
Tencent Buys ‘Clash of Clans’ Developer Supercell for $8.6B - downandout
http://www.wsj.com/articles/tencent-agrees-to-acquire-clash-of-clans-maker-supercell-1466493612
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shaqbert
Tencent benefits from insane price-earnings multiple inflation in China.

By buying a profit-rich gaming company, they can play the multiple game, and
lower their P/E multiple in China, thus looking "cheap".

In general, gaming companies have been trading at fairly low multiples (King
was trading for a while at multiples known for steel mills shortly before
their bankruptcy), based on the assumption that the business is hit driven and
the life cycle of a hit game is rather short. Yet Supercell has been defying
the odds for quite some times now...

So who knows... playing the multiple game might turn out a much better deal
long term.

~~~
personjerry
Hey shaqbert, how do you keep tabs on these sorts of things? I want to get to
know more about the financial markets but I mean, I don't know where to start
--there's just so many companies out there.

~~~
iaw
Start by reading "A Random Walk Down Wall Street" by Malkiel, it covers the
ins and outs (and gives you a starting point for more research on anything you
don't understand).

After that it's on you to read financial news. Knowing that the Chinese market
is hyper-inflated, coupled with the knowledge from the Malkiel book about P/E
tricks, it's easy to make the connection.

edit: I was reflecting on the last line and I want to point out that nothing
is "easy" in finance, it takes a lot of hard work to reach a level of
competent understanding. More that once you have the toolkit to understand the
basic financial shenanigans that have been going on for a century (or more), a
lot of seemingly strange behaviors become rational.

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mathattack
There are rumors that Tencent is also amongst the bidders for the Ultimate
Fighting Championship. (The whole sport, not just the game)

[http://www.reviewjournal.com/sports/mma-ufc/ufc-
reportedly-v...](http://www.reviewjournal.com/sports/mma-ufc/ufc-reportedly-
verge-being-sold-least-4-billion)

~~~
asniper
You mean the company, UFC isn't a sport, MMA is.

~~~
mathattack
Yes - you are correct. Just highlighting that it's not a game purchase.

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hkmurakami
Headline is modestly inaccurate.

>Tencent and its partners will together buy an 84.3% stake in Supercell for
$8.6 billion from Japanese telecommunications firm SoftBank Group Corp. and
the startup’s current and former employees, the companies said Tuesday. The
deal values the closely held Supercell, maker of some of the world’s highest-
grossing mobile games, at $10.2 billion, nearly double its valuation a year
earlier.

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Juha
Here is Supercell's official announcement:
[http://supercell.com/en/nextchapter/](http://supercell.com/en/nextchapter/)

Snippet form the post:

> First, we have agreed with Tencent that Supercell will continue to be
> operationally independent, exactly as it was under SoftBank's ownership...

I hope they manage to keep their own way of running the company.

~~~
vblord
Clash of Clans recently made changes to make the troops cheaper, cutting in to
their revenue. They were trying to push Clash Royale as their new cash cow and
loosened the reins a bit on Clash of Clans. Hopefully Tencent will keep up
that trend and not reverse it.

P.S. If anyone is looking for a good clan on Clash of Clans, check us out
#29OPCGCY

~~~
jlarocco
I'm not sure. I think making the troops cheaper and generate faster encourages
people to play the game more, not less.

And the last upgrade added quite a few building, troop, and spell upgrades,
which also encourage people to play more.

Personally, I can't stand Clash Royale. Besides lagging and crashing a lot,
the match up algorithm is intensely frustrating. It felt like maybe 1 in 4
matches I was just completely steam rolled with absolutely no chance I could
have won.

~~~
vblord
Yeah, i gave up on Clash Royale when I found out that the chests you got were
not random. The payout schedule for the chests is so low which makes it almost
impossible to advance to the higher arenas without paying. It was a fun game,
but I gave up on it.

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smaili
IMO this was the acquisition that Activision should have made instead of King.

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makecheck
Yes, Supercell made a fun game but there is no way it is worth _billions_ when
so many other apps and games receive chump change for their development
efforts.

Part of the problem is that if someone actually does buy a “gem bag” or
whatever they’re selling, it amounts to a single-vendor gift card (and not one
that can buy very much).

I think it would have been much cooler if all gems were tied to the entire
platform, and they worked in any game. For example: if you play game X for
awhile and earn some gems, maybe that time spent can be used to “buy” progress
in game Y. The platform could enforce some minimum time limit, e.g. no one can
develop an app that rewards gems at a rate greater than some number per hour
up to the time since the app was first downloaded.

And if it is possible to purchase gems, they should only cost money when
they’re used. That way, you don’t have to buy a “bag” of 300 gems that you may
never entirely use; instead, you can divide your rewards among all the games
you like (including new games that come along).

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thedangler
I think Tencent just bought the UFC too. I could be wrong.

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bluedino
Does buying a one-hit wonder game company ever work out?

~~~
mikek
They have more than one hit:

Clash of Clans, Clash Royale, Hay Day, and Boom Beach.

And arguably, they have a process for generating more hits like this.

edit: added Clash Royale

~~~
changdizzle
you forgot their latest and greatest - Clash Royale, generated $190mm in
revenue in the first month out

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dang
Url changed from [http://www.theverge.com/2016/6/21/11986712/tencent-
supercell...](http://www.theverge.com/2016/6/21/11986712/tencent-supercell-
softbank-majority-stake-acquisition), which points to this.

~~~
downandout
I purposely didn't post the wsj URL because of the paywall.

~~~
dang
Understood, but there's a tradeoff with HN's call for original sources
([https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html))
and the rule is that paywalls with workarounds are ok.

