Somewhere in Scandanavia there's a startup. And investors think that startup is worth a lot of money.
Supercell is a two-year-old company that is cashing in on iOS games. Titles include Hay Day and Clash of Clans, and the company frequently appears in the App Store's top grossing chart.
According to PandoDaily's Hamish McKenzie, the 60-person gaming company is rolling in revenue, so much so that it makes many Silicon Valley app companies "look like a humble paper route." In October, The New York Times said SuperCell was pulling in about $500,000 per day. Its founder, Ilkka Paananen, says daily revenue is now "quite a bit more." McKenzie says it's likely in the $750,000 range now.
In addition, operating costs are reportedly low -- about $60,000 per day. McKenzie says VCs have clamored to offer SuperCell term sheets at a $600 million valuation.
Index Ventures' Ben Holmes thinks Supercell could easily overtake a dwindling Zynga in the next year or two.
"They are one of the few companies, along with King.com, who are now on a regular and reliable basis producing winning games,” he told McKenzie. “Both companies have very good shot at overtaking Zynga in terms of revenue, profits and valuation over the next year.”
At its current rate, Supercell could generate $130 million annually, after Apple's cut of sales. But hit games can be unsustainable fads, as Zynga well knows. In the mean time, Supercell plans to keep working on its secret sauce: tablet games.
"We view the tablet as the ultimate gaming platform,” Paananen tells McKenzie. “The entire strategy is to create the best possible game experiences on the tablet, and the interesting side effect of that strategy is that we also make the games better on iPhone, because designing the games for a higher spec is also what makes the games better on the smartphones.”
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