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What does Mr. Son see here that I don't? Supercell is a rockstar game development house right now. But history has shown time and time again that App developme

by RaSoJo 13y ago

What does Mr. Son see here that I don't? Supercell is a rockstar game development house right now. But history has shown time and time again that App development houses have a shelf life. To a lay person such as me, the averages tend to show an invariable downward spiral of DAUs with the chance of a new hit game seemingly minimal. So why go plunk such a gargantuan amount???

dschiptsov 13y ago
Perhaps, because it was not one's own money, but money lent by bank to a corporation for a purchase of a stake. They call it a strategic investment, I suppose. Now everyone will get their bonuses and kickbacks, and when the stock/valuation plunges (what could possibly go wrong with Zinga?) that would be someone else's problem. Business as usual.)
- patio11 13y ago
  I get the feeling that your comment is (purposely) so content-free that you could apply it to virtually any transaction by a suitably large company. This suggests to me that it has very little signal for this discussion, since it evinces absolutely no knowledge of either of the companies at issue or any attempt to rectify that. For example: will Softbank require a $1.2 billion bank loan to make this purchase? That's possible (they do 100% of their borrowing in a country where money is, essentially, free for the asking) but unlikely, because they're sitting on over $14 billion in cash and cash equivalents and they hold the vast majority of it in a country where, as mentioned, money is free for the asking. See page 106 in their annual report, or some other page at some other link if you would prefer the English version: http://www.softbank.co.jp/ja/design_set/data/irinfo/library/annual_reports/pdf/2013/softbank_annual_report_2013_008.pdf http://www.softbank.co.jp/ja/design_set/data/irinfo/library/... If for some reason they wanted to borrow money, they'd probably finance with bonds, not bank loans. There's a "why" here but I just got told by the flight attendant to turn off my iPad -- ask me later if you care.
  - dschiptsov 13y ago
    It is not about technical details but how a deal with such inflated valuation that it is obvious even for a layman could occur in principle. I am most probably wrong about how exactly they did raise money, but this, it seems tome, is of second importance.
- christoph 13y ago
  Personally, I don't view Supercell in the same way/league as Zynga at all. Firstly, Zynga went crazy releasing a massive number of titles really quickly and not focusing on core products. Supercell have 2 games out... yes, 2! They put a huge amount of focus into both those games and don't appear to be in any rush to dilute them whatsoever. Also, Zynga were considered scummy for a variety of reasons - theft of others ideas (read blatantly stealing entire games from competitors) and their way over the top insistence on pollution of social networks. I don't see this behavior with Supercell at all.
Jare 13y ago
Besides the team and games themselves, they are buying a strong presence in the west. In strategic terms, it's not unlike when DeNA bought ngmoco.
jobu 13y ago
Three billion does seem pretty crazy. The only reasoning I can think is that Supercell has been able to create two very popular (and hugely profitable) games. Many of the rockstar game development houses never get more than one (Rovio, OMGPOP). My guess is they'll use some of this cash to start merchandising the way Rovio did with Angry birds.
- jzzskijj 13y ago
  Don't forget GungHo & Supercell collaboration in Puzzle & Dragons, which is very big in Japan. That must have helped also Softbank's decision. "An extremely popular and super addictive freemium game with over 19 million downloads in Japan and ranked as one of the top grossing apps" http://www.gunghoonline.com/games/puzzle-dragons/ http://www.gunghoonline.com/games/puzzle-dragons/ "Puzzle & Dragons developer GungHo Online pulled it $763 million in sales in the first half of 2013, representing a colossal year on year rise of more than 945 percent. As a result, the company has posted an operating profit of $460 million – up more than 4,331 percent – and net income of $287 million, up 2,609 percent." http://www.pocketgamer.biz/r/PG.Biz/GungHo+Online+news/news.asp?c=52683 http://www.pocketgamer.biz/r/PG.Biz/GungHo+Online+news/news....
- loumf 13y ago
  This is not an investment of $1.5 billion -- it's a stock purchase. The money goes to the sellers, not the company.

by RaSoJo 13y ago

dschiptsov 13y ago

Perhaps, because it was not one's own money, but money lent by bank to a corporation for a purchase of a stake. They call it a strategic investment, I suppose. Now everyone will get their bonuses and kickbacks, and when the stock/valuation plunges (what could possibly go wrong with Zinga?) that would be someone else's problem. Business as usual.)

patio11 13y ago
I get the feeling that your comment is (purposely) so content-free that you could apply it to virtually any transaction by a suitably large company. This suggests to me that it has very little signal for this discussion, since it evinces absolutely no knowledge of either of the companies at issue or any attempt to rectify that. For example: will Softbank require a $1.2 billion bank loan to make this purchase? That's possible (they do 100% of their borrowing in a country where money is, essentially, free for the asking) but unlikely, because they're sitting on over $14 billion in cash and cash equivalents and they hold the vast majority of it in a country where, as mentioned, money is free for the asking. See page 106 in their annual report, or some other page at some other link if you would prefer the English version: http://www.softbank.co.jp/ja/design_set/data/irinfo/library/annual_reports/pdf/2013/softbank_annual_report_2013_008.pdf http://www.softbank.co.jp/ja/design_set/data/irinfo/library/... If for some reason they wanted to borrow money, they'd probably finance with bonds, not bank loans. There's a "why" here but I just got told by the flight attendant to turn off my iPad -- ask me later if you care.
- dschiptsov 13y ago
  It is not about technical details but how a deal with such inflated valuation that it is obvious even for a layman could occur in principle. I am most probably wrong about how exactly they did raise money, but this, it seems tome, is of second importance.
christoph 13y ago
Personally, I don't view Supercell in the same way/league as Zynga at all. Firstly, Zynga went crazy releasing a massive number of titles really quickly and not focusing on core products. Supercell have 2 games out... yes, 2! They put a huge amount of focus into both those games and don't appear to be in any rush to dilute them whatsoever. Also, Zynga were considered scummy for a variety of reasons - theft of others ideas (read blatantly stealing entire games from competitors) and their way over the top insistence on pollution of social networks. I don't see this behavior with Supercell at all.

Jare 13y ago

Besides the team and games themselves, they are buying a strong presence in the west. In strategic terms, it's not unlike when DeNA bought ngmoco.

jobu 13y ago

Three billion does seem pretty crazy. The only reasoning I can think is that Supercell has been able to create two very popular (and hugely profitable) games. Many of the rockstar game development houses never get more than one (Rovio, OMGPOP). My guess is they'll use some of this cash to start merchandising the way Rovio did with Angry birds.

jzzskijj 13y ago
Don't forget GungHo & Supercell collaboration in Puzzle & Dragons, which is very big in Japan. That must have helped also Softbank's decision. "An extremely popular and super addictive freemium game with over 19 million downloads in Japan and ranked as one of the top grossing apps" http://www.gunghoonline.com/games/puzzle-dragons/ http://www.gunghoonline.com/games/puzzle-dragons/ "Puzzle & Dragons developer GungHo Online pulled it $763 million in sales in the first half of 2013, representing a colossal year on year rise of more than 945 percent. As a result, the company has posted an operating profit of $460 million – up more than 4,331 percent – and net income of $287 million, up 2,609 percent." http://www.pocketgamer.biz/r/PG.Biz/GungHo+Online+news/news.asp?c=52683 http://www.pocketgamer.biz/r/PG.Biz/GungHo+Online+news/news....
loumf 13y ago
This is not an investment of $1.5 billion -- it's a stock purchase. The money goes to the sellers, not the company.