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Gaming Mergers & Acquisitions Gaming Mergers & Acquisitions

Gaming Mergers & Acquisitions - PowerPoint Presentation

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Gaming Mergers & Acquisitions - PPT Presentation

Update Jim Perkins Director Corum Group May 2013 Introduction Jim Perkins Digital Media Specialist Corum Group Ltd Entertainment software entrepreneur Jim Perkins is directly responsible for publishing some of the industrys biggest franchises including Unreal Duke Nukem Wolfens ID: 726969

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Slide1

Gaming Mergers & AcquisitionsUpdate

Jim Perkins

Director,

Corum

Group

May 2013Slide2

Introduction

Jim Perkins

Digital Media Specialist

Corum Group, Ltd.

Entertainment software entrepreneur Jim Perkins is directly responsible for publishing some of the industry’s biggest franchises, including Unreal, Duke Nukem, Wolfenstein, Doom, Hunting Unlimited, and Driver. A well-known senior executive with a 22-year track record of publishing such bestselling hits, he founded and grew two highly successful software publishing companies (FormGen and ARUSH) from start-ups to multi-million dollar enterprises.

 Jim also launched Radar Group, the first Transmedia Incubation Company to monetize entertainment franchises across all media, including film and television. His success and extensive experience in software production, marketing and public relations, packaging, online and retail distribution and software M&A, uniquely qualify him as an expert in building value and realizing wealth. Jim joined Corum Group, the world’s leading software M&A firm, with a specific focus on educating and helping prospective sellers maximize the value of their digital media companies.Slide3

Agenda

Background: Digital Game Trends

Spotlight: China, Japan, South Korea

Review of Recent M&A

Case Study: Asian NotablesConclusionsLooking AheadSlide4

Game TrendsSlide5

Digital Game Sales Growth

Digital Game & Downloadable Content +33% year-over-year in the US and EU

Digital content 40% of total game spend in US

Asia projected to dominate online and mobile games by 2016

Chinese gamers are younger, 37% under 18Mobile game spending in China will exceed $1 billion in 2013Mobile game spending in US @ $2.1 billion in 2012

Source: NPD, iResearch & Digi-CapitalSlide6

Global Video Game RevenueSlide7

Shift to Tablets

Source: Juniper Research

Tablet-based In-App

g

aming purchases to jump from $301 million in 2012 to $3 billion in 2016Far East/China will generate 3x the In-App revenue on tablets than North America by 2016

Asia is overtaking North America as a key revenue producing marketAn ongoing shift to mid-core gaming is increasing the importance of tablets“Dual Launch” on Google Play and App Store will become the standard instead of launching App Store followed by AndroidSlide8

All About Apps

iOS Mobile Gaming Revenue Q4 2012

35%

Asia

40% North America

Google Play Mobile Gaming Revenue Q4 201260% Asia20% North America

Source: App AnnieSlide9

China, Japan, South KoreaSlide10

Chinese Mobile Gaming

425 million new smartphone installs this year

Mobile gaming revenue growth 50%+ through 2015

Carrier billing increases will allow monetization

Fragmentation

Ecosystem: Android 70%+ (counterfeit Android)

App Store: > 500 App Stores

Content: Action, Puzzle, MMO – no leader

Launch Strategies

Focus on Android

Develop relationships with App Store Operators

Launch with a Local Partner to

Help localize titles

Cut through Chinese bureaucracy

Source: ufert.seSlide11

Japanese Gaming

Japanese gamer profiles similar to European & North American players.

Older players = higher monetization rate

$4.16 billion social gaming market in 2012

ARPPU = @ $50/month

Ecosystem = 55% Android, 36% iOS, 9% Other

Culture Counts

No foreign mobile/social gaming company is really successful in Japan

Do not try to sell in Japan unprepared

Source: ufert.seSlide12

South Korean Mobile Gaming

2011: South Korea deregulates review of App Store games

2012: Mobile gaming surges

2012: Kakao Games, mobile gaming network launch, $51.6 million revenue within 3 months

2013: 41% mobile gaming growth forecast

2013: Gamevil revenue forecast at $100 million; its revenue increased 64% in 2012

2017: Market stabilizes at 12-18% year-over-year growth

Source: ufert.seSlide13

Game M&ASlide14

Top Strategic Acquirers: 2012Slide15

Game M&A - 2012

Game acquisitions set a new record in 2012 - $3.2B disclosed, estimated $4 billion total transaction value

