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Clash of Clans developer Supercell sells 51% stake to SoftBank and GungHo

Clash of Clans developer Supercell sells 51% stake to SoftBank and GungHo

Tue 15 Oct 2013 9:22am GMT / 5:22am EDT / 2:22am PDT
Business

Deal for tablet game developer worth $1.5 billion

Finnish developer Supercell has sold a 51 per cent stake in the company to Japanese telecoms firm Softbank and developer GungHo Online Entertainment.

The deal is worth $1.5 billion and follows a number of strategic relationships with GungHo this year.

SoftBank upped its stake in GungHo Online Entertainment, the team behind huge hit Puzzle and Dragons, in March this year to over 58 per cent.

Supercell was one of the first companies invested in by London Venture Partners, the firm founded by Ex-Sony (and now Microsoft) executive Phil Harrison, former Atari and EA boss David Gardner and David Lau-Kee, former CEO of Criterion.

In April 2013 it was suggested Supercell had just closed a round of investment worth $100 million, and at the time the developer was pulling in over $500,000 a day from iOS games Clash of Clans and Hay Day.

In a blog post, CEO of Supercell Ilkka Paananen detailed the thinking behind the buyout.

Hi Everyone,

I have some very exciting news to share with you today. We have received a strategic investment of $1.5 billion from SoftBank and GungHo. This new partnership will accelerate Supercell towards our goal of being the first truly global games company, and gives us enough time to get there.

Let me try to explain why.

The combination of tablets, mobile and the free-to-play business model has created a new market for games, one that will be accessible to billions of consumers, more people than ever before in the history of games. This truly is a new era of gaming and has opened up exciting opportunities for new kinds of companies.

At Supercell, one of our greatest aspirations is to become the first truly global games company, one that has a strong foothold in both the West and the East, including Japan, Korea and China. We want to build a company that people all over the globe will look back in 30 years and talk about all the great games that we developed and the impact they had on people's lives. The same way I personally feel about Nintendo, for example.

This is a lofty goal and getting there takes persistence, passion, and luck - but just as importantly, it takes time, and requires a lot of patience. Even if we have had a pretty good start on our journey, it is still very early days. Creating history takes time.

The strategic investment from SoftBank helps us to accelerate towards our goal in two different ways:

1) SoftBank provides us with a massive selection of strategic resources that will help us deliver our games to hundreds of millions of new consumers all over the globe.

2) SoftBank is all about the long term. In fact, I have never met anyone who thinks as long term as its founder, Masayoshi Son, does. When we first met, he told me he has a 300-year vision, and I thought he was joking until the following day when he ran me through what it actually looks like and it is indeed very real and extremely inspirational. When you meet someone like Masa you realize what it takes to build a global business that will last forever. It further strengthened my belief that, we are just getting started. As a company, we are 3 years old so we're only 1% done if we plan for the next 300 years.

In his own words, here's what Masa wanted to tell our players, employees and friends about Supercell and our new partnership:

"In our quest to become the #1 mobile Internet company, we scour the globe in search of interesting opportunities and right now some of the most exciting companies and innovations are coming out of Finland. Supercell is one of those rare and special companies. While your success is impressive, it is your amazing culture and deep passion that truly inspired me. After getting to know Ilkka and some of the team, it became clear to me that you, like us at Softbank, are on a similar long and aspirational journey to shape the future of entertainment for the next hundred years. And, I'm excited to see an independent Supercell continue to rise with great people and great games, delivering happiness to so many people around the world."

This new partnership also takes our collaboration with our good friends at GungHo to the next level. We are super excited to have them participate in this investment by putting in 20% of the total amount. We've had a great collaboration between Puzzle & Dragons and Clash of Clans. They're an amazing bunch of people, and they have a terrific culture. Through them we've come to learn that the Japanese and Finnish cultures are pretty similar on many levels. Not only when it comes to taking your shoes off before you enter someone's home, but also and more importantly, when it comes to partying, if you know what I mean.

It may sound like a detail, but I should also mention that the company that will end up owning 51% of Supercell is incorporated in Finland. This is both exciting and important for me personally. Although our aspirations are global, our roots and future are very much in Finland. Our operations remain in Finland, our management team remains in Finland and in San Francisco, and we continue to pay taxes in Finland. I think more and more people in this country are realizing that there is life after Nokia!

