Former EA/Playfish exec joins board of red-hot mobile gaming startup Supercell (interview)

Above: Supercell’s Clash of Clans combines elements of real-time strategy with asynchronous player-versus-player gameplay to create a unique gaming experience.

Image Credit: Supercell

GamesBeat: Did you happen to see Bobby Kotick’s comment about the mobile market on Activision’s last earnings call? He was saying that it was not yet a market where they were ready to invest more money, because you don’t see franchises having the same impact on the top lists every single year, year after year. He sees a lot of games being successful for three months and then disappearing from the charts. That’s one reason they feel like they can’t build a very large business in mobile yet. It’s an interesting observation given how much money Activision pours into three major franchises right now.

What do you think of that. Do you feel like mobile is understood well at this point?

Segerstrale: Tablets and mobile are closely related, but perhaps slightly different also. For sure, they’re still emerging. There are still a lot of things to work out as far as how you take a successful game and create the kind of perennial brand value or franchise value that has become so important for many of the publishers in the console world. What I would say personally is that it took the PC and console world a very long time to understand how that works. There were a lot of PC and console titles that came and went quickly for a long time before today’s anchor franchises came to exist and publishers figured out how to create that value. I expect it to take time on mobile and tablets as well.

With that said, being a keen student of the games industry overall, I think that if you just look at the trends – not just in terms of the amount of phones and tablets sold, but looking deeper at how people consume any kind of media right now — we’re very rapidly experiencing a shift from consumption of entertainment on the shared screen in the living room. We’re seeing that shift fairly quickly, and in an all-encompassing way, toward social experiences and shared experiences. As opposed to watching an episode of a TV series or listening to music or playing games on the sofa in front of the TV with whoever happens to be there, you take that entertainment with you and experience it whenever you want to and wherever you happen to be. That is going to be a very difficult transition for some of the large publishers to accommodate.

What Bobby says is absolutely true in that this clearly is emerging. Everyone has to figure out how this games-as-a-service environment is going to work in relation to creating longer-term franchises. Whether we like it or not, consumers choose how they will experience entertainment in the future. It’s getting it backwards to say that you shouldn’t invest in mobile because there haven’t been long-term franchises created there yet. Consumers are choosing to play on these devices and it’s up to us to figure out how to create that longevity.

Supercell has done well with both Hay Day and Clash of Clans so far. Hay Day just turned one year old and it’s still going strong. It’s in the top five pretty much everywhere. Clash of Clans, which I think is nine months old now, continues to go as strong as ever. It’s growing every month. Clearly there’s a fairly long arc for these products. I think the single most important thing for Supercell right now is finding out how to keep that player base happy, releasing interesting updates and additional content. Some companies I look up to on this are Riot with League of Legends and Blizzard with World of Warcraft – the products that, through their service component and their community, have been able to create a longer-term following.

One last thing I’ll say about that. If you think about how a Call of Duty or a Battlefield sustains itself year in and year out, until two years ago this was about having to re-market the same game every year, again and again. It’s only just now that we’re beginning to get a service component that takes players over from one version to another. It’s an extremely expensive pursuit, this franchise creation in the living room, compared to the efficiency of growing an audience on mobile platforms. That said, it’s a very exciting and interesting platform transition that we’re going through in the next couple of years. Certainly Bobby is right that it hasn’t been done in a major way yet. Supercell is focused on figuring out exactly how it’s done.

GamesBeat: What do you think of EA’s situation right now?

Segerstrale: Now that I’m outside the company, I’m not in the best place to comment on it. I think that if you look at EA’s track record over the last couple of years, there’s a growth in digital revenue and operating margins and all that stuff. EA is well-placed. The question is, what does EA do with that moving forward?

The hardest thing for the big console publishers from here on is choosing where they bet their best talent. Do they go after these next-generation consoles, believing that’s going to be a longer-term source of growth for the company? Or do you effectively burn your boats, if you like, and put them against something much less known, something that feels much riskier and much less proven? As per Bobby’s comment, how much do you invest in mobile versus next-gen? That’s going to be the hardest thing for both of those companies. They’re sitting on all those franchises and all that talent. Clearly they have a lot of momentum, and I think EA is initially well-placed, but they have a lot of choices to make. We’re in this interesting place in the market right now, where competition matters a lot less than your relationship with your players and your ability to execute overall.

GamesBeat: Is Supercell a good example of where your interests lie after EA?

Segerstrale: I’d say so. I’ve been a passionate entrepreneur for the past 12 or 13 years. I’m interested in growing smaller companies into bigger companies. With the other Playfish founders, through our seed investment vehicle and initial capital, we’ve invested in a number of companies. As I said, we led the seed round into Supercell, and we’ve taken similar stakes in other companies. What I’m doing right now is helping those grow. Obviously Supercell has done incredibly well and deserves a fair amount of attention. Taking a board seat reflects that, ensuring I can help Supercell in the best possible way with as much time and effort as is required. You’re likely to see me working with other companies as well – not so much as a professional VC, but rather at an earlier stage, helping navigate both product and company growth.

GamesBeat: It’s an interesting twist in the market — the race between Clash of Clans and Puzzle & Dragons this year.

Segerstrale: Yeah. Puzzle & Dragons is one of the most amazing stories in the game industry over the past year, in terms of just the sheer success that a single title can have. I’m a big admirer of GungHo [Online Entertainment, Puzzle & Dragons’ developer]. It’s going to be fun.