Supercell on track to be the next Rovio, says AppAnnie

Focusing on one or two IPs the key

Supercell on track to be the next Rovio, says AppAnnie
This week sees the launch of the first App Annie Index – a free report into the current state of the App Store and Google Play.

Set to be released on a monthly schedule, the Index is designed to act as an ongoing guide to global trends.

While a look at App Annie's store stats will give you precise data in one region at one moment in time, the Index aims to offer a wider perspective on the industry.

We've highlighted some of the first report's key findings already on, or you can find it in full on the App Annie website.

But to find out more about the thinking behind this new offering, and to dig a little deeper into its findings, we caught up with App Annie CEO Bertrand Schmitt and the company's VP of marketing Oliver Lo.

What is the App Annie Index and what prompted you to produce it?

Bertrand Schmitt: We did the index because, for a long time, we've been providing this free market data and giving publishers access to rankings.

At the same time, at the other end of the spectrum, we provide the very detailed analytical metrics to our premium customers.

We felt that we wanted to do something in-between. Something that would still be free, but also provide monthly rankings, a worldwide perspective on what's going on and a comparison of the different app stores.

If you just get the daily rankings from Apple or Google, you have no idea what's going on. What does it mean to be in this specific rank in this specific country? You don't know.

I think by being able to look at things with a monthly perspective, you're able to more easily see real trends – not just that the dot moved for a few days, but where the market's actually going.

The first App Annie Index emphasises the increasing importance of East Asian countries in the global app market. Download rates and revenues are increasing there, but do you think there's an appetite for western games in the region and therefore an opportunity for western developers?

Oliver Lo: I think the appetite depends on the appetite of the publishers to really engage with those audiences.

It's clear that there are massive revenue opportunities, but it's not the case that you can just take western games, translate them and put them in those markets.

If you look at the games that are popular in Japan and in Korea, they are very, very Asian games. Take a look at DragonFlight for Kakao – one of the breakout hits that we really 'out' in this Index – and you'll see an old school Space Invaders-type game, but infused with a very Asian style.

I think before, western publishers would think of Asia as a secondary thing – the west is their base and Asia is an auxillary to boost revenues a bit – but the balance of powers is now shifting.

The point we're often trying to make to publishers is that Asia is now starting to take the bulk of the revenues, for Google Play in particular.

So when you're talking about generating global revenues, Asia can no longer be an afterthought. It's got to be part of your core strategy.

BS: It's very true. Publishers have to think from the start about adapting their content – not just translating.

But at the same time, you see that some games like Rage of Bahamut from DeNA are successful in the US, so I think that a western publishers could be successful as well in East Asia.

It's a question of spending time understanding the market and adapting your games properly, but it's not impossible. You just need to be focused on it. You won't get lucky too easily.

OL: There are definitely some games that are accessible across all cultures – Angry Birds, for instance, or Fruit Ninja.

But there are other games that are very rooted in east or west, and that are based on specific gaming tastes that have been developed over decades.

Another major trend that's identified in the Index is Google Play 'catching up' to iOS. Its downloads and revenues are growing faster than iOS, so do you think it will catch up – or even overtake – iOS?

BS: Usually we don't try to predict too much because it depends on many things we don't control, but if you look at the current trends and try to project, it definitely looks like Google Play is moving up fast, and that growth isn't slowing down much.

At the same time, the growth rate on iOS is definitely slower. For sure, given the launch of iPad Mini, the new iPad, the iPhone 5, we're expecting iOS to accelerate a bit during this Q4, but Google Play is on the path to grow much faster.

Basically, we don't think it's impossible for Google Play to catch up next year. We think it's possible.

If you start developing a game today, it might be released in six months.

Considering its current growth rate, you cannot afford to ignore Google Play if you're working on a game right now. You either have to launch an Android version soon after your iOS release, or consider Google Play right from the beginning.

The App Annie Index also ranks the top publishers by revenue. Currently EA is in pole position for iOS with its roster of 962 apps, but Supercell is in second place with only two app launches under its belt. Was this a surprise?

