Company with the “World’s Least Powerful CEO” Makes $2.5 Million Every Day
blog.idonethis.com
blog.idonethis.com
It's amazing how difficult it is to sell an iOS game for anything more than $1.99. But, if you give them the game for free and let them exchange real money for strategic advantages in-game, they'll fork over a small fortune. Supercell is essentially selling $2.5 million/day in "gems" for only 2 games, gems that people then trade for resources or the ability to do things faster (like building units or structures).
A user named 'Panda' on the Supercell forums claims to have spent over $6,000 on gems in Clash of Clans[1]. Based on the responses regarding how quickly he was able to reach the top of the rankings, it seems to be true. Many other players in the thread report having spent $20-$40 on gems.
[1] http://forum.supercell.net/showthread.php/827-How-much-money...
They're doing well because they picked a winning business model for their games and then they went on to make great games. Clash of Clans was a breath of fresh air in an environment with tons of clones and uninspired crap. Also, entertainment is a hits driven business where if a product starts winning, it tends to dominate.
Picking a business model is crucial, but not sufficient, to be successful.
"Yet I look at these products and I don't see games. I see payment machines, made to look like entertainment."
http://www.eurogamer.net/articles/2013-04-13-saturday-soapbo...
The fact that Supercell has been able to succeed with the freemium model while many other mobile developers (both big and small) cannot, speaks to something unique about them.
And then their profits dropped 95% year-over-year... But that's the nature of mobile gamers and mobile games. The players are extremely fickle, and the games lack the depth and complexity necessary to keep people engaged over long periods of time. People flock from one fad to the next.
So far, I don't think we've seen anything but a bunch of one hit wonders in the mobile gaming industry. Draw Something, Words with Friends, Fruit Ninja, etc. Maybe Supercell will be different, but it doesn't seem likely.
A game that lets you top the leaderboards by paying buckets of cash is a game designed around exploiting their players. It's a kind of shallow and unethical game design that's basically the junk food and cigarettes of games. It's fine that it exists, and everyone should have the freedom to partake in it, but I hope no one looks up to it as a model of good game design. Sure, it's a good business model or whatever, but so is selling cigarettes.
The games will try hard to create an addiction, so the player keeps on playing, while making the actual gameplay as boring as possible to make the players buy gems/berries/coins to bypass the actual gameplay.
I have played some games like this, and I noticed how i would keep on playing the same boring parts (with some fun threwn in occasionally to keep m interest up) over and over in the hope of finally getting to the fun part. But it never came. It made me feel exploited and violated.
Also to put things in perspective, SuperCell makes 10x more money per employee than Goldman Sachs.
That's...unbelievable. Wow.
I'm not sure that the two are comparable, it might be akin to comparing the metabolic efficiency of yeast vs. an elephant. Could SuperCell scale to make ~$50 billion a year?
And while I haven't explored this in any real depth (yet), my guess is that some of the research into Multi-Agent Systems[4] and Agent-Based Modeling[5] may prove relevant to this aspect of organizational design as well.
Another interesting discussion around commitment management: http://coevolving.com/blogs/index.php/archive/conversations-...
[1]: http://en.wikipedia.org/wiki/Stephan_H._Haeckel
[2]: http://books.google.com/books?id=pkrFugJBAn4C&printsec=f...
[3]: http://www.senseandrespond.com/downloads/Comitmn2.pdf
Back in 1999 when Haecke wrote "The Adaptive Enterprise" he said there were no full-fledged examples of a firm which was totally based on the idea. Whether or not there are any today, I can't say for sure.
What I will say, is that I think there is a lot of reason to think that this approach might be a good idea, and to think that it's still an emerging trend.
And it's the company not the CEO- the first time I read the headline I thought the CEO was making 2.5 mil per day.
Their success is mostly due to the proverbial suckers that are born every day.
I've spent over $400 on Clash of Clans. I can afford to, but I don't feel that it's a good use of my money. This game design is definitely on the intrusive / addictive end of the spectrum. The obviously wouldn't be making so much money if it were a flat-rate game like Minecraft.
