How GungHo and Supercell’s Promo Partnership Led To a Buyout
How things got interesting after Supercell & GungHo started their partnership
GungHo, one of the rising stars in the Japan mobile gaming market, just bought 51% of Supercell with the help of Softbank.
It’s a ridiculously smart move. GungHo is incredibly strong in East Asia and especially Japan, easily the most lucrative gaming market. They’ve nailed down their model and done incredibly well — making $763M (or $4.2M/day) in the first half of the year, mostly with Puzzle & Dragons.
Supercell on the other hand is estimated to have made just over half that with $2.7M per day with Hay Day and Clash of Clans. They’ve done incredibly well in the Western market since they launched. Flooding every CPI partner out there, and even TV ads for Hay Day.
Where things got interesting was when Supercell and GungHo partnered up and started doing cross promotion. This happened late June, right when you see a spike from it going from #100 to Top 10 and holding the position. Since it launched in June 2012, it had stuck around top 100-150 top grossing, and it has stuck at the top 1 since it started. I would assume that this added at least $500k in daily earnings on top of what it was making elsewhere.
GungHo didn’t get nearly the same results in the US but it did get it consistently in the top 30 grossing.
This cross-promotion definitely wasn’t the whole reason for doing a deal like this. Either they planned it out, and thought this would be a good test to see if they could fit together, or they did it as a UA tool and saw how beneficial it could be. But to go from cross-promo partnership to buying 51% of a company for $1.5B is incredible. As Michail Katkoff, former head of Partneships for Supercell pointed out, the localization of CoC helped tremendously as well.
Supercell stands out to gain a lot from this, and GungHo knows it, which explains the huge bet. GungHo can make them a bigger player in the Asian markets. And use their expertise on tailoring GungHo games towards the Western market and mix it with cross promo. They can do something better than DeNA/Mobage/GREE could ever dream of.
And for Softbank, which has been buying chunks of top Asian gaming companies — get’s a piece of the Western gaming market. Will be interesting to see what they do in the coming year or two.
