Harvard Case - Supercell
"Supercell" Harvard business case study is written by William R. Kerr, Benjamin Jones, Alexis Brownell. It deals with the challenges in the field of Entrepreneurship. The case study is 28 page(s) long and it was first published on : Oct 17, 2016
At Fern Fort University, we recommend that Supercell continue its strategy of focusing on high-quality, engaging mobile games while strategically expanding its reach through a combination of organic growth, targeted acquisitions, and a measured approach to international expansion. This strategy should be underpinned by a commitment to fostering a culture of innovation, prioritizing player experience, and leveraging data analytics to drive continuous improvement.
2. Background
Supercell, a Finnish mobile game developer, has achieved remarkable success with its portfolio of highly engaging games like Clash of Clans, Clash Royale, and Hay Day. The company?s success is attributed to its unique culture of innovation, its focus on creating games with strong social elements, and its data-driven approach to game development and monetization. However, Supercell faces challenges in maintaining its growth trajectory in a rapidly evolving mobile gaming landscape.
The main protagonists of the case study are Ilkka Paananen, Supercell?s CEO, and the company?s leadership team, who are grappling with the strategic direction of the company in the face of increasing competition and market saturation.
3. Analysis of the Case Study
Strategic Analysis:
- SWOT Analysis:
- Strengths: Strong brand reputation, highly engaged player base, innovative game development, data-driven approach, strong company culture.
- Weaknesses: Limited game portfolio, potential for market saturation, dependence on a few key games.
- Opportunities: Expanding into new markets, developing new game genres, leveraging technology advancements (AI, AR/VR).
- Threats: Increasing competition, changing consumer preferences, evolving mobile gaming landscape, regulatory challenges.
- Porter?s Five Forces:
- Threat of New Entrants: High, due to low barriers to entry in the mobile gaming market.
- Bargaining Power of Buyers: Moderate, as players have many alternative games to choose from.
- Bargaining Power of Suppliers: Low, as Supercell can leverage its scale to negotiate favorable terms with suppliers.
- Threat of Substitutes: High, as players can easily switch to other forms of entertainment.
- Competitive Rivalry: Very high, with numerous established and emerging mobile game developers.
- Value Chain Analysis:
- Supercell?s value chain is characterized by a strong focus on game development, marketing, and player engagement. The company leverages its core competencies in game design, data analytics, and community management to create compelling games and foster a loyal player base.
Financial Analysis:
- Supercell?s financial performance is strong, with high revenue and profitability. However, the company faces challenges in maintaining its growth rate in the face of increasing competition and market saturation.
- Key financial metrics: Revenue growth, profitability, user acquisition costs, player lifetime value, return on investment (ROI).
Marketing Analysis:
- Supercell?s marketing strategy is focused on building brand awareness, driving user acquisition, and fostering player engagement. The company leverages a variety of channels, including social media, influencer marketing, and in-app advertising.
- Key marketing metrics: Brand awareness, user acquisition cost, player retention rate, customer lifetime value.
Operational Analysis:
- Supercell?s operational model is characterized by a decentralized structure, a strong focus on innovation, and a data-driven approach to game development and monetization. The company leverages agile development methodologies and continuous improvement practices to optimize its operations.
- Key operational metrics: Game development cycle time, player churn rate, customer support response time.
Disruptive Innovation:
- Supercell has been successful in creating disruptive innovations in the mobile gaming industry. Its games have redefined the genre and set new standards for player engagement and monetization.
- Examples of disruptive innovation: Clash of Clans, Clash Royale, Hay Day.
Globalization Strategies:
- Supercell has successfully expanded its reach into international markets, particularly in Asia. The company has localized its games and marketing efforts to cater to the specific preferences of different regions.
- Key globalization strategies: Localization, market segmentation, strategic partnerships.
4. Recommendations
- Focus on High-Quality, Engaging Games: Supercell should continue its focus on developing high-quality, engaging games that offer a unique and compelling player experience. This strategy should be driven by a commitment to innovation, creativity, and player feedback.
- Strategic Acquisitions: Supercell should consider strategic acquisitions of smaller studios with promising game concepts or innovative technology. This will allow the company to expand its game portfolio and diversify its revenue streams.
- Measured International Expansion: Supercell should continue its international expansion strategy, but with a measured approach. The company should focus on markets with high growth potential and prioritize localization and cultural sensitivity.
