Finland’s Supercell Shows Strong Growth in iPad Gaming

According to a report by Transparency Market Research, Gaming Market – Global Industry Analysis, Size, Growth, Share and Forecast 2011-2015, the global gaming market was pegged at $70.5 billion in 2011 and is projected to grow 14% annually through 2015 to $117.9 billion. Growth is projected to be driven by the Asia Pacific markets and the increasing penetration of smartphone-like mobile devices worldwide. Another report estimates that by 2015, Asia and Europe would account for 87% of revenues for online and mobile games by 2015, with China accounting for 32% of the market.

Supercell’s Financials
While Zynga is among the leading player in the online gaming industry, new start-ups are managing to create a mark of their own as well. Helsinki, Finland–based Supercell is one such startup which has seen a strong surge in the demand for its online games.

Supercell was founded in 2011 by a group of industry veterans known for their expertise in creating hit games and successful IP. They began their operations by designing games around multiple platforms, but they soon realized that the future of the gaming industry lay within the tablet segment. Their first game, Gunshine, was a non-tablet focused game and did not do well. Since then, thought, they have focused on developing games for the tablet market, and particularly the iPad. Supercell hit it big last summer when they released their two very popular (and at this point their only two) games, Hay Day and Clash of Clans. Even after almost a year of release, these two games remain among the top-grossing iPad games in several countries, and revenues from iPad games now equal revenues from iPhone games.

Like other gaming models, Supercell earns revenues through sales of premium features and virtual goods on their gaming apps. Their games are simple and easy to play and come with funny animation details, thus keeping users engaged. The games earn revenues by allowing players to buy features such as speeding production of eggs and milk or troops in the Hay Day game and in the Clash of Clans. For now, the two games are driving strong revenue growth.

Recent reports reveal that Supercell grosses more than $2.4 million in revenues each day. Last year, Supercell grossed $100 million in revenues and managed to gross $179 million in revenues in the first quarter this year earned from their 8.5 million daily users who play over 10 times daily. Unlike some of its competitors, Supercell is profitable as well. During the first quarter this year, they recorded earnings of $104 million. Analysts expect that if their current performance trend were to continue, they should be able to gross over $1 billion in revenues by the end of the current year.

The company is venture funded and has raised $142 million to date from funds that include Accel Partners, London Venture Partners, Initial Capital, Lifeline Ventures, Cerval Investments, Index Ventures, Atomico, and Institutional Venture Partners. The funding includes the $130 million raised earlier this year, which pegged their valuation at $770 million.

Supercell prides itself in its close-knit organization structure. They are a team of 100 employees, all organized in independent cells responsible for creative assets. The company also keeps their performance transparent within the organization and all of their employees receive a mail everyday telling them about their games’ financial and operational metrics. They attribute their success to their flat, open organization structure.

Supercell realizes the importance of Android and Windows OS within the tablet segment and over the next three years plans to release Android games. In addition, they are looking at expansion in the Asian markets and “probably” an IPO. Some believe that Supercell’s games may just be a fad and player interest may fade out any day. For now, though, the company remains on a strong growth curve.