$8.6bn takeover of Supercell shows mobile gaming is serious business

China's Tencent highly values its new majority stake in the 'Clash of Clans' creator...

$8.6bn takeover of Supercell shows mobile gaming is serious business


Tencent, the tech investment giant that dominates China's gaming and social media markets, has been looking outside of the world's second-largest economy for its latest acquisition.

The company has agreed a $8.6bn deal to acquire 84% of Supercell, the Finnish firm behind popular mobile games Clash of Clans (pictured) and Hay Day.

In doing so, it secures itself an impressive 13% chunk of the $100bn global gaming industry as a whole and can now essentially consider it to be at the very top of the food chain when it comes to online games.

In a Tuesday statement, President Martin Lau said:

"Tencent is dedicated to building long-term strategic partnerships with leading game companies.

"We are excited that Supercell is joining our global network of game partners, and will preserve their independence and enhance their advantages, thus bringing even more exciting gaming experiences to players around the world.

"It is important to us that Supercell stays true to its roots by sustaining its unique culture, continuing to be headquartered in Finland, and representing its home proudly."

The deal means Tencent considers Supercell to be worth over $10bn. That's reportedly twice as much as the combined recent purchase price of LucasFilms and YouTube. It is also double its valuation a mere year ago.

Supercell is indeed doing well: having started out in 2010 operating out of a single room in Helsinki and employing cardboard boxes as desks, last year it took $780m, chiefly from the sale of add-ons to freemium games.

Tencent will be hoping to exploit the existing popularity of Clash of Clans in China, and extend it through its various platforms in the country.

Internationally, it gives them access to outside developers and significant revenue streams when you consider that Supercell's top four games are played by 100 million people around the world every single day.

Supercell has now eclipsed a news-making deal for one of its market rivals – last November, Activision parted with $5.9bn in cash and stock to secure King, the maker of Candy Crush Saga.

The two acquisitions come at a time when the mobile gaming market is saturated and consolidation seems to be the way to go.

Anyone who has seen an Arnold Schwarzenegger or Kate Upton TV ad will know the money swirling around the industry has only been increasing year-on-year.

To be more precise, market researcher Newzoo BV expects its global revenue to rise 21% to approximately $37 billion in 2016, outdoing consoles and PCs.

For Tencent, taking the majority of Supercell off the hands of Japan's SoftBank Group appears to be a pricey but logical move to shore up a major source of business.

Faced with questions as to how it would deal with declining sales of PC games a number of years ago, it has successfully embraced the mobile gaming boom. Last year, online games accounted for over half of the $15bn it made in sales.