SoftBank Deploys ‘Clash of Clans’ to Tap $3 Billion Game Market

Photographer: Junko Kimura/Bloomberg
Masayoshi Son, chairman and chief executive officer of SoftBank Corp., left, shakes hands with Ilkka Paananen, chief executive officer of Supercell Oy, as they pose for photographs during a news conference in Tokyo on Oct. 31, 2013.

Supercell Oy started the year trying to break into the Japanese smartphone game market. By October, it had struck a deal with the nation’s second-richest man that valued the maker of “Clash of Clans” at $3 billion.

The Finnish game maker is seeking a bigger slice of Japan’s market for downloaded games, which is forecast to triple to $3 billion this year, amid a shift to smartphones, Supercell co-founder Ilkka Paananen said in an interview. Billionaire Masayoshi Son’s SoftBank Corp. led a $1.53 billion agreement for a 51 percent stake, a deal that was completed last week.

Supercell’s bet on a country with a declining population is paying off as mobile users shift from feature handsets to Apple Inc. devices and phones using Google Inc.’s Android software. After Supercell began working with Gungho Online Entertainment Inc., which is led by the SoftBank President’s younger brother Taizo Son, its flagship title skyrocketed to among the country’s top ten mobile downloaded games, said Paananen.

“In Europe people thought we were crazy because they say Japan is just a big graveyard for a Western gaming company,” Paananen said Oct. 31 in Tokyo. “No Western gaming company can do well here, but we still wanted to try.”

Photographer: Kiyoshi Ota/Bloomberg

An attendee, center, plays a video game on a Nintendo Co. 3DS handheld game player in the GungHo Online Entertainment Inc. booth at the Tokyo Game Show 2013 in Chiba. Close

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Photographer: Kiyoshi Ota/Bloomberg

An attendee, center, plays a video game on a Nintendo Co. 3DS handheld game player in the GungHo Online Entertainment Inc. booth at the Tokyo Game Show 2013 in Chiba.

Supercell’s “Clash of Clans” is the second-highest grossing game in Apple’s app store.

The Helsinki-based company is also filling a gap left by Japanese companies like Gree Inc., that tapped an earlier generation of handsets and relied on online platforms to download titles. Tokyo-based Gree offered buyouts to some of its workers last month.

Mass Market

Sales of game titles played on game-specific players fell 17 percent to 95.1 billion yen ($964 million) in the six months ended Sept. 30 from a year earlier, the lowest in nine years, according to Kadokawa Corp., a Tokyo-based publisher of game magazine “Weekly Famitsu.”

“We fundamentally believe games as mass market phenomenon will shift to mobile and tablets,” said Paananen. “Smartphones and tablets are so much more convenient than any other platform. Everybody can play games and everybody has one these days.”

Revenue from downloaded games on smartphones totaled $1 billion in Japan in 2012, a fifth of the worldwide $5 billion market, according to an estimate made by Gree. The Japanese market will probably triple to $3 billion of revenue this year, outpacing the global market’s growth, it said.

Smartphone Content

Kyoto, Japan-based Nintendo Co., the creator of the Mario and Zelda franchises, has failed to capture the consumer shift to smartphones and tablets. The company’s titles can only be played on its own hardware, like the Wii U and 3DS handheld device.

Photographer: Yuriko Nakao/Bloomberg

The Gree Inc. logo on the company's website is displayed on a smartphone in Tokyo. Close

The Gree Inc. logo on the company's website is displayed on a smartphone in Tokyo.

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Photographer: Yuriko Nakao/Bloomberg

The Gree Inc. logo on the company's website is displayed on a smartphone in Tokyo.

The company last week posted a second-quarter loss amid sluggish sales of the Wii U.

Masayoshi Son, the 56-year-old founder of SoftBank, has said he’s seeking overseas opportunities and the company has been involved in at least 12 deals over the past year, including the July acquisition of Sprint Corp. for $21.6 billion.

“The one who wins the competition in the gaming industry will win the game of smartphone content,” Son said Oct. 31 in Tokyo after SoftBank announced sales will reach more than 6 trillion yen in the 12 months ending March.

Paananen said what attracted him to SoftBank and founder Son is their long-term vision for growth.

“We really want to create a new type of gaming company that people would look back in twenty, thirty, forty years and say the company was loved by both of its employees and players,” said Paananen. “But creating history takes time.”

To contact the reporters on this story: Mariko Yasu in Tokyo at myasu@bloomberg.net; Takashi Amano in Tokyo at tamano6@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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