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Would Supercell acquiring other studios be a good idea?

Our Mobile Mavens discuss Ilkka Paananen's hints
Would Supercell acquiring other studios be a good idea?
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One of the more tantalising tidbits to emerge from Supercell CEO Ilkka Paananen's BAFTA Games Lecture was his hint at potential acquisitions.

"What we are thinking about very actively and [are] very interested about is to look for other teams in other locations who would be interested in joining this type of environment," said Paananen.

"Obviously, since we are able to make this work internally and we don’t really mess with the teams, we believe that we can also make it work with external teams."

Ambiguous phrasing makes it a non-definitive statement, but it certainly sounds as though the Tencent-owned Clash Royale developer is looking to partner with external teams - the ramifications of which could be huge, no matter which way you look at it.

So we put the topic to our Mobile Mavens:

  • Do you think Supercell is looking to acquire studios?
  • Would this be a good idea?
Nick Malaperiman

Nick Malaperiman

Head of Marketing at TopHouse Media

I can definitely see Supercell making some strategic acquisitions - but you wonder what the deep objective is.

Are they broadening the portfolio, after new IP, keen on acquiring new specialised expertise or maybe after a powerful foothold in eSports?

They have the financial clout to work with anyone they want, we know that. I wonder if this is part of Tencent's vision, or Ilkka's master plan?

For me, part of the success at Supercell has been the culture they have fostered, and the way of working they have established.

I don't know that every studio could jump straight into that change in culture and modus operandi, even if it makes sense. Then again, money talks, and if people are smart, they'll happily adopt the Supercell ethos.

The other part that I guess potential partners need to be aware of, is that Supercell's alleged culture of killing games at soft launch is very much a part of their standard operating procedure.

It'd be interesting to see if the head of an acquired studio can live with the idea that their baby may be killed at the 'beta' stage.

I reckon acquiring a mobile marketing agency would be a great start for them...

Harry Holmwood

Harry Holmwood

CEO at Marvelous Europe

Supercell's great triumph is to have created a culture where people feel valued and secure even when their titles are cancelled, and lessons are constantly being learned about how to get better and better.

“Supercell comes closest to creating a 'formula' for successul games, by realising there isn't one.”
Harry Holmwood

In the almost 25 years I've been doing this, they've come the closest I've ever seen to creating a 'formula' for how to create successful games (basically by recognising that there really isn't one).

Despite their vast success, there's only so many titles they can prototype at once - they only have 180 staff - so expanding their reach through acquisitions seems to make a lot of sense.

What wouldn't make a lot of sense would be for them to partner with third-party developers that aren't acquired, in a traditional developer/publisher model.

That immediately creates a conflict of interest where it might be in Supercell's interest to cancel a project, but the partner doesn't want to be left without its source of funding.

If they can spread some of their magic around the world by discovering and nurturing new talent, it could be a great way for them and their acquired businesses and individuals to grow.

The danger with acquisitions is always that companies do too much, too quickly, and spend ridiculous money to get there.

That doesn't seem to fit with Supercell's approach so, if anyone can make it work, it's them.

Shintaro Kanaoya

Shintaro Kanaoya

CEO at Chorus Worldwide

The interesting part of that quote for me is the “in other locations” part. It, and the Tencent acquisition, suggests that they want to have a more dominant global footprint.

Supercell don’t dominate the charts in the East like they do in the West, so I wonder if there’s a strategic interest from both Supercell and Tencent to sprinkle the Supercell magic onto local teams in, for example, China, where Supercell currently don’t have a single title in the Top 50 Top Grossing on iOS.

The tricky part with that will be:

  1. Remote management
  2. Cultural differences (both in terms of the games, and managing the teams).

I’ve rarely seen this succeed, but then again, I’ve rarely seen anything like Supercell.

Scott Foe

Scott Foe

Chief Product Officer at Ignited Artists

When you are sitting on a mountain of cash, you have few choices: Develop new business, invest, acquire, or disburse.

Chilling on cash mountain is rarely an acceptable strategy.

Torulf Jernström

Torulf Jernström

CEO at Tribeflame

The name Supercell comes from the thoughts of game development teams operating as independent "cells". The company then being a collection of such cells.

This should make it quite possible to operate cells in different locations.

Supercell operates a bottom-up structure
Supercell operates a bottom-up structure

One attractive part of it could be increased cross-pollination of ideas. No matter how hard you try, a certain amount of group-think will creep into a company.

Having some cells in completely different environments around the world can make for better diversity and could help creativity. Also, we can't all move to Helsinki. Some of the good people want to live elsewhere.

So, Ilkka: please buy our company! It would be so awesome to work with you.

