Supercell CEO Ilkka Paananen: “I was actually quite worried about the company”

Supercell CEO Ilkka Paananen says he was worried about the developer’s lack of growth before a company all-hands last year focused on making changes to its famed culture.

Speaking during a fireside chat at Slush (you can read the full transcript here), Paananen was concerned that while Supercell was falling out of the top 10 developers in the world, it had also lost share in a market that had grown.

“We founded Supercell to create these games that as many people as possible would play for years and games that would be remembered forever,” he said.

“And if you think about the big picture, the fact was that we hadn’t actually been growing for a number of years, and at the same time the market was growing, therefore we were losing share.

“And if that trend would have continued for say a decade, at some point the fact is we would fade into being irrelevant and therefore we wouldn’t actually reach our mission, which of course is a huge problem.”

Supercell’s decline

It’s worth noting that while the mobile games industry grew during the pandemic, over the last couple of years it has been in decline due to a return to normalcy post-lockdown and privacy changes by platform holders, amongst other factors.

Paananen decided the studio had two options to regain its status as a top developer: change its mission or change the company. But the first step was to make sure the rest of the studio was on the same page, he said.

“We actually watched a timeline where we were seeing Supercell’s position dropping year over year and finally even out from the top 10, and of course it’s a very painful thing to watch,” he stated.

“But I think it’s a necessary thing for us to do and really face the truth, and obviously then you want to change, but change has to start from me.”

He added: “But really if you go to the problem and what’s the solution – the fundamental problem was that if you think about our mission, for us to be successful in that mission, we need to be really great at two different things.

“The first one is that we have to be great at creating new games, and then second, once we’ve created a great new game, we have to make it even better for that game to be remembered forever.

“The problem was that we were trying to solve these two very different problems using exactly the same type of approach. That approach of course had made us successful, but it wasn’t relevant anymore, it didn’t work out anymore.

“So therefore we decided to split the problem into two different parts. In essence we start to think of new games as their own startups and we applied what I would call the old Supercell culture to those parts. And then the live games part you start to think about them as startups which have already found a product market fit, therefore they become scaleups.

“And then the question is ok, now we’ve created something that’s awesome, but how do we create something even better? And then you get to things like scaling and so on.”

In need of a Spark

To improve the ‘new games’ side of the business, Supercell has introduced a new Spark initiative, which it discussed earlier this year.

Paananen said this involves applying a “very systematic approach” to creating new teams within the company, which it calls cells. This process includes having a professional psychologist as part of a team to evaluate it.

“What makes us very different as a games company is we actually don’t greenlight or approve game ideas, that’s not what we do, we greenlight and approve teams,” said Paananen.

“But once they are a team at Supercell, or cell as we call them, we trust them 100% and then that cell can build whatever game they want, as long as it gets us closer to our mission.

“So we just got a lot more systematic about team building on the new games side.”

For its live teams, Paananen admitted Supercell had been “too happy” with its thinking of these “small cosy teams”.

“It sounds terrible, but in essence we had put our own interests ahead of our players’ interest,” he said.

“So even if we very well knew with bigger teams we could do way more for our players, we still decided to stay in our own comfort zone because that’s how it always had been and that approach had made us successful.”

Supercell has now taken a new strategy of growing its live teams and evolving its famous small ‘cell’ culture for successful titles. The culture remains largely similar for new game development, but there’s a willingness to expand for games that reach global launch.

In fact, it even recruited former Mojang head of games Sara Bach as its head of live games last year (now promoted to chief live games officer). You can read our full interview with Bach here.

Supercell rose as high as the number two mobile games developer in the world by App Store and Google Play revenue in June 2024, according to AppMagic data. These estiamtes don’t include lucrative third-party Android stores, such as those in China, or player spending on web shops.

Brawl Stars saw a significant surge in revenue in 2023 and into 2024, while Clash Royale has also seen player spending rise. Meanwhile, Clash of Clans’ team has grown significantly over the past year.

Paananen acknowledged that growing its live teams meant changes more akin to how more traditional developers run their businesses.

“Of course with growth comes things like structure and process, and both of those two things, even middle management, and all of those things used to be almost like curse words at Supercell,” he said.

“But then we decided okay, we have to change something, we have to really place our players first. And if that means that we have to go to the uncomfortable zone, then so be it.”

You can read the full transcript of the fireside chat between Ilkka Paananen and Harvard Business school profession Jeffrey Rayport at Slush 2024 right here.