An overview of the interactive entertainment industry, and current trends in the social and mobile game market.

1. Smart and Social
The Industry’s Crown Jewel

2. Introduction
• Senior Research Analyst at Robert W. Baird & Co.
• Baird is one of the largest private investment banks
• Prior experience as software developer, Internet
start-up and Wall Street background at JP Morgan
and Lazard
• Covered Internet and Interactive Entertainment for
10 years
• Based in San Francisco
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3. Overview
• Industry performance
• Market forecast
• Power of Exponential
• Influence of Facebook and shift to Mobile
• Conclusions
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4. Global Video Game Market
Source: RW Baird & Co. estimates
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5. Video Games Fastest Growth Media
Source: RW Baird & Co. estimates
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6. Games are the most important
form of digital media
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7. Platform Growth Rates
Source: RW Baird & Co. estimates
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8. E-commerce model to monetize games
Source: RW Baird & Co. estimates
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9. Beauty of Free-to-Play
Source: RW Baird & Co. estimates
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10. Forecast for Mobile and Social
Source: RW Baird & Co. estimates
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11. Significant Opportunity in Mobile Advertising
Source: RW Baird & Co. estimates
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12. Global Video Game Industry Growth
will be driven by Smart Devices
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13. Smart + Social are exponential
• Rapid increase in smart devices
• Social game mechanics now available on Mobile O/S
• Virtual goods sales expand monetization
• Global opportunities
• Competitive platform wars good for developers
– Android
– iOS
– Windows
– Samsung
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14. Smart + Social are exponential
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15. Filling the Stadium
1) 45 minutes
2) 3 hours
3) 12 hours
4) 2 days
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16. Wave of Smart Devices
500 M
400 M
300 M
200 M
100 M
M
2008 2009 2010 2011
Android iOS
Source: RW Baird & Co. estimates
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17. Game Usage on Smartphones
Source: RW Baird & Co. estimates
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18. Exponential – GREE mobile users (in M)
Source: Company Reports
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19. Tablet Sales Growing Faster than Phones
Source: RW Baird & Co. estimates
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20. Multi-device Lifestyle
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21. % of Internet Traffic from Smart Devices
Source: RW Baird & Co. estimates
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22. App Sales are Global
Source: Flurry
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23. % of Internet Traffic from Smart Devices
Source: RW Baird & Co. estimates
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24. Payments Growth on Facebook is Slowing
Facebook Revenues Zynga Growth Rate
Source: RW Baird & Co. estimates
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25. Focus Turning from Facebook to Mobile
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26. Smart Devices are a disruptive force
similar in scope to web browsers
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27. Platforms are key
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28. Conclusions
• Huge wave of smart devices
• Exponential growth dynamics
• Global opportunities
• More attractive growth profile vs. Facebook
• Efficient distribution – use the tools, play the
platforms
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29. Questions/Discussion
E-mail: csebastian@rwbaird.com
Twitter: @colin_sebastian
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