BBC Interview Reveals Supercell’s Next Move!

[Music] The supercell news was on BBC. So I was like, okay, let me take a read. And basically BBC.com, supercell boss, we need to take bigger risks. So I read the article and I is on this I don't know why he's on BBC talking about this very interesting audience choice and channel, but he is talking IPO. IPO. Exactly. So he's you know cited competition against games and apps like that's good. So apps are competition for games. They have to compete against the entertainment value of the Tik Toks and the YouTubes. Talked about costs of games rapidly increasing. So this is of course very high level for audience that has that probably plays Netflix games and um talks about the time to market and how the bar is higher for games and then he talks more about what's happening at Supercell. So they have 10 games in development at various stages and that the teams are asking

themselves this question. Why would people play this game in five or 10 years? So okay uh like this is BBC stuff. And then he reiterated what Supercell's basically ethos is in making games which is taking a quite complex game ideas and making them really easy and accessible to play and sort of a cartoony and fun. I think that's a very well put that's what they do. He talked about AI. Again, Ilka is all about AI. He talked about AI innovation lab in Helsinki. I'm quoting, "We basically gave them free hand to do whatever they wanted in order to spark innovation. Decided that that's a massive success and they are opening an AI lab in San Francisco." I wonder how much the person who runs AI lab in San Francisco is getting paid. I want to know that one. that that must be some insane package cuz like AI guys in San Francisco and gals make make a ton. But anyways, that kind of sparked me to look at sensor tower and supercell's numbers. So the

first half of 2024 to first half of 2025 since it's roughly comparable and we can see that the portfolio is a little bit struggling because last year was record year. So Boom Beach is the only game that is up and it's up by 6%. So good job guys. It's their smallest game, I think. Brawl Stars down by 20%, Clash Mini, Dead Clash of Clans down by third. Oh, hold on. We got to pause on Brawl Stars because that has been such an important narrative of like end of 2024. I feel like all I was getting on LinkedIn was Brawl Stars coverage. They were doing a GDC tour on their turnaround. all of that legitimate flowers to them. But I would say this is now a period of silence and the game is down almost what half from where it was in May 24 where it was doing 80 million a month. It's now down to 40 million a month. Again, still very impressive. The narrative is still the same, but I would just say like that is a radical change. They were not able to sustain this monetization level. Monopoly go, which I

hope we'll cover in future episodes. Also, by the way, little bit of slippage on those top grossing charts. Yes, I don't know if it's worth mentioning, but now they've changed the leader of Brawl Star. So, Frank let it he made that insane pivot when the game was basically looking like dead on arrival in soft launch and Frank was the person who took it over as a lead and I think he came from customer support side or something. it wasn't like directly in game development and so he has done a truly heroic job basically pulling it out of what two to three nose dives so he's on his welldeserved sabbatical I don't know if he left but it was just on LinkedIn he was basically taking a sbatical so that usually indicates that he's taken a break before moving on to a next project so all the kudos to him he did a fantastic job since I don't want to get too far away from the point that both of you just made about the numbers being dramatically down. Both Monopoly Go and Supercell and Brawl Stars have web shops. And one thing that I want us to

be super careful about, like we love Sensor Tower and they said themselves, Shurog said that they are trying to add in a tool that will help estimate web payments. I just want to be careful to say that anytime I talk to these people about web shops, they are over the moon and saying that the percentage of revenue coming from web shops if we're just talking about revenue is very very high like 30 40 50%. That gets you a level explanation. That doesn't necessarily get you a change explanation. Like here the change the movement is important and you would have to assume some crazy changes in web store adoption over the same period to compensate. But the changes are from a number. There's one data point that is missing here. So what Phil is showing is revenue by app. But there's another thing that we need to look at and that is downloads. So, I don't have that that graph there, but I looked at it and Brawl Stars downloads have gone to a third to what they were when when it

started climbing. Okay, we talked about this a little when Brawl Stars Yeah. did their rethink. It was a combination of actually adjusting the game, but they also did an insane marketing push, something they hadn't done in the in and so it was short-term revenue. It wasn't the same type of audience that they've had they've captured, you know, so they just didn't stick around. Right. Exactly. and and but they also talked about that that that was organic downloads like there was I think Frank came out on LinkedIn saying like I'm just paraphrasing but it was giving something like 80% of the downloads are organic and you're like excuse me so you're just basically not attributing but anyways like that's semantics overall I would say the the overall portfolio is down by about 20% if we're comparing first half to the second half of course not looking at web shop revenue so the actual amount can be smaller but there's positive signs Clash Royale is is showing some positive growth right now with with some good updates. Brawl Stars came down from the heights as we talked about. Heyday, Clash of Clans, what are those like 12 year old games? They're pretty stable.

