
Supercell to sell 51% of shares to GungHo and Softbank for $1.5B - olegp
http://www.arcticstartup.com/2013/10/15/supercell-to-sell-51-of-shares-to-gungho-and-softbank-for-1-5b
======
adventured
Gotta love PR fluff:

"will accelerate Supercell towards [the] goal of being the first truly global
games company"

As opposed to, say, Nintendo having accomplished that nearly three decades
ago.

~~~
svantana
I think they are referring to the possibility of reaching ALL markets
including Africa, South-east Asia, etc. NES was a big hit, but only in Japan,
North America and Europe.

~~~
rubinelli
NES had some fierce competition from SEGA's Master System in developing
markets, but it still sold incredibly well (one reason for it being the ease
of producing pirate cartridges, which flooded these markets).

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RaSoJo
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
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
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/...](http://www.softbank.co.jp/ja/design_set/data/irinfo/library/annual_reports/pdf/2013/softbank_annual_report_2013_008.pdf)

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
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.

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diziet
Our app worth algorithm valued Supercell on iOS as worth $1,486,676,112:
[https://sensortower.com/ios/publisher/supercell/488106216](https://sensortower.com/ios/publisher/supercell/488106216)

1B of that being in Clash of Clans

Interesting to see them exit -- Clash of Clans hadn't showed signs of slowing
down, especially given that they recently released on Android.

~~~
seferphier
curious. how do you estimate how much an app is worth? Are you discounting
future cash flows? If the total networth of Supercell is at 1.5B then selling
it at 1.5B for 51% is not a bad deal (assuming that its value does not
increase)

Big contrast to Gungho (the purchaser) and Rovio, which is worth $455,438,581
and $145,714,888.

~~~
diziet
We have models about revenue, user growth, user amounts, etc -- all valued per
country, etc that we combine to make the estimation. Larger apps make this
estimation a lot easier than indie apps, too. You can click through on each
app and see more detailed info.

Rovio hasn't been a major player in terms of being a top grossing app recently
-- they get good downloads and have brand presence, but in the age of IAP
based free to play revenue (24 top grossing apps out of top 25 are free:
[https://sensortower.com/ios/rankings/top/iphone/us/all-
categ...](https://sensortower.com/ios/rankings/top/iphone/us/all-categories))
Rovio's app based model isn't as sticky as long term freemium titles with long
term progression. Not to say that Rovio isn't doing great in other parts of
it's business!

~~~
seferphier
Very impressive how accurate the valuations are. I agree that Rovio's business
model isn't as great as CoC and other game publishers.

Think the valuation on Gungho is significantly off though. Gungho made 763
million the first half of 2013, compared to 455 million
([http://www.pocketgamer.biz/r/PG.Biz/GungHo+Online+news/news....](http://www.pocketgamer.biz/r/PG.Biz/GungHo+Online+news/news.asp?c=52683))

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Pitarou
Nobody's mentioned what's pushing firms like Softbank to look for bold
overseas acquisitions.

Japan has a major government debt crisis looming, and the only way out for the
Japanese government is to print Yen plus financial repression. Large,
profitable Japanese firms like Softbank are desperate to insulate themselves
from this (and maybe even profit from it) while they still can. Converting Yen
to overseas capital looks like a smart move at the moment.

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pinaceae
the absolute crazy part? all of that was built by supporting only one platform
- iOS. they just released their first android game.

what a homogenous environment with easy payment built-in can achieve. even
after Apple's big bad cut on in-app payments, etc.

if you're launching a new app take note.

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CookWithMe
> The founder of Softbank, Masayoshi Son, shared with Paananen that he has a
> 300 year vision for reshaping entertainment, and a plan of how to implement
> it.

With $1.5B in the bank, he can spend $5M a year for 300 years without going
bankrupt. Nice runway!

~~~
tehwalrus
Alas, I think death and taxes will both stop him there.

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MiKely
What it is that makes Finland to produce these start-ups like Supercell or
Rovio?

~~~
olegp
Cold dark winters with nothing else to do than play or make computer games.

~~~
rubinelli
I guess that makes game companies the new rock bands.

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kayoone
'According to the latest information, Softbank put in 80% of the funding, or
$1.2 billion while GungHo put in the remaining $300 000.'

They are missing some zeros there.

~~~
Sujan
Fixed now.

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jan__L
I think they need some big investors like this to keep going on. Hopefully
they are allowed to work on projects they want in the future. We'll see

~~~
hatu
Actually it's quite a surprise to me. They are one of the most profitable
entertainment companies ever. I'm not sure what they need the money for, they
had hundreds of millions coming in each month from revenue on a team of under
a 100 people.

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seivan
Cash out before the crash out :)

