Clash of Clans maker profit up despite Pokemon challenge (updated)
15/02/2017 12:57
(Adds CEO, analyst comments)
By Tuomas Forsell and Jussi Rosendahl
HELSINKI, Feb 15 (Reuters) - Supercell, the maker of hit
mobile game Clash of Clans, said on Wednesday sales growth
stalled last year due to competition from new challengers such
as Nintendo Co's 7974.T Pokemon GO, though earnings rose.
The Finnish company, majority owned by China's Tencent
Holdings Ltd 0700.HK , said profits benefited from lower
spending on advertising and the successful launch of its latest
game, Clash Royale.
"Despite tighter competition, this was the best year so far
in financial terms. Clash Royale was a huge hit," Chief
Executive Ilkka Paananen told reporters.
Clash of Clans, a war strategy game in which players build
fortresses, form clans with other players and battle it out in a
Medieval-style fantasy world, has remained on the list of
top-earning applications since its launch in 2012.
In 2016, it was ranked No. 2 after Mixi Inc's 2121.T
Monster Strike, according to research company App Annie. Clash
Royale, which features Clash of Clans characters, was No. 5.
Augmented-reality Pokemon GO, which has players walking
around real life neighbourhoods to catch and train Pokemon, has
the biggest number of active users but in revenue terms lagged
Clash of Clans.
"In the summer, when Pokemon GO was a huge hit, a taxi
driver asked me what would be our counter-attack. I said there's
no point in doing something against a competitor, we must only
focus in doing what we do best, improve our games further,"
Paananen said.
Rather than launching a variety of games for different
audiences, Supercell has focused on developing a handful. Using
a "freemium" price strategy, its games are free to download, but
generate revenue from in-game purchases.
The strategy has helped Supercell avoid the problems faced
by the likes of Rovio Entertainment, which has launched several
titles but failed to create a follow up hit to its Angry Birds.
Supercell's earnings before interest, tax, depreciation, and
amortisation rose to 917 million euros ($967 million) last year
from 848 million in 2015. Revenue was broadly flat at 2.1
billion euros.
IHS Technology analyst Jack Kent said the flat revenue
indicated new challenges.
"The overall mobile games market is still increasing, but
the explosive growth driven by the rise in smartphone
penetration and the shift to a freemium model is slowing," he
said.
"Supercell is still making a lot of money... (but it) is
also facing the challenge of how to follow up on its initial
major hits."
Paananen said the company might test a new game in selected
markets later this year, but there were no immediate plans to do
so.
Founded in 2010, Supercell has just 213 employees but has
become one of Finland's most profitable companies.
($1 = 0.9479 euros)
(Editing by Susan Thomas and Mark Potter)
((jussi.rosendahl@thomsonreuters.com; +358 9 6805 0248; Reuters
Messaging: jussi.rosendahl.thomsonreuters.com@reuters.net))
Keywords: SUPERCELL RESULTS/