BS: It's not a surprise in the sense that we saw it coming – we saw the numbers. It's definitely impressive, though.

For me, Supercell is duplicating the success of certain other publishers, such as Rovio and Halfbrick Studios. My feeling is that Supercell is going the same way as these companies.

OL: When you look at those publishers that are based on one or two IPs – as opposed to those that spread their bets over a number of properties – and the way that they run their companies, they tend to be really focused on quality.

It'll be interesting to see how those companies develop in the future.

Supercell is a 70-person company right now and it's got good backing. It's going to grow, and the company will have to make choices about how it grows and how it develops its portfolio.

What areas do you think provide the biggest opportunities for developers and publishers right now in terms of regions, app stores and genres?

BS: Depending on where you believe you are strong, or where you can be strong, the answer will be different.

Today, if you are a western publisher, is that the easiest win is probably to be focused on the western market and on iOS. That's probably easiest.

At some point, though, you'll definitely want to grow your market. At that stage, you'll have to do Google Play and you'll have to better adapt to the East Asian market.

It's definitely possible to do this. We didn't mention it in the Index, but if you look at Glu Mobile, that company is doing very well in Korea on Google Play right now.

OL: When it comes to game types – one trend I've seen looking at the space now compared to how it was a year ago, is

A year or so ago, when the space was moving from social games to mobile games, you'd see more games at the top of the charts that are casual games, farm games, city games – that kind of thing.

I think we're seeing a shift, and publishers like Zynga are investing in this shift, towards mid-core and hardcore.

And actually, the success of Supercell is particularly telling, because it has taken what is – in terms of game mechanics – a hardcore game and designed it so that it's very accessible and almost casual.

Supercell has managed to take very highly-monetising game mechanics and bring it to the masses, and that's a sign of the development of the ecosystem that's maturing.

I think the mobile space is maturing and audiences are becoming more mature in terms of their tastes in games, and going for increasingly sophisticated titles – as opposed to the days when it was just about throwing paper in a bin.

That's borne out if you look at the App Annie Index and look at the top game apps by revenue, where you've got a lot of strategy, casino, RPG, racing and action games…

BS: …And of course the casino is a particularly interesting category. Many companies are rushing in – Zynga, Big Fish – they're investing a lot in this, so casino is definitely a category to watch.

Finally, I wanted to ask about App Annie more broadly. You have rivals in the same space and you're largely working with the same data, so what would you say makes you better than the competition?

BS: We're not really accessing the same data in the first place.

More than 150,000 apps use our analytics service and more than 40 percent of the top 100 publishers use us. And we've been doing that, and providing this free analytics service, for a longer time than anybody else.

So I think we don't have access to the same data – we have access to much more, and the biggest publishers are using us. This gives us insights about the top of the market in much finer detail than anyone else.

In the gaming space particularly, so many companies are using us. If you look at our App Annie Intelligence premium service – you take the top 15 publishers on iOS by revenues, and ten of them are buying our data, and they've learned a lot from our service.

And we've learned a lot from them, too, that's allowed us to improve our offering over time. No other company can claim such coverage of the top publishers.

There are many people trying to compete in that space, but not so many that are real competition to us.

OL: The value proposition of all market data companies is really about the quality and accuracy of market data. That's the one thing people care about.

If you're going to base your whole international strategy – or you whole investment strategy – on data, then you have to trust it. If that data is not accurate, if your algorithms aren't well designed, if you don't have many data-points to build models from, then there's no point in anyone using the data.

That's something we've heavily invested in, and that's why so many of the big guys in publishing, gaming, investment, buy our data.

It's also why we wanted to share it on the Index, because I feel there's a really high demand for this data now, because people are asking more and more questions about the space, but there's a shortage of that data in the public eye.

We wanted to give that information to the industry.
Thanks to Bertrand and Oliver for their time.

Staff Writer's news editor 2012-2013