Supercell, a mobile gaming company, has reported falling sales and profits for a second year running. It reported a decline of 26 percent in income as its bestselling titles are not able to age gracefully.
The Finnish company is the brains behind viral iPhone games Clash of Clans and Clash Royale. In 2016, it was last valued at $10 billion (£7.8 billion) when Tencent, a Chinese tech giant, acquired an 84 percent stake in the business.
Despite Clash of Clans being ranked as the fourth most-widely-played smartphone game in 2018, Supercell said that its earnings before interest, tax, depreciation and amortisation (Ebitda) dropped to €537 million (£470.8 million) from the €729 million that was recorded in 2017.
The revenue of the company dropped by 24 percent to €1.4 billion. It was down from the €1.8 billion that was recorded in 2017. Both sets of figures are currently at their lowest since 2014.
While each of the four games of Supercell- Clash of Clans, Clash Royale, Hay Day, and Boom Beach – have generated more than $1 billion in revenue since they launched, Clash of Clans and Clash Royale marked the biggest declines in sales in 2018.
The woes of the company are similar to that of many in the mobile gaming industry that have grappled to keep up with the success of games such as Playerunknown Battlegrounds and Fortnite, which are available in a variety of formats.
In a blog post, Ilkka Paananen, the chief executive officer (CEO) of Supercell, stated: “Of course it would be great if the numbers always grew from the previous year. But focusing on short-term financial metrics has never been the most important thing for me or for us as a company.”
He added: “Our concern is that if you start to be driven by short-term financials, you may be tempted to release average quality games too early or be overly focused on monetisation. Instead, our approach is to focus on building great teams and creating a culture where these teams can focus on building great games.”
The launch of Brawl Stars in 2018 was the first game of the firm since 2016, a drought that is widely considered to have been responsible for the falling numbers of Supercell.
Previously, Supercell was backed by Softbank before the Japanese investor sold its stake to Tencent in a deal valued at $8.6 billion. Tencent also owns the rights to Epic Games’ Fortnite in China. It has since raised its stake in the business to 88 percent.