In the start-up world, there is the concept of a unicorn. This is a company in a crowded space that receives an unexplainable amount of investment dollars or sells for a price higher than can be explained. The concept of the unicorn has existed outside of startups, though. For example, the casual and mobile gaming industry as a whole seems to be a unicorn in itself.
For example, when Electronic Arts purchased PopCap, the original name in casual games, for more than $750 million, it seemed insane. How could the company that made Bejeweled be worth that much money? Today, however, that number is considered small for this industry. Last year, Activision purchased Candy Crush studio King for $5.9 billion, shocking the industry. Today, once again, that number seems small.
This week, mobile developer Supercell, had a major stake transfer for an even more major price. Parent company Softbank, the company that owns Sprint in the US, sold 84% of their stake in the mobile developer behind the Clash of Clans franchise to Chinese developer Tencent. The purchase was for $8.57 billion dollars, valuing the studio at $10.2 billion. That is a lot of money for any purchase, especially for a company with a very small overall offering.
Let's put that number into perspective. In 2014, Microsoft purchased Mojang, maker of Minecraft, for $2.5 billion. In the same year, Facebook purchased Oculus for $2 billion. In 2012, they purchased Instagram for $1 billion. The same year, Disney purchased Lucasfilm for $4 billion. All of those purchased together barely exceeds this single purchase, and it's below the overall value of the company.
That's right: Supercell, a studio it is likely you have never heard of, is worth roughly 2.5 times the combined value of Star Wars and Indiana Jones, plus the infrastructure that has made them possible and successful. Why is that the case? Because fear breeds impulsiveness. It's what happened with Instagram, which Facebook paid far too much for because there was rumor that Twitter was interested. In this case, with Asian studios beginning to rule the landscape in mobile, it is no surprise that Tencent was willing to spend a lot of money to purchase a quickly growing competitor in a space that is expected to be 40% of the overall industry in 2 years.read more...