I think it's way more than I should have, and I'll never get it back. It does have the addicting part (packs and drafts are addictive as hell), and a "collectible" part for rationalization.
I have some kind of personal problem that leads me into these time sinks, because I've mostly quit, only to replace it with other time wasters (League of Legends and others).
edit: omonra, your post is dead.
Your personal problem is that you're a higher animal. Out of the reinforcement schedule patterns that maximise conditioning, the "Variable Interval Reinforcement Ratio" or VIRR is the most powerful.
That is: systems with random payoff schedules are the most addictive to higher animals. Pigeons, rats, humans: if good stuff happens at random we quickly become shackled to whatever it was we were doing.
Gambling: random payoffs. Addictive.
Buying MtG booster packs: random payoffs. Addictive.
Many, many computer games: random payoffs. Addictive.
No. I expected to spend about $20. I'd have bought a drill-press or cheap logic analyzer instead.
I've got my own mobile gaming addiction -- I'm just fortunate that the game I'm addicted to (Civilization Revolution) didn't have microtransactions for a long time, and what they've added recently, I've been able to avoid.
The biggest issue I have with these games is that they can be great time wasters.
At some point, I just deleted the game as I realized my addictive side was taking over.
It would be great to have an app that you can selectively pick apps that you want auto-deleted after a certain time depending on how much time you have spent in the app.
Imagine that once the user starts the game for the first time, they are asked if the app should track how much they spent on in-app purchases and let them know if they are at that limit.
If they are about to make another purchase and it will go over the limit, the user is shown a message with the total amount spent so far and that this purchase will push them over the limit.
This would stop the "trigger finger" effect. It would cause the person to break from the heat of the moment with the game and instead of making the question one of - "I want to buy this so I can get ahead in the game.", it becomes - "I already spent X amount on this game, do I want to spend another xx amount.".
I think if someone has a lack of self control, there isn't too much that can be done from blowing a lot of money in this in-app purchases. But I do believe that for the average person, having that second level of intervention (ie. the message with how much they have spent) provides enough pause to really decide if they want to make the purchase.
Does this make good business sense to add this feature? As a game developer, likely not. I don't know how this would benefit a game developer aside from "doing the right thing".
Saying a game is "free" and then charging for in-game goods is disingenuous. Saying it's $1.99 and then having $100s of shit to buy inside the game is also disingenuous. It should say the game is "free" with "no limit".
If you have a free game with a single expansion pack, then it should say "free", "up to $5" for the expansion pack.
This kind of information is magnitudes more important than the stupid ESRB ratings we have for console titles.
I would personally try many more games if they had these labels. I would also be more comfortable developing "real", one-time fee games, if the competitive landscape were straightened out like this. As it stands, freemium games make boatloads of money and the industry will continue to shift in that direction until something is done about it. The only thing I can think of is to make the consumer more aware in advance.
Correct me if I am wrong, but this is effectively how Valve organizes itself right? :)
http://www.eurogamer.net/articles/2012-03-08-gabe-newell-is-...
Just hire developers,graphics artist and/or sound guys. No suits, no hr, no nothing else other then content creators. If you _HAVE_ to hire non content creators, make it count.
A lot of them have great games but lose money for any number of reasons.
At $1.99 per app you're going to need to move a lot of apps every month, year on year, just to keep the business afloat.
How much are they paying the developers and designers?
I guess that like usually in Finland, salaries are rather modest compared to Bay / US in general (around 40-100k eur), but because of the functioning society, many things are free and taken care of (education, healthcare, daycare), your standard of living can end up higher.
Equity/stock options for employees are almost unheard of and I wish more startups would pick it up. Supercell is also an exception in this regard, that they now offer stock options for everyone (they started it after the last 100M round).
If it works anything like in Sweden (i suspect it does), the employer pays a high tax too. The employer pays about twice of what ends up in the pocket of the employee.
So I guess the salary levels are comparable.
Of course, the reason they use "2.5 million per day" is to give you a classic Scrooge McDuck kind of visual, with a big semi trailer packed with money entering your palace every day.