‘Brawl Stars’ Unable to Fight Off Sales Decline for Tencent’s Supercell

By Essi Lehto

HELSINKI (Reuters) – Finland’s biggest video game maker Supercell reported a 7% drop in annual sales on Tuesday, squeezed by intense competition even as the COVID-19 pandemic pushed people indoors and boosted the broader gaming sector.

Supercell, majority owned by China’s Tencent Holdings and known for titles such as “Clash of Clans”, said that “Brawl Stars”, published in 2017 and the newest of its existing games, crossed the 1 billion euro mark in gross revenue early this year.

The company said overall user numbers rose year on year but increased marketing costs and the way Supercell books sales and expenses separately meant the benefit was not reflected in the annual financial statement.

“Well over a half of marketing costs come from investing in the gamer community,” Chief Executive Officer Ilkka Paananen said in a statement.

The company did not disclose the extent of its marketing spending.

Global video game revenue is estimated to have surged 20% to $179.7 billion in 2020, according https://www.marketwatch.com/story/videogames-are-a-bigger-industry-than-sports-and-movies-combined-thanks-to-the-pandemic-11608654990 to IDC data, making the sector a bigger moneymaker than the global movie industry.

Supercell and rival mobile game maker Rovio, of “Angry Birds” fame, have struggled to generate revenue growth in the face of increasing competition from console games.

Supercell’s games are free to download and the company makes its money from in-game purchases

Last year’s annual revenue fell to 1.3 billion euros, down from almost 1.4 billion euros the previous year, while earnings before interest, taxation, depreciation and amortisation (EBITDA) dropped 21% to 407 million euros.

In the past two years Supercell has released and discontinued two games and now has five actively supported games.

($1 = 0.8232 euros)

(Reporting by Essi Lehto in Helsinki and Supantha Mukherjee in Stockholm; Editing by David Goodman)