Video Game

• Industry & Forecast

• What Can Shopify Plus Do

• First Step: Ubisoft

• Implementation Plan

• Financial Forecast

Movie

• Industry & Forecast

• What Can Shopify Plus Do

• First Step: Warner Bros

• Implementation Plan

• Financial Forecast

Page of ContentRecommendation

Conclusion

Recommendation

• Develop Entertainment Industry segment in the Consumer Electronics and Consumer Goods Vertical

• Focus on Video Gaming and Movie Franchise Merchandising

• For Video Gaming focus on console and PC in-game merchandising API

• For Movies focus on unique Cinema based merchandising POS

Video Game Segments: Console and PC

Industry & Forecast

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2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

North American Gaming Revenue (billion USD) 1

North American Gaming Revenue (billion USD)

2013 North American Video Game Licensing Royalties Revenue: 266 Million USD3

Source: [1] http://www.statista.com/statistics/246895/value-of-the-north-american-video-game-market-by-component/[2] https://www.superdataresearch.com/market-data/north-america-digital-games-market-report/

[3] http://www.hollywoodreporter.com/news/licensing-revenue-royalties-rose-33-711887

U.S. and Canada Digital Games MarketBy Game Category (2014E) 2

Key Players

What can Shopify Plus do?

• Provide In-game merchandising channels to increase impulse purchases

• “The study also reveals that manufacturers looking to capitalize on impulse purchases should put a strong focus on packaging while retailers should focus on merchandizing”4

• “A survey of in-store impulse shoppers shows images or descriptions on game packaging ….extremely important to 40 per cent, while 25 per cent are swayed by in-store demonstrations of the game”4

• “15 per cent of impulse purchases were made online”5

• “Two years ago the market for Gaming Toys & Merchandise was estimated at around £60m and last year….£77m based on NPD Group figures. The increase…illustrates that retail are looking to other categories to drive revenue and margin”4

[4] https://www.npd.com/wps/portal/npd/us/news/press-releases/pr_111122/[5] http://www.licensing.biz/sector-spotlights/read/the-video-games-licensing-boom/026901

• Well know franchises Assassin’s Creed, WatchDogs, Rayman

• Established Online Store: Ubiworkshop

• Large North American Presence

First step: Ubisoft Entertainment

[6] http://www.newzoo.com/insights/the-top-25-public-companies-generated-54-1bn-game-revenues-in-2014-up-10-4-year-on-year/

Top 10 Public Companies by Game Revenues6

Comparison of FY2014 and FY2013 Revenue ($Bn)

Ubiworkshop7

[7] http://store.ubiworkshop.com/

Shopify Plus Business Model

[8] https://www.shivarweb.com/5043/shopify-plus-enterprise-ecommerce-platform-review/[9] http://wemakewebsites.com/blog/shopify-pricing-what-percentage-do-they-charge

• Goals: Growth and Value Generation

• Market Focus: PC and Console Video Game integrated merchandising

• Core Activities: API provision, Server hosting, Tracking and Analytics

• Transactional Structure:

• Monthly subscription for physical merchandise: $1000-$50008

• Profit Sharing: 1.00-2.00%9

Powered by

Implementation plan

• Two-fold introductory phase

Phase 1: Transition Ubiworkshop online to Plus

Phase 2: Implement in-game API for next major release

Implementation Plan Contd.

• Note: Test can be stopped If user base falls below 20% of initial adoption rate, we stop the test (depends on the game)

• Note: Plan is based on publicly available information. Release schedule can be altered based on release date provided by Ubisoft when in a partnership

Major Release Date for in-game API

March 8, 201610

[10] http://blog.ubi.com/the-division-an-update-to-our-beta-plans/

Financial Revenue Forecast for Shopify Plus

• Three Year Cumulative Revenue: 2.53 million

• Based on:

• Ubiworkshop traffic (120,000 views/month)11

• Shopify transaction charges (1.8% of rev, 20 cents/CC trans)9

• Shopify Plus monthly fees ($1000-$5000)8

• Assuming• At least half of Ubiworkshop views result in transactions (constant

60,000/month)

• $50 average transaction value (LOW BALL ESTIMATE)

• $1000/month for phase 1, $5000/month for phase 2

[8] https://www.shivarweb.com/5043/shopify-plus-enterprise-ecommerce-platform-review/[9] http://wemakewebsites.com/blog/shopify-pricing-what-percentage-do-they-charge

[11] http://www.mustat.com/ubiworkshop.com

Future Steps

[8] https://www.shivarweb.com/5043/shopify-plus-enterprise-ecommerce-platform-review/[9] http://wemakewebsites.com/blog/shopify-pricing-what-percentage-do-they-charge

