This email was sent to the EGD mailing list on the 8th of May 2020.
Here are the things that I’ve been excited about this week.
Deconstruction of Supercell — Five Items That Stood Out
Deconstructor of Fun released an essay on Supercell this week. It’s an insightful article written by Miska Katkoff, who was on my podcast in February. Miska and I have both worked at Supercell in the early days.
I wanted to take a closer look and share my five important thoughts on what a gaming startup founder should take away from this essay?
“[Supercell has a] well-diversified portfolio across genres (from simulation to build & battle and MOBA)” — Even though the essay talks about diversity, there’s a recipe for success that didn’t get covered here. If we rank all the games that didn’t get killed in soft launch, based on how much revenue they brought, you can see that PVP has worked.
- Clash of Clans — Build & battle (PVP)
- Clash Royale — Card battler (PVP)
- Boom Beach — Build & battle (PVP)
- Brawl Stars — Battle Royale (PVP)
- Hay Day — Farming & resource management (not PVP)
But why Clash of Clans is at the top? Because it has the most in-depth skill-based gameplay of them all. As Miska says:
“Whoever thinks that mobile games are not “deep enough” clearly hasn’t played Clash of Clans yet. This game packs some of the best balanced, nerve-wracking, strategic gameplay on a mobile device. It manages to be relevant to players who seek an extremely high skill cap experience as well as to players who just want to have fun and blow up the opponent’s base. Clans also have an extremely smooth progression. Every town hall unlocks new troops and defenses, encouraging players to learn new attacks while managing complexity.”
#2 Older titles and stacks of cohorts
“Some argued that launching a game with the same IP and gameplay that appeals to similar players was a net negative for Supercell over time. Instead, we think that Clans would have declined even without Clash Royale (albeit at a slower rate) due to the “law of gravity” that all mobile games face after launch and, therefore, that Clash Royale was a net positive.”
This “law of gravity” concept is fascinating, and I’ve been thinking about this as well. The reason why this happens is related to the way that these kinds of games work.
With these kinds of games, I’m talking about a game with has high long term retention, think Day-360, which is still above 5%. New players start, and a year later, 5% of them are still playing the game. Each day, a new cohort of players start. Each new cohort stacks a new player cohort to the DAU of the game.
Games that stack DAU cohorts on top of each over several years will eventually see these older cohorts become flatter. And it’s harder to build big new stacks when there aren’t many new players out for user acquisition to acquire.
Flatter old cohorts and smaller new cohorts cause the “law of gravity.” Older cohorts, which started as 5X or 10X compared to the size of a cohort that starts today, stop playing, and newer cohorts are much smaller in size.
“Supercell’s strategy is designed to achieve three objectives:
- Create an environment that fosters innovation
- Create a culture of constructive confrontation where internal development has to go through a gauntlet of peer reviews
- Give the team the autonomy to make key decisions about their game – including the decision to kill their own games.”
Completely agree that these make Supercell special. But I’d like to add timing here. If we talk about 2012 to 2016, those were the Tailwinds of mobile gaming, where everything was possible, UA was cheap and there was an abundance of organic installs. Paul Murphy said it well on the Elite Game Developer’s podcast.
“Today, mobile gaming is a really large mature ecosystem. That’s great and amazing, but on the other hand, you don’t have a rising tide moment that you had when Supercell and King were growing. So even though they happen to be great companies, the reality is there was true scarcity in the market. My last company, Dots, benefited from this. We were at the tail end of that rising tide, but if we tried to start Dots today, there’s no chance, like we just never would have broken through in the way that we broke through in 2013.”
Paul continues, “I think when you have situations where it’s not you know rising tide, everyone wins. Now, you have to be much more thoughtful about the bets you’re placing, and I think that’s why you’ve seen a lot of the generalist funds back away from gaming because they realize they actually don’t know very much about gaming. They just got lucky.”
#4 Crowded genres
Back in 2012, build and battle games weren’t around on mobile, and Supercell came in and took over. Same happened with Battle Royale in 2018 with Brawl Stars. Miska talks about these factors that play into Supercell’s favor.
Winner-take-all dynamics “Competition is increasingly a “winner-take-all” game across genres, where top ~3 competitors typically take up 60-80% of the market, leaving little room to smaller players. “
First-mover advantage “Related to the prior point, being one of the first few companies to enter a genre has become even more important because the first few games have the best chance to create high switching costs for players through a) Social networks: e.g., when all your friends are playing Fortnite, why would you switch to another Battle Royale game, unless its gameplay is meaningfully different or you like the IP much better? b) Progression: i.e., when you have invested a lot of money and time to progress down the (power/ skill/ vanity) curve, why would you switch to another similar game, where you have to re-learn and re-earn everything from scratch?”