Nicolas Godement-Berline

Nicolas Godement-Berline

Head of Operations

“I’d argue that the entire point of Ilkka Paananen's BAFTA lecture was to prepare the ground for acquisitions.”
Nicolas Godement-Berline

I think Supercell are definitely about to acquire companies. I'll even go on a limb there and argue that the entire point of Ilkka Paananen's BAFTA lecture was to prepare the ground for that.

He did a fantastic job of explaining Supercell's corporate culture, both the pros and cons, so that acquisition candidates would know what they would be getting into.

Note that it does not necesarily have to be studios per se, they could also be looking at other companies within the gaming ecosystem.

Would this be a good idea? Very much so.

At this point nearly any mid-sized game company is going to want to get acquired by Supercell, so they will just have the luxury of cherry-picking the teams they feel would fit the best within their corporate culture.

Paul Farley

Paul Farley

CEO / Founder at Firestoke Games

If the comments from Ilkka do indeed hint at forthcoming global expansion from Supercell, I’d be fairly certain this is being driven by Tencent’s desire to increase global footprint, rather than from the existing Supercell management team.

If this had been part of the plan for a while, I’m surprised it wasn’t actioned a couple of years ago when the number of attractive acquisition targets in mobile F2P were more numerous.

Either way perhaps this points to a move beyond mobile F2P into other platforms and other technologies rather than more of the same?

“I’d be fairly certain this is being driven by Tencent’s desire to increase global footprint.”
Paul Farley

As others have stated the organisational structure of Supercell would appear to set it up nicely for new cells located in various locations around the globe creating content using the Supercell methodology, but with a much better appreciation for regional tastes.

The interesting question should they take this approach will be who they chose to acquire.

I doubt there will be many studios that could resist the appeal of partnering with Supercell.

But understanding that around 75% of business acquisitions fail to deliver long-term value for either party (I’d hazard a guess that this number is even more unfavourable when applied to the games industry) the choice of acquisition is going to be crucial to avoid this becoming a costly and distracting side show.

The recent article on highlighting DeNA and GREE’s global expansion woes should serve as a useful guide to how this kind of activity can go badly wrong.

Assuming Supercell continue their approach of seeding small teams, allowing them to be autonomous and killing failing projects/business arms quickly then there is no reason why they can’t buck this trend.

Will Luton

Will Luton

Founder/CPO Village Studio Games

Been thinking about studios that seem to have the right profile to be acquired by Supercell and I'm coming up blank.

My assumptions are that the studio would need to have proven success, high production values, as well as being in mobile F2P, small, and highly agile.

John Ozimek

John Ozimek

Co-founder at Big Games Machine

I just wanted to add my two cents, as I feel that most posts have focused on the success of Supercell's development methodology rather than the X-factor which is the management of talent within that structure.

To me, this would be far harder to replicate and therefore makes me slightly suspicious of any studio acquisition talk.

Having been through studio acquisition and merger at Glu, which started first with the merger between Macrospace and Sorrent, and then post-IPO the acquisition of UK developer iFone (mostly for IP reasons), I saw firsthand how difficult it is to integrate both individuals, studio org charts, and contrasting values and cultures.

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To me, the real success of Supercell is not the organisation into teams (which, after all, is how all big publishers tend to work), but rather the internal culture Ilkka and team have created.

To have an environment where people's work will often not see daylight, yet retain their enthusiasm and loyalty, takes fantastic leadership.

That's why I don't see Ilkka's comment as automatically meaning they are on an acquisition or expansion spree, as to do so risks diluting or fracturing that internal culture, and for what?

The point of mega-hits like Clash are that they have universal appeal rather than a niche or regional appeal.

The only alternative scenario I can think of might be that other studios could publish under the Supercell name - but once again, that would appear to go against the approach that's served Supercell so well to date.

Maybe you just need to get Ilkka in a corner and give him a Paxman-esque grilling to find out what he meant.

Oscar Clark

Oscar Clark

Chief Strategy Officer at Fundamentally Games

I think John and Will are on to something. Does this necessarily mean acquisitions?

It may make more sense to create new teams with diverse backgrounds and the ability to execute under the Supercell banner.

There can be baggage with existing teams that might make a transition of culture more tricky. And as others have said, the culture is what's important.

I'm not suggesting there won't be any purchases, but I wouldn't expect them to do deals in the way other big mobile companies did in the past.

It was interesting how Ilkka also said something about how he looked back at the last year and was shocked not to have made mistakes.

If he is still the guy I remember, he will want to keep pushing boundaries, trying new things and making new mistakes - and continuing to learn.

Isn't that at least part of why he is where is is today?