15% increase

from 2011Number of deals declined by 12%

Average transaction size rose 60% to approx. $50 million7 of top 10 deal buyers were from South Korea, China or Japan

Source: 451 Research, Digi-CapitalSlide16

Game M&A Transaction Value - 2012

Source: Digi-CapitalSlide17

Game M&A Transaction Volume - 2012Slide18

Game M&A HistorySlide19

Game Investment - 2012

Game investment transactions were up 9%

Average game investment transaction value was down 57%

Average size of investment - $5 millionMore mobile game studios were funded, but the money needed to fund the studios was smaller

Kickstarter accounted for 6% of all investmentsSource: Digi-CapitalSlide20

Game Investment Transaction Value - 2012

Source: Digi-CapitalSlide21

Game Investment Transaction Volume - 2012

Source: Digi-CapitalSlide22

Asian Game M&ATransactions Past 12 Months

Aeria Games & Entertainment (Japan)

Gamepot - Online & social network games

Aspect Gaming (China)

Longshot Interactive - Baccarat game for Facebook users in AsiaChangYou.com (China)7Road - MMORPG game, DDTank

Chengdu B-Ray Media Co. (China)Gamegoo Information Tech - Online video games in ChinaSlide23

Asia Game M&ATransactions Past 12 Months

Giant Interactive (China)

Backward Heroes - Online marketing and video services

Gree (Japan)

Pokelabo, Inc. – Japanese mobile video gamesAppAnt Studios – Android video game, Dino LifePaprika Lab – Facebook games + iOS quiz game

GungHo Online Entertainment (Japan)Grasshopper Manufacture – Console and mobile video gamesKog Corporation (South Korea)Kill3rCombo – MMORPG games for consumers globallySlide24

Asian Game M&ATransactions Past 12 Months

Mobcast, Inc. (Japan)

Entercrews Co. – Web and mobile role-playing games

Nexon (Japan)

gloops, Inc. – Mobile and social networking gamesinBLue, Inc. – Mobile and social networking games

Sega Corp. (Japan)Relic Entertainment – Canadian PC and console-based gamesSony Computer Entertainment (California)Gaikai – Videogame delivery network operatorWebzen (South Korea)Gala Networks – Online MMO game, gPotatoSlide25

Case Study – Asian NotablesSlide26

Asian Notables

Giant

Interactive Group, Inc. was founded in 2004 and listed on the NYSE in 2007.

Gree, Inc. is a social gaming for mobile phones pioneer, founded in 2004.

NEOWIZ Game Corporation is an internet and online game service company founded in 1997.

Nexon Co. Ltd. was founded in 1994 and an early adopter of free-to-play online games. Slide27

Asian Notables

Source: Financial TimesSlide28

Asian Notables

Source: Capital IQ & 451 Research

9Slide29

Asian Notables“M & A Outlook”

All companies are trying to increase their mobile presence via:

M&A

Partnerships

Internal DevelopmentNexon’s strong earnings and its 2012 purchases suggest it will continue buying in 2013

Giant announced M&A will be one of its avenues to develop its mobile offeringsSlide30

Conclusions and Looking ForwardSlide31

General Game Sector Tech M&A Outlook

2013

off to a slower start than 2011 & 2012:US tax law changes accelerated some M&A into 2012

Seasonality - larger deals usually land in H2

Less sophisticated buyers tempted by mass denial of how hard to build Frothy social games market got ahead of itselfSlide32

Potential Drivers of a Double Top

Platform rotation

: tablets, console cycle

Software/design innovation: tools, wild cardsLegal changes such as equity

crowdfunding:- Kickstarter already nearly $50M without equity- Pressurizes market, brings new buyersUS Android games market growth

- Google Play games services announced- Speaking of which …Slide33

Arrival in Force of

Top-Tier,

Sophisticated Buyers

Yahoo, Google, etc.

Tech-sophisticated, deep expertise at handRealistic about need to buyDisciplined, established M&A processesAble to factor in costs of hiring

and training Deep pockets and long-term outlookStrategically aware and drivenSlide34

Conclusion

An incredible

industry with Asia uniquely positionedAn incredible year of M&A, with more to

come

Tech, talent and growth drive demandStrategic players arrivingOpportunities aboundSlide35

Thank you

Jim Perkins

jimp@corumgroup.com