Clash of Clans maker Supercell reports second consecutive year of falling profits

Emily Nicolle
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Supercell is majority-owned by tech giant Tencent (Source: Getty)

Mobile gaming firm Supercell has posted falling sales and profits for a second year running, reporting a 26 per cent drop in income as its bestselling titles fail to age gracefully.

The Finnish firm, which was the brains behind viral iPhone games Clash of Clans and Clash Royale, was last valued at $10bn (£7.8bn) in 2016 when Chinese tech giant Tencent bought an 84 per cent stake in the business.

Despite Clash of Clans being the fourth most-widely-played smartphone game last year, Supercell said its earnings before interest, tax, depreciation and amortisation (Ebitda) fell to €537m (£470.8m) from €729m in 2017.

Revenue fell 24 per cent to €1.4bn, down from €1.8bn a year ago. Both sets of figures are now at their lowest since 2014.

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While each of Supercell's four games - Clash of Clans, Clash Royale, Boom Beach and Hay Day - have generated more than $1bn in revenue since they launched, Clash of Clans and Clash Royale saw the biggest declines in sales last year.

The firm's woes are similar to that of many in the mobile gaming industry that have struggled to keep up with the success of games such as Fortnite and Playerunknown Battlegrounds, which are available in a variety of formats.

Supercell chief executive officer (CEO) Ilkka Paananen said in a blog post: "Of course it would be great if the numbers always grew from the previous year. But focusing on short-term financial metrics has never been the most important thing for me or for us as a company.

"Our concern is that if you start to be driven by short-term financials, you may be tempted to release average quality games too early or be overly focused on monetisation. Instead, our approach is to focus on building great teams and creating a culture where these teams can focus on building great games."

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The launch of Brawl Stars last year was the firm's first game since 2016, a drought widely considered to have been responsible for Supercell's falling numbers.

Supercell was previously backed by Softbank before the Japanese investor sold its stake to Tencent for $8.6bn. Tencent, which also owns the rights to Epic Games' Fortnite in China, has since increased its stake in the business to 88 per cent.