Based on current revenue and profits and the potential to grow in China it could be easily argued that Supercell is worth $10 billion. Of course, with a deal of this magnitude it always pays to look under the hood. Games are a cyclical, hits driven business and what is popular today may not be in fashion next year. The question with a franchise is how sticky is it? Will consumers be invested two years, five years, or 10 years from now? In the case of many franchises the answer is yes, but there are also many franchises where investors are better to take the money and run.

DFC Intelligence analysts Jeremy Miller and George Chronis took a closer look at Supercell products and their potential as long-term franchises. This includes examining how a game like Clash of Clans was able to stand out from the pack and also whether Supercell can continue to be forerunners of what will be inevitable increased competition. Finally, of course, there is the issue of how invested consumers are in Clash of Clans as a franchise, not just the gameplay but the characters and universe of the game that can be extended to products like Clash Royale.

Clash of Clans launched for iOS in August 2012, followed on Android in October 2013, and became an immediate hit as a top-notch product for iPads and other tablets. One of the biggest early draws was that there wasn't a strategy or base building game like it on the market. Of course, this immediately resulted in numerous competing products being launched per the nature of the mobile game space. However, all the quickly launched copycat games could not execute the way Supercell did in terms of frequent updates, solid coding, new features, balancing and just the simplicity of the art and gameplay design. Clash of Clans was also easy to learn as everything was explained well.

Another subtlety about clan wars was that people would feel pressure to assist in attacks within the 24 hour limit of the war by using gems to speed up production of troops to get a last attack in before a clan war ended, so as not let clanmates down.

Supercell was very strategic in offering "1 gem boosts" to celebrate Clash of Clans anniversaries, or to usher in big new patches, or as holiday bonuses. Supercell would also periodically offer cheap deals to users to get more value for their precious gems, but nevertheless whittle down their stockpile of gems. Similarly, Supercell would take note of when user game time started to taper off and then started adding in more available rewards, which led players to come back to see if they could pick up extra loot.

Many players of a game like Clash of Clans would simply “grind” by playing for hours and never spending any money. However, over time, non-paying but dedicated grinders would not only have a ton of time invested in the game, they would have built social relationships with their clanmates. These consumer would eventually be much more likely to invest money in the game. This is basically the textbook of how to run a mobile F2P game over the long term. Grind them down to the point where their time becomes more valuable than their money.

Clash Royale launched in early 2016 as a spinoff of Clash of Clans. From looking at the game it is clear that Supercell developers closely examined collectible card games such as Blizzard’s Hearthstone and Magic: The Gathering etc. On paper this makes huge sense because it is likely many Clash of Clans players also played card battle games. Blizzard’s Warcraft IP was very successfully re-purposed into Hearthstone and Supercell did the same thing for Clash of Clans.