NY Games Conference 2009

Games Industry OutlookNY Games Conference

September 30, 2009

Good Morning

Joost

SuperData Research, Inc. 2009

Top 5 Trends in Gaming

I. Smartphones II. Digital DistributionIII. Trading Card GamesIV. Prepaid Game CardsV. Growing Free2Play Market


I. Rise of the SmartphonesA ‘market within a market,’ expected to grow ~4 times faster than the overall handset industry

As annual shipments for Low End and Mid-Tier handsets are declining, shipments for Smartphones expected to reach almost 300MM units by 2010E


0

17.5

35.0

52.5

70.0

2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E

Low End Mid-tier Smartphones

WW Handset Shipments (% of units)

II. Digital Distribution Marches OnDifferent Technology, Different Consumer Behavior

Shift toward digital distribution reduces seasonality, attracts consumers outside of traditional holiday season

Decreased dependence on “once-a-year casual shoppers” 0

7.5

15.0

22.5

30.0

J F M A M J J A S O N D

Monthly Sales as % of Annual

Games SoftwareOverall Software


II. Digital Distribution Marches OnAs consoles step up online offerings, digital distribution of video game grows from 19% in 2008 to 23% for 2009E

U.S. Video Games Sales: 1999 - 2009E

0

3.75

7.50

11.25

15.00

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E

Physical Games SalesDigital Games Sales% of Video Games Sold Online

Worldwide digitally downloaded game sales expected to reach $10.8 billion by 2012


III. Trading Card GamesTCGs are very compatible with Internet-based play, without surrendering any portability

Online Game Play

Offline Social Play


III. Trading Card GamesThis sleeping giant has a loyal following, strong licenses and capable of a smooth transition into digital age

Total TCG market estimated at $2.2 billion worldwide

mil $ 2002 2003 2004 2005 2006 2007 2008 2009E

U.S. Retail Sales 750 850 700 475 550 600 800 845

Japan23%

Europe37%

U.S.40%


III. Trading Card GamesTCGs are a natural extension for F2P, especially those with a strong brand or license

Free Realms (SOE) Club Penguin (Disney) MapleStory (Nexon)

World of Warcraft (Blizzard Ent.) Pokémon (Nintendo) Yu-Gi-Oh! (Konami Digital)


IV. Prepaid Game CardsRising popularity of online game play has also spurred growth in prepaid game sector

Traditionally cheaper than using credit cards

Gives younger audiences controlled access

Infrastructure already in place


V. Growing Free2Play MarketEmerging markets show growing appetite for F2P and offer advantages that developed market do not


Emerging MarketGrowth %

Jan-April ‘09

Turkey 158.4%

Brazil 100.0%

Taiwan 78.4%

Sri Lanka 72.0%

Philippines 69.8%

Russian Federation 63.6%

South Africa 51.6%

China 46.8%

Vietnam 37.5%

India 34.4%

Average Growth 71.2%

In emerging markets, most players play at PC Cafés, and do not want to buy and download a game to a machine they don’t own

Limited competition from consoles in these markets

Conclusion

Smartphones: Growing market, but not infinite

Digital Distribution: Exchange seasonality for economic vulnerability

Trading Card Games: Great ancillary venue for cool IP

Prepaid Game Cards: Expanding addressable market by lowering boundaries for financial transactions

Growing Free2Play Market: Great model to penetrate emerging markets


Thanks

[email protected]


Fine Print


ConditionsSuperData Research (“SuperData”) has made every attempt to verify the accuracy and completeness of information here presented from sources we believe to be reliable. It is understood, however, that our estimates, forecasts, opinions and recommendations represent the judgment of our analysts, based on the best information available at the time of publication. It is recommended that purchasers also consult other available business sources and not rely solely on this analysis as the basis for major strategic, financial, or management decisions. SuperData makes no warranty or representation, either expressed or implied, with respect to the information in this report. In no event will SuperData be liable for direct, indirect or consequential damages resulting from any defect or inaccuracy in this report, even if advised of the possibility of such damages. Information about specific companies is not intended to be a complete description, nor of their securities, nor is this study an offer to buy or sell such securities. SuperData’s liability, if any, shall not exceed the amount paid for this study.

NY Games Conference 2009

Technology

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