Supercell Reports Drop in Profits as Its Hit Titles Age

Finnish mobile game maker Supercell reported a 26 percent drop in 2018 core profit on Tuesday due to falling revenue for its ageing hit games Clash of Clans and Clash Royale.

Supercell, founded in 2010 and valued in 2016 at around $10 billion (roughly Rs. 71,000 crores), grew for years on the back of the success of its few hit games. Its biggest hit, Clash of Clans - the world's fourth-largest game in 2018 - was launched in 2012.

The Helsinki-based firm, majority owned by China's Tencent Holdings, said earnings before interest, tax, depreciation, and amortisation (EBITDA) fell to EUR 537 million ($605.15 million) from 729 million a year earlier.

Company revenue dropped 24 percent to EUR 1.37 billion from 1.8 billion a year ago.

Chief Executive Ilkka Paananen said the company had high hopes for its fifth game, Brawl Stars, which it launched globally mid-December. The game has topped the charts in more than 50 countries, including Japan and Korea.

"Throughout history Asian markets have been difficult to conquer for Western game developers," Paananen said.

The bulk of its 2018 profit came from Supercell's four games - Clash of Clans, Clash Royale, Boom Beach, and Hay Day - which have each generated more than $1 billion (roughly Rs. 7,100 crores) in revenue from in-game purchases since their launch.

The company did not disclose sales figures for its titles, but Paananen said its biggest titles, Clash of Clans and Clash Royale, saw the deepest declines.

Supercell slipped last year to the No 7 spot in the global mobile game publisher rankings, based on revenue collected on Apple's iOS and Google's Play stores, according to research company App Annie. It was ranked No 2 in 2016.

Supercell's Clash of Clans was the fourth most widely played game in 2018 - according to App Annie data - after Happy Elements' Anipop, Tencent's Honour of Kings and Activision Blizzard's Candy Crush Saga.

Supercell, which has kept its operational independence and Helsinki headquarters, first sold a stake to Japan's Softbank in 2013. Tencent bought Softbank's stake in 2016 for $8.6 billion and has increased its shareholding to 88 percent.