How Supercell approaches investing in mobile game developers

Supercell made a rare move today by investing $7.8 million in Finnish game developer Frogmind, maker of the Badland series. It’s a small amount of cash, but Helsinki-based Supercell has plenty of money to put to work, if it wishes. Supercell has two of the hottest games on Earth: Clash Royale, which just took back the No. 1 spot in the app store from Pokémon Go, and Clash of Clans.

Clearly, any investment from Supercell is extremely valuable because the company has such rare insights into what makes mobile games work.

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Tencent bought an 84 percent stake in Supercell in June at a $10.2 billion valuation. We asked CEO Ilkka Paananen why his company chose to invest in Frogmin, and how it might proceed with other investments in the future. To our surprise, Paananen wrote back and explained Supercell’s point of view.

Here’s a transcript of Paananen’s emailed reply.

GamesBeat: Why are you investing in Frogmind?

Paananen: Our goal at Supercell is to make great games that are played for years and years by millions of people, games that become part of the rich history of games. We try to get there by forming small teams we call “cells,” and providing these cells the complete independence and responsibility to work on their game — one way to describe these cells would be to think them as small companies inside the greater company. This pretty unique organizational model has worked well for us over the years, but at the same time we know that not everyone is in a position to work for us. So, we’ve been thinking whether there would be ways for us to enable also other game developers to make a bigger impact by using this philosophy, but outside the existing Supercell teams. Frogmind is a very well respected developer with a fantastic team and a terrific track record of producing great games for mobile. As part of the Helsinki developer scene, we’ve known them for years and are big fans of their team and their passion for quality. We also love the games they’ve developed so far, and are very excited about the games on their roadmap. So we’re excited to be their new partner!

GamesBeat:  Why does the 51 percent deal make sense?

Paananen: The partnership is all about giving Frogmind the resources and stability they need to continue making great games, while maintaining the complete independence that is crucial to them being able to do that. From our own experiences with both Softbank and Tencent we felt that this type of deal structure is the best way to achieve this.

GamesBeat:  Will Supercell publish any particular games from Frogmind?

Paananen: No. Supercell is a developer, not a publisher. Frogmind will still publish under their own name and decide which games to make and how to make them. We will be there to provide advice and support if they’d like it, but won’t force it in any way.

GamesBeat:  This is the first outside investment that I know of by Supercell. Why are you doing it?

Paananen: As I said, we’ve been thinking for a while about ways in which we can enable the best talent to make the best games when they aren’t in a position to come and work for us. Over the years, we have talked with a number of teams but Frogmind was the first one that just felt perfect for us. They share the same passion for quality that we do, and are fans of small teams as well. In fact, their teams are even smaller than ours!

GamesBeat:  Is it part of a larger intention to help Finnish game studios?

Paananen: Supercell obviously has its roots here in Finland, which is very important to us. At the same time, our ambitions are very much global. And while we definitely want to support other studios and teams in Finland, it’s not limited to Finland in any way. Over the years, we would love to find like-minded developers also from outside Finland.

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GamesBeat:  Do you plan to invest in other mobile game studios over time?

Paananen: As said, over the years, we hope to find more teams that share similar values to us and that we could partner with.

GamesBeat:  Is there some structure to it?

Paananen: We treat every opportunity case by case. The biggest consideration would have to be the team, and their philosophy towards making games, even if the actual games would be very different from ours. We look for teams who share our passion for quality, people who want to build great games that people would play for years. Games that have a shot at making history.