Naturally, this transaction is great for us from an economic perspective. As many of you know, a big part of Supercell's culture is the idea of "we are all in this together". In line with this thinking, everyone at the company will participate in the upside and receive a portion of the proceeds from the investment. None of us work here just for of money, but when the company succeeds, everyone should get their fair share of it and this transaction is no exception.

Although we now have a major new investor in Softbank, it is extremely important to understand that we are still in full control of our future and will continue to operate independently. In fact, and this may sound surprising to some, I feel that with this deal, we're now more independent and in control of our future than we ever have been.

Lastly, I want to thank our players, all the Supercellians, and everyone else whose support has been so valuable in getting us this far. We've had an amazing journey together, and it will only get more exciting in the years to come.

Thank you for reading this far. I know this was a lengthy post, but since this is such an important milestone for the company, I wanted to take the time to fully explain our thinking behind it and exactly what it means to all of you.

Now, let's go make history together! Kippis! Kampai!

11 Comments

Jakub Mikyska
CEO

178 880 4.9
Well, good for SuperCell. They won the lottery, now it is time cash the paycheck.

Posted:6 months ago

#1

Thomas Dolby
Project Manager / Lead Programmer

319 253 0.8
I'm not quite sure what they mean by the first truly global games company. Is there anywhere on the planet left untouched by Nintendo in some way?

Posted:6 months ago

#2
Hmm. Happy Supercell sleeps on a pile of money tonight, fearful SoftBank in for a rude awakening tomorrow.

Posted:6 months ago

#3
Pretty goddamn awesome job!

Posted:6 months ago

#4
As a company, Supercell probably has a few hundred millions in the bank and more coming in every day. This move probably was partly what it was advertised meaning having partners to reach out more and partly to mitigate the risk. This way the company can still retain cash reserves and go forward instead of the need to distribute the extra cash for the owners. Pretty smart!

Posted:6 months ago

#5

Anthony Chan

83 68 0.8
Good on Supercell! Clash of Clans suprisingly is VERY good for a free-to-play microtransactions game. And the number of years that CoC has been around and with no dramatic drop in popularity, I think Supercell had the right formula. The question is (and this is where Softbank hopes its bet is a good one) can Supercell develop another game that can rise like Clash of Clans?

I have seen too many F2P mobile games that are fresh ideas become wildly successful, However it seems to dry up afterwards. A lot of these companies are one hit or 2 hit wonders, and the further successes are story-less sequels of the same gameplay - no offense, but does Angry Birds need that many iterations?

PS ... the title is a bit misleading... Supercell did not sell a portion of its company to GungHo ... rather GungHo's controlling parent (GungHo and Supercell would never be related strategically or operationally)

Either way, I wish both Supercell, Softbank, and GungHo the best! - yes I love my Puzzle & Dragons!

Edited 1 times. Last edit by Anthony Chan on 15th October 2013 3:27pm

Posted:6 months ago

#6

James Ingrams
Writer

208 72 0.3
There you go. Huge marketed AAA title gets $200 million in income in the first day (GTA V anyone?!), small companies quietly make 200,000 a day forever. Who's really making the big bucks?!!

Posted:6 months ago

#7

Paul Johnson
Managing Director / Lead code monkey

787 931 1.2
Careful James. You'll get Bruce going again. :) (or me, lol)

Posted:6 months ago

#8

James Ingrams
Writer

208 72 0.3
Someone has to put a fire under the asses of the computer industry/media! - Rather than the constant back-slapping that goes on all the time as though nothings wrong! :)

Only if you have worked in this business, U.S. and U.K., for 40 years do you REALLY know how bad the situation is!

I'm the proverbial kid shouting "but the king has got no clothes!", except, unlike the fairy tale, the computer industry's eyes haven't been opened yet to the truth!

Posted:6 months ago

#9

Paul Johnson
Managing Director / Lead code monkey

787 931 1.2
I'm totally hearing you, but I've about given up shouting about it. The most apt quote for the situation imo is:

"there's none so blind as those that won't see".

Posted:6 months ago

#10
I wonder when the IPO will be?

Posted:6 months ago

#11

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