What does Clash of Clans makerâ€™s $10 billion sale say about the future of gaming? | Tech News
We’ve been hearing for years how mobile gaming has been growing at nearly inconceivable rates and will soon become the dominant force in the gaming business. Today’s $10 billion (£7 billion) purchase of Clash of Clans maker Supercell by Chinese gaming giant Tencent drives home just how big that shift is—or at least how big the market thinks it is.
Tencent paid $8.57 billion for about 84 percent of the Finnish Supercell (which is owned by Japanese parent Softbank), valuing the mobile game studio at about $10.2 billion. That means a mobile game company with four titles is now worth more than twice as much as both Minecraft-maker Mojang (acquired by Microsoft in 2014 for $2.5 billion) and VR company Oculus (acquired by Facebook in 2014 for $2 billion) combined. Looking outside of gaming, Supercell sold for nearly twice as much as the combined purchase price of both YouTube and LucasFilm.
The only gaming acquisition that even comes close to the size of the Supercell deal is Activision’s purchase of Candy Crush Saga maker King, another mobile-focused studio. That move represented a $5.9 billion bet that franchises like Call of Duty, Overwatch, and Destiny aren’t going to be enough to sustain growth for the mega-publisher going forward. But King is largely a one-trick pony at this point, relying heavily on the Candy Crush games for the vast majority of its players and revenue. Supercell’s success runs a bit deeper, with mega-hit Clash of Clans backed up by smaller-but-still-big hits like Clash Royale, Boom Beach, and Hay Day.
The relative value of mobile gaming largely comes from the simple fact that so many people worldwide have smartphones in their pockets, and they are willing to download and try free-to-play titles. Supercell claims more than 100 million daily players for the four games mentioned above; that’s a little under 10 percent of the total market for mobile gamers worldwide, according to one estimate. For a console game to have 100 million players, it would have to be sold to roughly 50 percent of all console owners worldwide, according to other estimates. PC gaming looks relatively strong on a worldwide revenue basis, but these days the business is utterly contaminated by free-to-play MOBAs and MMOs, rather than more traditional single-player games or direct online competitions.
Asia is the key to this change, which helps explain why Tencent is willing to put so much money into acquiring a growing competitor. A recent Digi-Capital report estimates Asia will represent more than 50 percent of all mobile gaming revenue by 2018, leaving Europe and North America to divide up the remainder. That same report estimates the total market for mobile games will be $45 billion (£30 billion) in two years, representing a 40 percent plurality of the total gaming market.
That’s an amazing statistic when you consider mobile gaming was barely a statistical blip just under a decade ago. But non-mobile gamers shouldn’t necessarily worry that their preferred platforms are going away any time soon. Digi-Capital estimates that the console and offline PC gaming spaces will actually grow a bit over the next few years in terms of actual revenue dollars. Activision predicts the same thing. It’s just that the mobile game business will be growing even faster, increasing the size of the pie but not really eating into the existing slices spent on other games.
In other words, today’s Supercell acquisition shows that mobile gaming is increasingly going to be the first thing that the global game industry focuses its money on in the coming years. But that doesn’t mean it will be the only thing the industry focuses on for the forseeable future or that mobile games will crowd out the kinds of gaming people still love to do on other platforms.