics however meant a few of those titles didn’t make it.

But Supercell has never been a company to greet failure with disappointment. In fact, the studio celebrates any game cancellation with a bottle of champagne.

And not keen to ever leave its staff in the dark on how its games are faring or why they have been canned, Paananen reveals a culture of transparency at the studio.

“So we distribute all the key performance indicators and metrics of every single game to everybody in the company. Every single person at the company gets them at the same time by these daily emails.

We decided to focus solely on tablet and mobile, and that’s probably the best decision we’ve ever made.

“Everybody can see what’s the truth and what the game looks like, and everybody I guess realised that okay this (Gunshine) isn’t really going anywhere and we need to do something different.

“Of course it always breaks your heart to throw something away that people have been working so hard on. But on the other hand I think people saw that, okay, there was no other way and I would almost say that some people probably were almost relieved and thought, okay let’s try out something a bit different.”

Another one of the key pillars Supercell is built upon is what makes the games happen – the people.
Through his chat with us, Paananen stresses the importance of the company’s employees, echoing similar sentiments to the likes of Steam giant Valve on just how vital it is for the studio to bring in the best staff it possibly can.

He admits many companies say this, but explains that, to Supercell, people will always be the number one priority, and are more important than financial goals, revenue and profit. Although the idea here is that creating a hotbed for creativity and attracting the best of the best will in turn generate bigger revenues and better games.

“We have a very high bar in recruiting,” he explains. “So first of all, at Supercell we had a relatively large group of co-founders, six of us who founded the company. And since all of those guys are quite senior and experienced in the local scene, that great group of people then helped us attract the next round, because they want to work with the best.

“So the idea behind Supercell is that you can get the best people but then just to stay out of there way and give them the creative freedom. Supercell is organised into small teams that we call cells. The idea is that these cells are small, but also very independent.”

It’s this cell structure that is the inspiration for the company’s name, Supercell. Each team can be as small as five or six people, and Paananen says such a structure means everyone gets a chance to work on the game experience itself, which instills a sense of ownership and passion in each developer.

He adds that unlike larger firms, Supercell has done away with greenlight processes and doesn’t use a ‘designed by committee’ style to games development that he says most talented devs hate at the big companies. Instead, the studio looks to give teams the creative freedom to make the titles they want.

“For the right kind of people it’s a really fun environment. Teams are small, everybody has a large responsibility. That creates a lot more pressure I guess than you would have in a bigger organisation and it’s a lot more fun.”

The next Nintendo

Lending itself to such a creative process and hiring in the strongest possible candidates, it’s no surprise Clash of Clans and Hay Day have become huge hits across the globe.

But such is their success, Paananen says the studio can now plan for the long-term, and does not have to force new games to keep itself afloat, but instead wait for the right title that meets its particular and lofty standards.
When Paananen says his dream is to become a global games company to stand the test of time, he isn’t taking it lightly. In fact, he has already set his sights on emulating one of the industry’s most iconic companies.

“We want to build something truly great, something that people, in ten, 20, 30 years would look back and say that Supercell really did something great,” states Paananen.

“Much like, for example, the way people feel about a company like Nintendo. A company that the players absolutely love for everything they do and everybody recognises the name. So if we want to build Supercell to the same space, the fact is it’s going to take many, many years, tens of years. It takes time and it takes patience and it feels like we now have a good shot at building that kind of company because we have the resources, and we definitely have the time and patience.”

If the success of Clash of Clans and Hay Day wasn’t enough to propel Supercell to such heights, Softbank’s and GungHo’s $1.5bn purchase of a majority holding in the company should help it achieve these plans.

We want to build something truly great, something that people, in ten, 20, 30 years would look back and say that Supercell really did something great.

Paananen says Softbank, which made up 80 per cent of the purchasing fee, isn’t like a typical investor, such as a VC, as the telecoms giant does not need to sell the shares down the line to make its money back.

He adds that partnering with a firm like Softbank is a dream come true, as it is prepared to be patient and plan for the long-term, and also allows Supercell to keep its independence.

“On top of that of course, Softbank has a very strong presence in the mid-eastern markets, especially in Japan, but also connections to Korea and China and so on,” he says. “So we thought that would be a way to accelerate ourselves towards being a truly global games company.”

Paananen is adamant that the deal will not affect how Supercell operates, and insists the agreement the Finnish studio’s founders signed means they will retain complete control of the business.

Playing for the long-term

With its future set and ambitious plans in motion, the team at Supercell has set its eyes on developing the next hit, although its CEO says it is just as important the studio continues working on Hay Day and Clash of Clans for the foreseeable future, similar to the longevity seen in the industry’s biggest games like World of Warcraft and League of Legends.

“We need to make these games better. And then of course we are looking at expanding to other markets, so Korea is one of the next ones on our list and we have just got started in Japan, where we now have Clash also available on Android. We feel like there are so many more players who haven’t played these games yet, so there’s an opportunity there.

“We can still make these games so much better for our players by introducing new features, content and ways to play, and so on. So that’s very much a first priority.

He adds: “At some point a new game will come out from us.”

As for his own future, what awaits the CEO of one of the industry’s biggest success stories in recent years?

“My future is absolutely with Supercell,” he states assuredly. Having built one of the biggest studios in the world, Paananen still aims to achieve more, and belives he can do all of that at the house that built Clash of Clans.
Drawing inspiration from the success he’s already had, and from that of Softbank founder Masayoshi Son, whom he says has a 300-year mission for his company, the sky is the limit for both Paananen and Supercell.

“I couldn’t imagine any better. It’s such a fantastic group of people. And you know, it’s a growing market. It’s still very early days for the mobile and tablet market by the way, I feel it’s perhaps like the PC gaming market of the early ‘90s or something like that. So it’s very, very early days, both for us as a company and the whole market in general.

“It’s extremely difficult to imagine life without Supercell at the moment.”