Squadbusters is looking dicey. Diceier than ever. Like dicey dicey. No, it's not dicey. Michigan, it's been dead. It's been dead for over a year. No, no, no, no. There's a team in London that is working hard on it. So until until they give up, we're giving it a fighting chance. This is This is It's in hospice right now. Yeah, thanks for the but but but the overall story of Supercell, like I'm just tying down the article, like this is insanely profitable company, they're making like what 121 million in net revenue a month on inapp purchases alone. That's insane. And I think just reading through this article, even though it's high level, I think is doing absolutely the right thing. So the company is to some extent kind of living off dividends because these games they're generating revenue are old and he's definitely pushing towards the these new new hungry elements like the AI lab. So bringing people outside the organization to come something new spark labs which nobody talks about anymore. It was last I think the new cohort is

starting after the summer after the brief and short 3-day long summer of Finland. Then the Spark Lab starts with a with a new set of people. That's also a way to bring in hungry folks who are new to Supercell, new to process who just just focus on building something new. It was interesting because I read this article after I left the uh the I don't know if I can talk about the event but anyways around the event there were many people from various different companies who work or have worked or affiliated with Supercell in somehow and this was before I read the article and some of the folks were talking about the Supercell work life balance and this is again hearsay I do not know this so don't attack me but folks were talking about this that that supercell you know, very work life balance focused. It's 10:00 a.m. to 400 pm. You got the long holidays. The office is basically shut down for June. They have a lot of offsides. We're talking about two per

quarter usually per person. A lot of the leadership is working remotely. Like you got the CFO in Austin, you got the live ops head in Stockholm, you got marketing in London, you got people head in in San Francisco. So you talk to people from Supercell and they're absolutely loving it because it's a great company to work for. And then you talk to somebody who's coming from Dream or Hoyoverse, they might have like a PTSD, especially people from Hoyo War, which is like 997 culture. It's like hardcore even for Chinese. So what I'm trying to get at is it's a super profitable company which games that are producing most of the revenue are shipped 10 years or more ago. And I think they're doing absolutely the right thing by shaking up the organization by bringing people from like not even from outside but almost like creating these cells inside the company whether it's the AI cells or the spark cells to bring that hunger because it feels like life is excellent and I would definitely treat Supercell as a

place to work anybody else. What the [ __ ] is this thing? Wait, is this is this sarcasm? No. No. What? Well, well, think about it. Like I think about it from the culture perspective, right? They're getting more chill and they're about to IPO and the revenue's down. Where are we cheering Ilka for this? He's getting distracted by these stupid little experiments rather than optimizing the high prof. Here's what I'm trying to say. It's like really hard to change the culture that they have right now. And so they're bringing sort of like these auxiliary teams how it feels like the Spark Labs and the AI lab. Yes. That is running away from your culture problems. That is not dealing with your culture problems. to give you an example. So at GDC there was a lot of supercellians that were there and normally you could just go to supercell you could go to GDC whenever you want just put on the company bill but now that the company has grown to such a big size they have to make choices cuz resources are limited so then how are you going to choose who goes to GDC and who doesn't well now you need rules right and now you got to pick and choose now who gets to go who doesn't get to go and now who's going to have resources and who isn't going to have resources right I want hundred more

million dollars for my Brawl Stars marketing budget well we can't really do that anymore more right cuz all these other people. So now you start to get into the classic hierarchy of resource control and management and the thing we haven't seen from Ilka is how he's going to evolve Supercell to deal with the challenges of a modern corporation. We've heard nothing and so he runs away to spark labs into AI. No. No. He was out there talking about this [ __ ] two years ago, right? Like he had this huge thing where we're changing the culture. We're doing everything yet. They haven't done [ __ ] It's a cute internship program. Yeah. At the end of the day, at the end of the day, when you're this big, you actually wrote it very well. Scaling is not a risk-loving environment, right? Like when you're at this level of success, like to get you to the next level of success is a completely different calculus, you know? Like you can't be doing this kind of [ __ ] flippy floppy nonsense, right? And then this is a big debate that I had with Catela and Alexander, which him and I completely disagree on this point. When you're at this scale, innovation is tough, right? What they should be doing

is leveraging their brand and bringing games to the masses that are already successful. So do the World of Warcraft type thing like like incrementally improve things. You know, Clash Royale was kind of similar to that as well. Like that's what they should be focusing on. Forget innovation and just starting from scratch. Like leverage what is successful and make it better. You know, like at this scale, you can't do this [ __ ] Okay? I'm just saying like it's just not going to work, right? But I think they have been doing it on a product sense. Like we haven't talked about it, but Clash of Clans and Clash Royale got like rid of timers. Those are huge economy changes that I want to revisit. And those are storyried franchises that are radically changing fundamental mechanics, right? He's not talking about that. He's not celebrating that. Let me just break this down. I don't mean to be a dick, but I right now, right? They need someone new that actually can change the way they work, right? if they want to continue to grow and beyond that. If they want to continue to do what they're doing, Ilka

