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Supercell reveals latest fiscal figures, defends free-to-play model
Supercell reveals latest fiscal figures, defends free-to-play model
February 12, 2014 | By Mike Rose

February 12, 2014 | By Mike Rose
More: Smartphone/Tablet, Business/Marketing

We already knew that Clash of Clans studio Supercell was making a lot of money from just two mobile games. Today the company disclosed just how much revenue it has taken over the last fiscal year.

During the 2013 fiscal year, Supercell recorded GAAP revenues of $689 million, and EBITDA (earnings before interest, taxes, depreciation, and amortization) of $322 million. The company noted that it paid approximately $345 million in taxes.

Supercell's Ilkka Paananen noted that these large-scale earnings are allowing the company to plan for the long-term future. "We have the financial security to do so," he added. "So we can think what's best for the players and Supercell."

Paananen also took the opportunity to announce that the company's third game, Boom Beach, will launch next March.

The game soft-launched in Canada and Australia recently, and currently sits at number 5 in the top grossing iPhone charts in both countries. The company is obviously looking to replicate the success it had with Clash of Clans and Hay Day with this new release.

Paananen noted that the company has hired 60 new staffers during 2013. He also added that Supercell does not plan to support the Windows Phone platform, as he says that, "The focus for us is a fundamental value we believe in, and we want to be very focused about the platforms we support."

Defending the free-to-play model

During a press Q&A this morning, Paananen was forced to defend the free-to-play model, and discussed the "whales" that play Supercell games.

As Gamasutra has investigated previously, high-spenders in free-to-play games can find themselves in difficult financial situations, as they struggle to stop themselves spending too much money on games that provide no spending ceiling.

But Paananen said simply, "I think you could say the same thing about every single form of entertainment - it's not healthy to watch movies all day, for example."

He added that Supercell watches over its highest spenders, and has invited many of them to visit the studio's headquarters in Finland.

"It's no secret that some players spend substantial amounts of money on these games," he noted. "But I wouldn't say the vast majority of revenue comes from them. These people usually come from an investment banker or lawyer background, and they spend a lot of money on golf courses and so on. I've asked them 'Why do you spend so much money on these games?' and they say 'People spend money on golf, I spend money on Clash of Clans.'"

He was keen to add that, "It goes without saying that it's not healthy to be just playing mobile games - just like with many other forms of entertainment."

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Pau Ruiz
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"I think you could say the same thing about every single form of entertainment - it's not healthy to watch movies all day, for example."

Spending money because the game entices people to do so using well-studied psychology is not the same as "watching movies all day".

How can anybody say this with this a straight face? It find the comparison simply disgusting.

Alan Boody
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This is obviously how he convinces himself that whale hunting is ethical.

Mark Velthuis
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While he's right that doing anything too much is bad for you, I think it's still unacceptable when the game is in fact designed to manipulate you into playing/paying too much (I haven't played Clash of Clans, so I can't realy say if that game fits into that category).

Still, free to play only sais so much. I think it might be time to split that payment model up into categories that are more specific.

There's the games that are actually completely free.
Then the ones that have adds. (Tho personally I would still consider this to be completely free).
We've got the games where you can buy things that only have an aesthetic value.
Then the games where you can buy things that are more a quality of life thing (like inventory space)
The games where you can buy everything you'll ever need/want in the shop (the so called pay to win)
And the games where they actually put up a wall that basicly prevents you from playing unless you pay.

I think we should not have to defend the payment models of Team Fortress 2 and Path of Exile just because Dungeon Keeper Mobile and Farmville abuse players using a similarly named but in my opinion completely different payment model.

Leonardo Carucci
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Gambling companies run programs called "Responsible Gaming", where they set limits to gamblers based on spending habits and other parameters. They usually work with external organizations that support gamblers, operate a 24/7 help line etc to deal with addiction etc.

Maybe it's something the social/mobile industry needs to look into?

Julian Cram
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Show well researched scientific evidence that vast numbers of people are losing their houses, life savings, retirement funds and so on on spending on these games, and then maybe the mobile industry will.

Until then, anything "reported" even by a site as reputable as gamasutra is hearsay.

Nicholas Lovell
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The Financial Times says $892 million in revenue and $464 million in EBITDA. You have $689m and $382m. Is the difference GAAP versus non-GAAP? Do you have a link to the report, or was it a conference call?

Mike Rose
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Hey Nicolas, yeah the figures the FT are giving are the non-GAAP. Supercell stuck the non-GAAP figures on the main chart, then hid the GAAP figures away to the side, so many people missed them. We report GAAP over non-GAAP at Gama

Nicholas Lovell
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I'd also be surprised if the company paid $345 million in taxes. That would be more tax than profit before tax, which even the most socialist person would admit is unsustainable.

I suspect the bulk of that tax bill is Capital Gains Tax (or equivalent) paid by the shareholders who exited to Gungho on the difference between the amount they invested and the amount they sold their shares for. I could be wrong, but I think it is likely to be tax paid by "shareholders and the company", not just the company

Tuomas Pirinen
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Finnish media reported widely on this, the tax bill is indeed by the company and its owners/shareholders. That 350M will pay for a lot of hospitals, roads and pensions in Finland!