Today, mid-core is very crowded. You got lots of RPGs like Empires and Puzzles, Marvel: Strike Force, Marvel: Contest of Champions, Star Wars: Galaxy of Heroes, and others. But why aren’t there more build and battle games in the top-grossing charts? Why is Clash of Clans dominating? It’s because the competitive nature drives build and battle, people stick around to beat harder real-player opponents.
With RPGs, the primary motivation is geared more towards collecting all the characters. Sure, they can have secondary motivations for players to enjoy the games, like competition. But the primary motivation is the complete the character roster. Marvel is continuously pumping out new characters. As long as they have skill-based gameplay, they will stay in the mid-core top grossing lists, along with side Clash of Clans.
|Check out Quantic Foundry on player motivations|
“Obviously, Supercell’s strategy is not for everybody, as it requires extremely high design talent, creativity, and a risk-taking, long-term focused mindset (by the way, this is why we’re not bullish when Supercell works on incremental innovations like Rush Wars and Hay Day Pop).”
Talent is the final point I wanted to address. I’ll leave you with a Tweet that I wrote about this a while ago.
1/ To this day, I still think about my experiences from 2012 at Supercell, pre-Clash of Clan, and pre-Hay Day. Teams matter so much.
2/ You could see that the teams were lead by maestros. They had five to six people per team, delivering these games in half a year from concept to global launch. I’m mindblown to this day.
3/ The tech had been built for Gunshine, 1st Supercell game. Plug and play to have clans in CoC and roadside market for Hay Day.
4/ Raised a big round early, $11m in May 2011. With this, ramped up to five quality games in development by summer 2012. Two of those became legendary.
5/ Team members transitioned to new projects at the end of 2012. Results were Clash Royale and Boom Beach. Mindblown again.
How To Work With Gaming Startup Advisors — We created this article to help startup founders get most out of their advisors. The key aspects that I believe are important when looking to hire advisors are: Expectations of the founders for the advisor’s contribution, incentives for the advisor, and the formality of the advisor role.
Read more by going here.
“Never start raising until you can justify a $1 million valuation. Otherwise, you’re going to be ending up giving out too much for too little. I’ve seen this happen so many times when people are raising 50k here, 50k there, 100k here. And they end up like giving out chunks of their company constantly. They are raising, but they can’t justify a high enough valuation when they still don’t have proof on a higher valuation.” — How To Get Investor Money For Gaming Startup
Sign up for our webinars
Long Term Engagement in Hybrid Casual — In this 60-minute webinar, I’m joined by Nick Murray to discuss the most crucial topic for free-to-play game development: long-term engagement. What is it, why it matters, and how developers in hybrid casual (think Archero) can take learnings from mid-core. There’s going to be a 15-minute presentation from both Joakim and Nick, followed by a Q&A session. Sign up here.
Work From Home for Game Teams — This webinar is happening on May 15th. It’s me and Sophie Vo from Voodoo, who will be talking about best practices of working from home when you are developing games with a team. What has worked well, and what are common issues and how to deal with them. Sign up here.
Articles Worth Reading
+ 10 Common Mistakes of F2P Product Managers — Being a PM is often equated to being the “CEO of a product” and requires a multi-disciplined skill set including design, business, analytics and leadership all in one person. The complexity and relative youth of this discipline means that PM and other product leaders rarely get the mentorship they need and I see many PMs making the same mistakes that I made. Yet these common mistake are 100% correctable. Here’s how.
+ Dazzle Rocks raises $6.8 for MMO — Helsinki-based Dazzle Rocks just announced their huge funding round to build a social MMO that they’ve been working on for a while now. Stella Wang, the co-founder and CEO of Dazzle Rocks was the first-ever guest on the Elite Game Developers podcast. They have an excellent culture at Dazzle Rocks, and I hope you’ll find time to listen to the episode. We also co-wrote an article about the episode in Pocket Gamer last year, which you can find here.
+ How to run your startup in a recession — Last week I shared the game design thoughts of Rahul Vohra. He’s the co-founder and CEO of Superhuman, a boutique email software company. Rahul used to be a game designer, working for Jagex in the UK. He’s one of my favorite entrepreneurs. This week Rahul sharing his thoughts on managing startup cash flow during a recession, like the corona recession. Rahul gives us two options and lays out the ways to pick the right choice for your startup.
+ IAP revenue up 30% during Q1 — The amount of people that are spending on in-app purchases has gone up, says this GameAnalytics report. This could be because more people are playing, so there’s a bigger chance someone will spend something. But playtime comes into the equation as well: the longer people play, the more likely they’ll spend. So existing players are likely to be spending more, too.
Quote that I’m thinking about
“What is information? Information is not what you’re told, it’s what you understand. It’s the resolution on uncertainty.” – Alex Danco on the North Star Podcast