Supercell, the games developer behind Brawl Stars and Clash of Clans, saw its profits fall by a fifth in 2020, as a lack of new hits caused it to miss out on the lockdown gaming boom.
Despite now boasting five titles that have grossed more than €1bn in player spending over their lifetime, Supercell’s sales for 2020 fell by 7 per cent to €1.3bn ($1.5bn) compared with the previous year. Earnings before interest, tax, depreciation and amortisation were down by 21 per cent to €407m ($463m).
“Given everything that has been going on in the world, we are happy that our business has been able to remain stable and we feel that the results are pretty good for a company of around 340 people,” said Ilkka Paananen, Supercell’s chief executive, in a blog post on Tuesday.
Helsinki-based Supercell continues to generate huge profits from a far smaller number of staff than rival publishers with a similar level of revenues, such as Ubisoft, which has thousands of employees.
But despite its profitability, Tuesday’s figures mark its fourth successive year of declining profits. China’s Tencent took a majority stake valuing the Finnish company at $10.2bn in 2016, when its earnings peaked at €917m.
Supercell axed two of its most promising new games in the past two years before they reached a full launch, in line with Paananen’s philosophy of shutting down even high-quality titles that fail to justify continued investment.
Hay Day Pop, a puzzle game, “must be one of the best games we ever killed”, Paananen said. “However, unfortunately it didn’t find a large enough audience.”
As a result, Supercell did not have any big new launches that could help it capture consumers’ demand for new forms of entertainment during the pandemic.
Omdia, a research and consultancy company, estimates that consumer spending on mobile games grew by 20 per cent globally in 2020, to $94.3bn. It predicts a further 9 per cent growth this year, with gaming spending set to exceed $100bn for the first time.
Breakout hits on mobile during last year included Among Us and Genshin Impact, as well as a number of so-called “hyper-casual” apps that have flooded the app store charts, making it harder for other new launches to stand out.
Supercell remains among the top 10 most successful publishers on the iPhone and Android app stores, Omdia analyst George Jijiashvili said, but its ranking by consumer spending slipped from sixth in 2019 to eighth last year.
“As it stands, they are still well positioned because they are still printing money,” Jijiashvili said. “The fact is that it’s just an extremely competitive landscape for any games maker.”
Supercell’s most recent success, Brawl Stars, which originally launched in 2017, made its debut in China last year. A Brawl Stars tournament attracted 15m players a month and was won by the esports division of French football team Paris Saint-Germain.
However, Clash Royale, a 2016 spin-off of its earlier hit Clash of Clans, has struggled to maintain its early momentum. “Right now it’s fair to say that we are definitely not where we want to be with Royale,” Paananen said.
He added: “We believe that our best days are still ahead of us.”