The digital transition 2.0

Heroes and Zeroes

Nicholas Lovell

About me

• Amazon US: http://amzn.to/RQwAhA

• Amazon UK: http://amzn.to/R6kzHA

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Heroes and zeros 2012

My zeroes

From $20 billion rumoured valuation to less than cash

Zynga The Old Republic Subscription MMOs

3DS below cost. PS Vita DOA Handhelds

80% share price fall. Breach of debt covenants THQ

My heroes

Sony’s stealth virtual worldPlayStation Home Apple’s game of the year 2011 Nimblebit

$380 million exit to Sony Gaikai

AWS. Kindle. Kindle Fire. Amazon

How did you do?

Zynga

Subscription MMOs

Handhelds

THQ

PlayStation Home

Nimblebit

Gaikai

Amazon

My prediction

Zero

Zero

Zero

Zero

Hero

Hero

Hero

Hero

Your prediction

Zero

Zero

Zero

Zero

Zero

Hero

Hero

Hero

Result

Zero

Zero

Zero

Zero

Zero

Hero

Hero

Hero

YOU WIN

Would you buy Zynga?

Market value 1,716.9Financial debt 100.0Cash (394.4)Marketable securities (928.7)Long-term marketable securities (325.6)San Francisco Headquarters (274.8)Zynga's Enterprise Value (106.5)

Would you buy Zynga?

• Yes

• No

Heroes and zeros 2013

Epic Games

“The free-to-play game is going to win”

- Mike Sweeney, co-founder

HERO

Epic: Hero or Zero?

• Hero

• Zero

NPD

• By territory• Physical• AAA• Upfront payments

NPD’s focus

• Global• Digital• Casual, AAA, indie…• Freemium, paymium

and more• Mobile, social,

browser…

Industry future

ZERO

NPD: Hero or Zero?

• Hero

• Zero

DeNA

ARPDAU > $1Q2 revenues: $627 m

HERO

DeNA: Hero or Zero?

• Hero

• Zero

Paymium

Unlock the true fans

PRICE

Demand

Revenue opportunity

Marketing opportunity

HERO

Paymium: Hero or Zero?

• Hero

• Zero

Windows 8 AppStore

ZERO

Win8 Appstore: Hero or Zero?

• Hero

• Zero

World of Warcraft

• 10 million subs• Down from 12 million• Small uplift from Mists of Pandaria

ZERO

World of Warcraft: Hero or Zero?

• Hero

• Zero

Paid DLC

• 30% of iOS/Android IAP revenue in the US comes from transactions valued at $50

• 51% comes from transactions of more than $20• Players don’t pay for content; they pay for database entries

ZERO

PDLC: Hero or Zero?

• Hero

• Zero

Kickstarter

HERO

Kickstarter: Hero or Zero?

• Hero

• Zero

Did you agree?

Epic

NPD

DeNA

Paymium

Windows 8 Appstore

World of Warcraft

Paid DLC

Kickstarter

I said

Hero

Zero

Hero

Hero

Zero

Zero

Zero

Hero

You said

Thank you

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