is fine. Like they're just not going to grow. They're just going to be basically flatline, right? Like forever. I disagree. I disagree on that. I don't I mean everything, you know, I was joking with you like what different are you going to say? I feel like every time we talk about Supercell, we're saying exactly the same thing. Like what is new about their approach? over the last two years that I've been on this podcast. Every time you pull up a blog of his or an article, it's the same [ __ ] Now it's like there's an AI company in San Fr. Of course there is because everyone has to say that because you have to. You need a leader that actually can drive quote unquote innovation, but innovation in a way that scales for such a big company, right? I mean, there's zero to one, there's one to 100, and then there's a 100 to a billion. And and I think Crest is trying to say perhaps ILA is not the best fit for that stage of the company and where it is. He was awesome at the, you know, one to 100 or maybe one to a few thousand. And this goes back to the Roblox thing too, like the leader is

still there, right? And I I was actually wrong about that in some sense. He's basically allowing Manuel to like manage the revenue generation of the platform more aggressively, right? So they're like doing it together. So, I was a little bit wrong on that, but the but the fact of the matter is they needed someone like Manuel to take them to the next stage of growth and level. Like, he's not the right guy, right? And so, bring in advertising, bring in merch, bring in all this other [ __ ] It's like if you want to continue to scale and grow and go IPO, that's what you need, right? If that's not what you need, then I can keep doing what he's doing, right? But they brought the CFO. CFOs are [ __ ] dude. CFOs are [ __ ] tails wagging the dog, dude. Okay. I mean, is there certain instances where CFOs make a material difference? No. I mean, the CFO is going to do what Phil said, right? Which is, I'm going to put constraints. I'm going to start to look at a budget. Like when I was at Riot, Riot didn't used to have a budget. And when I started in 2018, they were like, "All right, we got to put our big boy pants

on and we have to have a budget and we have to have P&L." And everyone freaked out. They were like, "Oh my god, I we just spend millions and millions on trailers cuz it's cool." And now people were had to justify their life. So that's what a CFO does. They come in and they turn it into a real company. I have to actually I have I have to pull back a little bit because I know Mike Williams is going to kick my ass next time he sees me. CFOs are not [ __ ] Blake Jorgensson, for instance, saved EA. Immediate correction. Yeah. Yeah. So Blake, there's instances in which you need a CFO to get keep people accountable and pulled things together. You know, the at EA, it was basically the Canadian mafia that just spent them into oblivion, building up all these [ __ ] teams. It It wasn't until Blake came along and [ __ ] just decimated that whole big org and got rid of all this [ __ ] marketing spend on TV. And look, Blake was a [ __ ] genius in terms of that. But generally speaking, CFOs are the tail wag of the dog, dude. Like the leadership strategy. Yeah. Yeah. COO, CEO, they're the ones that

are really driving actual strategy, product strategy. Well, I I want to ask one question. Why is this article on BBC? IPO. IPO. Supercell comm seems to love not going to gaming. Well, actually, that's not fair. They've gone to our our friend at Mobile Gaming Biz. I don't know. They just they have weird coms, right? No, they now do only pocket gamer, which they advertise on, and so they do only that. Crest, come on. Right. like the the strategy is they want to start getting out in front of the business environment. That's why they hired that CEO. That's for a comm strategy. So comm strategy 101 is comms is only for a few things. One is if you need to raise money. Two is if you need to do recruiting to get more people in. Three is if you need to do some sort of like crisis management. Four is you're laying the groundwork for an IPO. Press is not for players. It is not for consumers. It is for the business environment. I'm going to get [ __ ] from comm's folks. But that is your comm

strategy. So whenever people come to us as deconstructor of fun, I'm like, here's our audience. You know, what are you trying to accomplish? And sometimes I tell people, no, like that's not why you come to us. We cannot help you with that goal. So Crest, I wanted to ask, am I crazy by chanting IPO as as like the reason why they did this? Yeah. When you're going that broad, I mean, you're trying to build up interest from investors, right? And equity investors that may or may not be familiar with the story, but when they see it on BBC, they go like, "Well, [ __ ] The hell is this?" You know, it's named dropping, right? Like you, it's like now I have to pay attention because somebody at the BBC is talking about this. I'll tell you though, one thing like this growth profile like it is a tough cell, right? I mean, it is a tough cell, dude. Cuz again, I've said this a million times on the podcast. The problem with gaming in general is it is a hit-driven business and that makes people very nervous on the investment side because that creates volatility that they don't [ __ ] want, right? That's when you scale over time

and build and build and build is is a better story for going public. This looks like they got one [ __ ] huge uptick from Brawl Stars and now it's going through the toilet again, right? Not really through the toilet. 40 45 million a month still. I know, but we're comparing it to what 120 million. And it wasn't for a short period of time. It was for six months this thing was like driving that kind of thing. That's like it's a huge drop, man. That's like huge. Like that's not what people want to see, you know? [Music]