[11] http://www.mustat.com/ubiworkshop.com

MoviesFranchise Heavy Selection

Industry & Forecast

• Movie and TV-related merchandise hit $51.4 billion in 2013, according to industry. Royalties from those sales climbed to $2.66 billion12

• The global box office is expected to grow at a CAGR of 5.4% over the next 5 years, to increase from 34 billion in 2013 to reach $44 billion in 201713

• The strong growth in global box office revenue will increase the proportion of box office revenues by 42%13

• Movie theaters generate revenues from 3 main sources:1. Admission2. Concession

3. In-theater advertising

• Concession generates significantly higher gross margins (~80-85%)13

[[12] http://www.therichest.com/rich-list/most-popular/10-movies-that-sold-the-most-merchandise/?view=all[13] 2014-05-07 Cinema Operator Industry Report May 2014 (www.redcapgroup.com)

Industry & Forecast

[13] ] 2014-05-07 Cinema Operator Industry Report May 2014 (www.redcapgroup.com)

Box Office Growth Outlook by Region Revenue Breakdown (2013)

Industry Analysis

• If a movie hits one billion dollars in sales, it’s a safe estimate that toy sales will average $250 to $300 million12

• Time Warner are well known for their Blockbuster movie figures such as Batman, Superman, Harry Potter, Green Lantern etc.

• Establish outlets in North America that sell merchandises in cinemas to audiences during “launch of new movies”.

• E.g. the upcoming “Batman v Superman movie” release in March 2016.

[12] http://www.therichest.com/rich-list/most-popular/10-movies-that-sold-the-most-merchandise/?view=all

Key Players

Shopify Plus Business Model

• Goals: Revenue growth and Value Generation

• Market Focus: box-office movie merchandising outlets

• Core Activities: API and Popify POS hardware provision

• Transactional Structure :• Monthly subscription for Popify service: $1000-$50008

• Revenue Sharing: 1.00-2.00%9

[8] https://www.shivarweb.com/5043/shopify-plus-enterprise-ecommerce-platform-review/[9] http://wemakewebsites.com/blog/shopify-pricing-what-percentage-do-they-charge

What can Shopify Plus do?

• Introduce new POS channels to encourage consumer impulse purchases directly within the cinema

• “…no less than 80% of Americans made an impulse buy in the past year”14

• “Its all about seeing the product ….the product will remind the customer of a problem that the product in question can solve” 14

• Creates “An overwhelming attraction to the product” 14

• Costco Effect: “…promotes impulse purchases by limiting peoples options to trendy, popular items…” 14

[14] http://www.virgin.com/entrepreneur/psychology-impulse-purchase

Implementation plan

• Phase 1 • Design Offline-Online POS service for purchase of movie

merchandise through the Popify channel• Integrate movie producers’ online stores into Shopify platform

• Phase 2• Use Ontario as a test market

• Phase 3 • Launch outlet parallel with

blockbuster movie • e.g. Batman v Superman

• Phase 4• If successful rollout to rest of

North America & later Internationally

Implementation plan

• Note: Plan is based on publicly available information. Release schedule can be altered based on release date provided by Warner Bros when in a partnership

Financial Forecast

• Three Year Cumulative Revenue: $143 million

• Based on:• Walk-in traffic (19.1 million tickets sold in 2013)13and15

• Shopify transaction charges (2% of rev, 0.2 cents/CC trans)8

• Shopify Plus monthly fees ($1000-$5000)9

• At 27.5% of Time Warner Outlets views result in transactions ($52 million)16

Assuming• $30 average transaction value (LOW BALL ESTIMATE)

• $1000/month for phase 1, $5000/month for phase 2,3,4

[8] https://www.shivarweb.com/5043/shopify-plus-enterprise-ecommerce-platform-review/[9] http://wemakewebsites.com/blog/shopify-pricing-what-percentage-do-they-charge[13] 2014-05-07 Cinema Operator Industry Report May 2014 (www.redcapgroup.com)

[15] http://www.statista.com/statistics/187289/box-office-market-share-of-warner-bros-in-north-america-since-2000/[16] http://www.therichest.com/rich-list/most-popular/10-movies-that-sold-the-most-merchandise/?view=all

Conclusion

• Develop Entertainment Industry segment and focus on Video Gaming and Movie Franchise Merchandising

• For Video Gaming focus on console and PC in-game merchandising API. Shopify Plus can first establish a partnership with Ubisoft Montreal

• For Movies focus on unique Cinema based merchandising POS. Warner Bros is an ideal candidate

• Launch test market in the next six months, and the cumulative revenue for the next three years is estimated to be $145.5 million

THANKS