How will Shinra build the next

game industry ecosystem?

The Game Changer

Yoichi Wada, President

Oct. 22nd, 2014

Shinra Technologies, Inc.

Content is intangible.

Value is generated when content

becomes product.

Characteristics of Content Industries

Movie

Content Industries in the 20th Century

Film Industry

Literature Book Publishing Industry

Music Record Industry

Game Game (Console) Industry

Publish

Manufacture

DistributionRetail

Create

Transformation from Content to Product Significant Added Value

Revenue allocation varies in each industry, however typically only 5-30% (45% max) is given back to the content creators.

As contents get more digital, creators receive higher shares.

Characteristics of Game Industries

Computer games are the most complex

software applications.

A specialized platform is required.

The game industry ecosystems were

shaped by each specialized platform.

Arcade Games : 1970s onward

One Machine, One Game

Expensive Hardware

Consumer cannot invest in extremely expensive

arcade machines.

Arcade operators purchase machines and had

consumers insert coins to recoup cost.

Birth of a new form of entertainment.

Console Games : 1985 - 2000

One Machine, Multiple Games

Inexpensive Hardware

Game console makers adopted a vertically

integrated business model, and the ecosystems

were built on the basis of third parties being only

on the game development layer.

The introduction of this new business model led to

substantial growth in the game industry.

Console Games : 2000 onward

Non-gaming features (e.g. DVD)

added to console hardware

The effective investment required on the part of

customers to play games was reduced

Other forms of entertainment (e.g. movies)

became increasingly fused with games

General Purpose Device Games:2005 onward

Smartphones and Laptops

Players no longer have to invest money solely for

the purpose of playing games

Reaches wider target segments and geographical

regions

• Moms playing Farmville

• Emerging markets where game consoles were too

expensive

0

20,000

40,000

60,000

80,000

100,000

120,000

Smart TV

Mobile(SP, Tablet)

PC Online

ConnectedConsoleConsole/HH/PCソフ

トArcade Game

12

10

8

6

4

2

Billion $

1975 1980 1985 1990 1995 2000 2005 2010 2015e 2020e

The games market has grown through each expansion of devices

Cloud gaming will change the game industry

fundamentally

The Innovator’s Dilemma

Quality

Time

Customer Expectations

Switch

Until now we have seen only partial alignment with the theory

Quality

Time

Partial Switch

Partial Switch

Arcade Game

Console Game

General PurposeDevice Game

0

20,000

40,000

60,000

80,000

100,000

120,000

1975 2006

12

10

8

6

4

2

In the game industry thus far, we have

not seen complete disruption. Rather,

various device markets have piled up

similar to geographical strata.

When there has been a change in

device, the reason we haven’t seen a

complete shift from one device to

another has been due to the

“experience” provided by the uniqueness

of the device itself.

0

20,000

40,000

60,000

80,000

100,000

120,000

1975 2006

12

10

8

6

4

2

The Platform will move from Deviceto the Cloud

The differentiation in colors will

become meaningless.

Quality

Time

Switch !

The situation will change completely

Client Game Cloud Game

The New Game Experience

The New Ecosystem

Two New Value Drivers

The New Game Experience

Games have shifted from consoles to general

purpose devices. While the market did expand,

uniqueness and variety was lost.

Cloud gaming is a solution to bring forth new,

unique attributes of games similar to special

purpose devices.

Two New Value Drivers

The New Ecosystem

Until now, the industry ecosystem has been

built around the device manufacturers

(clients).

As value shifts from the client to the cloud,

the new ecosystem’s leadership will revolve

around the cloud operator.

Two New Value Drivers

Shinra Technologies, Inc. is pioneering this new era.

We anticipate huge opportunities inthe game industry’s greatest

transformation.

New experiences occur on a supercomputer designed for

games

We free game developers from strangleholds such as:

Shinra Enables New Game Experiences

We present players with new ways to interact with

games

The difficulty of creating online games

The need to support multiple devices and OSs

The limited processing availability in devices

Via the cloud, create a world that ties together users,

developers and related parties in a way that is both

satisfying and economically palatable

Shinra Establishes A New Ecosystem

F2P, crowd funding, crowd sourcing, etc

Include all these new trends to create a true

“ecosystem”

We are building worlds no one has seen

before, and we cannot do it by

ourselvesShinra adopts an

Emergent Strategy

Get on a rocket ship : shinra.com