- Leverage Data Analytics: Supercell should continue to leverage data analytics to optimize its game development, marketing, and player engagement strategies. This will enable the company to better understand its players, identify trends, and make data-driven decisions.
- Foster a Culture of Innovation: Supercell?s success is rooted in its culture of innovation. The company should continue to invest in its employees, encourage experimentation, and reward creativity.
- Prioritize Player Experience: Supercell should prioritize player experience in all aspects of its business. This includes providing excellent customer support, fostering a sense of community, and continually improving its games based on player feedback.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Supercell?s strengths, weaknesses, opportunities, and threats, as well as the dynamics of the mobile gaming industry.
- Core Competencies: The recommendations are consistent with Supercell?s core competencies in game development, data analytics, and community management.
- External Customers: The recommendations prioritize player experience and cater to the needs of Supercell?s target audience.
- Competitors: The recommendations address the challenges posed by competitors by focusing on innovation, strategic acquisitions, and international expansion.
- Attractiveness: The recommendations are expected to enhance Supercell?s financial performance by driving revenue growth, increasing profitability, and expanding its market reach.
6. Conclusion
Supercell is a successful company with a strong foundation for future growth. By continuing to focus on high-quality, engaging games, expanding its reach through strategic acquisitions and measured international expansion, and leveraging data analytics to drive continuous improvement, Supercell can maintain its leadership position in the mobile gaming industry.
7. Discussion
Alternatives not selected:
- Aggressive Expansion: Supercell could pursue a more aggressive expansion strategy, acquiring multiple studios and entering new markets rapidly. However, this could lead to integration challenges and a dilution of the company?s culture.
- Focus on Existing Games: Supercell could focus solely on its existing games, optimizing their monetization and player engagement. However, this would limit the company?s growth potential and make it vulnerable to market shifts.
Risks and Key Assumptions:
- Competition: The mobile gaming industry is highly competitive, and new entrants and established players could disrupt Supercell?s market share.
- Changing Consumer Preferences: Consumer preferences in the mobile gaming industry are constantly evolving, and Supercell needs to adapt its games and marketing strategies accordingly.
- Technology Advancements: New technologies, such as artificial intelligence and augmented reality, could significantly impact the mobile gaming industry.
8. Next Steps
- Develop a detailed strategic plan: This plan should outline Supercell?s long-term vision, key objectives, and action steps for achieving its goals.
- Identify and evaluate potential acquisition targets: Supercell should conduct due diligence on potential acquisition targets, assessing their game concepts, technology, and cultural fit.
- Develop a phased international expansion strategy: This strategy should identify target markets, prioritize localization efforts, and establish partnerships with local distributors.
- Invest in data analytics and technology: Supercell should invest in advanced data analytics tools and technologies to gain deeper insights into its players and optimize its operations.
- Strengthen its culture of innovation: Supercell should continue to foster a culture of creativity, experimentation, and continuous improvement.
By taking these steps, Supercell can position itself for continued success in the dynamic and competitive mobile gaming industry.
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Case Description
Supercell is a young Finnish smartphone game company with an unusual team structure and company philosophy. It is already one of Finland's most valuable companies, and despite being only 6 years old, it has put up some impressive numbers: as of 2016, it has released only four games for global audiences, but each one has made it to the top (or almost to the top) of the most-downloaded and most-revenue-generated app charts; it has recorded multi-million daily revenues and around a hundred million daily users; it has nearly 200 employees in its Helsinki headquarters and support offices around the world; and now, thanks to an acquisition by Chinese internet/entertainment company Tencent, Supercell has a valuation of $10.2 billion, making it Europe's first "decacorn" (a start-up with a $10 billion or greater value). Supercell's success is due in part to its unconventional company structure and attitudes towards game development and management in general. The development unit at Supercell revolves around the concept of a "cell," a small team consisting of anywhere from two to a dozen (or more) people who work together to make a game. Cells are highly independent and control all the decision-making for their game, including when/whether a game should be cancelled. The case allows discussion of important concepts like what conditions aid an effective team dynamic, how an entrepreneurial company can scale in size while retaining the "power of small," how companies can create value through focus and being willing to terminate underperforming projects, and the implications of global markets and extreme valuations for what a company must achieve.
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