Is Metacore a warning sign?

• Metacore is set to lay off 160 staff as it restructures around Merge Mansion.
• Supercell has acquired the remaining team and added the merge title to its live games portfolio.
• High UA costs and competition from China is squeezing publishers.

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Supercell announced it will fully acquire Merge Mansion developer Metacore earlier this week. The move puts 160 jobs on the line as the studio restructures and focuses on its merge hit, having failed to find its next blockbuster.

Supercell’s announcement was a positive one - it’s adding a new money-maker to its live games portfolio and claims Merge Mansion’s best days are ahead of it. Metacore’s post was a much more sobering read. Merge Mansion growth has plateaued, new game investment hasn’t been successful and it faces an “increasingly competitive market”.

It’s dangerous to back against Supercell. But the deal raises a few questions. Supercell has previously bankrolled user acquisition for Metacore, opening a $180 million credit line in 2021. If the title could grow further, surely the studio had the funds and the talent to do so? The deal sounds more like the full acquisition of Space Ape than the purchase of its next fast-growing blockbuster.

Supercell’s M&A strategy is once again in the spotlight. It’s never made the transformative deals of others, like Zynga’s acquisitions of the likes of Peak and Small Giant Games, or Playtika’s $1.95bn purchase of SuperPlay. Meanwhile, Moon Active has picked up some surefire hits, including Travel Town, built by UK developer Magmatic Games, the third biggest title in the merge genre right now.

Merge Mansion should be considered a success story. But as Supercell brings it fully into the fold, it’s no longer a category leader to a genre that it trailblazed. Right now, none of Supercell’s investments are at the level of a company that strives for billion-dollar hits.

In terms of player spending in the first four months of 2026, Merge Mansion ranks fifth above Boom Beach in Supercell’s live games portfolio.

Warning signs?

Metacore’s plight is symptomatic of challenges that face the mobile games industry. First, it’s always been difficult for studios to release a second hit. GungHo and Mixi struggled to follow-up Puzzle & Dragons and Monster Strike. Since Brawl Stars released in December 2018, Supercell has lost its billion-dollar-blockbuster streak. 

As Supercell CEO Ilkka Paananen noted in his last annual blog post, the challenge of launching a successful title has become greater. At the time of his post, it was claimed that of 53,000 games launched since 2020, 22 (0.4%) have grossed more than $1 billion. Of those, 20 came from developers in China, Japan and South Korea.

Paananen said Chinese developers have a “natural advantage” in the “world’s biggest market”. Meanwhile, Western developers “have not brought radical new gameplay innovation to the market”.

One of those billion-dollar hits is the world’s most lucrative merge game, Gossip Harbor from Chinese developer Microfun. It’s grossed an estimated $1.8 billion, according to AppMagic estimates. Merge Mansion is estimated to have picked up a still very successful over $700m to date, by official figures. 

Of the top grossing merge games in the world between January and April 2026, seven were made in China. Of the top five, one, Moon Active’s Travel Town, came from outside the country. 

Looking at just the US market, it’s a similar story as Chinese companies like Century Games and Happibits find global success in the genre. Metacore’s Merge Mansion ranked fifth in the US and seventh globally during the period.

Competition and UA crunch

While Chinese don’t dominate all genres, it’s worth noting their stranglehold over 4X strategy games, too. Just one of the US top 10 grossing 4X strategy games during January to April 30th was made outside of China (officially some are registered in Singapore). Again, it’s the same story globally.

Chinese publishers have also shown prowess in the shooter category. Sources previously told us they believe it’s only a matter of time before Chinese developers crack the match-3 model at a global scale, too. Vertex’s Matching Story and Century Games’ Truck Star could be early indicators there.

It’s not just expertise in systems and game design that have put China on top globally. As Deconstructor of Fun’s Michail Katkoff put it during Roviocon last year, Chinese companies have big team sizes, build monetisation at the core of their games right off the bat - as higher user value can lead to higher UA budgets - and have a bigger home market, among other advantages. There’s no expense spared on global marketing.

On our recent trip to Gamescom LATAM in Brazil, it appeared that high UA costs were pushing developers out of mobile. Epyllion CEO Matthew Ball’s recent State of Video Gaming report highlighted that, as a weighted average, publishers are said to spend around 32% of net revenue on UA - though figures can vary significantly across top companies. 

Ball said UA expenses have exceeded app store fees on consumer spending since 2020. By 2027, ad exchange fees on ad revenue could pass them, too, he claimed.

Supercell’s acquisition of Metacore tells a few stories. One is a potential warning sign of what can happen to former category leaders once Chinese publishers crack the formula and invest heavily to scale. And for many Western companies, soaring UA costs aren’t helping them compete.

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