Ilkka Paananen, CEO of Supercell, published a program column on the state of the studio on the company’s blog. In it, he spoke about the challenges that the Finnish company faces today, and also shared its financial results for the past year.
We have prepared the main theses of the column.
- Paananen starts with the fact that the company’s mission is to create great games that will be played by as many players as possible for years (and will be remembered forever).
- 20 years ago, it was enough to create a great game for success, but in a world where World of Warcraft, League of Legends, Counter-Strike and Fortnite exist, everything is more difficult.
- Now, in order to fulfill such a mission, it is necessary to immediately create new masterpieces on a regular basis, and constantly improve them.
- Based on this, Paananen formulates two key tasks that are set for Supercell today.
The first task is to create new great games that have a chance to become cultural phenomena
The Company is guided by the following principles when implementing this task:
- to form small independent teams (cells) consisting of very experienced developers to create games. At the start of the work, we are talking about completely small teams. They grow in size according to progress. Teams are given carte blanche in terms of implementing the project they want;
- first of all, trust the intuition and experience of developers. Work with data is also underway, but the company does not believe that it can be used to achieve outstanding success;
- try not to pay attention to what other developers are doing, avoid the desire to create improved versions of games from other teams (here Paananen clarifies that the decline in the gaming market by the end of 2022 is partly due to the fact that the audience lacks more new innovative titles).
By following these principles, Supercell manages to attract more highly qualified employees to work, as well as spend less on buying traffic (more than 90% of new users came organically).
On the other hand, the company regularly has to close a large number of titles that do not meet its high standards. To date, the company has released five hits, while closing more than 30 games. Moreover, over the past four years, Supercell has not released a single novelty to the world.
Paananen notes that earlier it seemed to him that it was easier to make hits when he had already released several significant titles. However, it turned out that the opposite was true.
“Just creating a hit is infinitely difficult. Plus, you need luck, a lot of luck. It is even more difficult to repeat success. Even psychologically, it seems that it is much easier to create a game when there is nothing to lose. When developing Hay Day and Clash of Clans, we had no idea how big hits they would become. We just did the best we could. Now we are facing serious pressure. First of all, we are under pressure from previous successes. Sometimes I think it would be easier for us to create new games today if we didn’t have hits behind us.”
The second task is to support the players in the project they love, to play it and to be remembered forever
After launching a new great game, it ceases to be a project of a specific team or publisher. She starts to belong to the players who love her.
And here the task of the developer, his duty, is to constantly make the game even better.
In order to be able to improve the game for many years (and even decades), it is important to constantly find a balance between:
- working with new players and supporting a long-established audience;
- by adding predictable innovations and introducing risky changes;
- improving existing content and introducing new;
- respect for the gaming heritage and willingness to rethink it.
It’s funny that Paananen immediately writes that it is impossible to achieve the right balance, so the team should move towards the one that seems most suitable to it.
In the second half of the column, Paananen shares what Supercell specifically plans to do in the foreseeable future, in which directions to move.
- The question is raised about the possibility of her games appearing on other platforms.
- It is stated that the company will continue to increase the number of developers within its walls (first of all, the Helsinki office is now growing, where five new games are being developed, including the recently announced Squad Busters).
- Immediately Paananen recalls that a year ago he publicly admitted his managerial mistake. For a long time, the company believed that internal teams, regardless of specialization, should be small in size. This rule no longer applies to service teams that deal with the operation of titles already launched in the global release.
- In the future, the growth of the number of such teams will not be limited by anything other than the needs of the players themselves.
- The tasks of the service teams will be: development of new fundamental features, constant refinement of the game itself, as well as tools for it, plus training of new employees.
- It is noted that the company’s hiring policy is changing. Previously, one of the requirements for applicants was the presence of more than ten years of experience in the field. It was assumed that the development teams should consist of people who have worked in the industry for 10-20 years. Now the number of years worked is no longer given such importance.
- It is emphasized that Supercell will continue to develop its own internal engine, possibly so that it can then compete with third—party solutions (whether the company will make it available to third-party teams is not specified).
- In addition, Supercell will continue to invest in external studios. To date, she has invested in 15 companies. Paananen particularly noted three of them: Channel37, Metacore and HypeHype.
At the end of the material, data on the company’s revenue for 2022 is provided:
- Supercell’s revenue for the year amounted to €1.77 billion (a drop of 6% year-on-year);
- EBITDA €632 million (down 14%);
- The company paid €132 million in taxes.
Paananen explains the decline in revenue by three things:
- a common high-base effect for the mobile market;
- introduction of the Apple advertising identifier;
- the termination of their games in Russia and Belarus in accordance with international sanctions.
As for the decline in EBITDA, the reason for it is, among other things, the growth of internal and external investments.
At the end of the column, it is emphasized that Supercell continues to be a financially stable company capable of making large investments and conducting long-term planning.
Paananen believes that Supercell is lucky, given that now many gaming companies are faced with the need to cut costs and carry out layoffs.