2013 cartoon digital

Cartoon Digital 2013Trends And Opportunities In The Evolving Market For Video Games

Munich, June 2013

Laurent Michaud

Tel: +33 467 144 439

Head of Consumer Electronics& Digital Entertainment

[email protected]

Sommaire

1. Game Industry Organisation p 03

2. 8 Key Trends p 08

3. What Synergy between video game and cinema/animation? p 23

Game Industry Organisation

Value Chain : Hardware + Software+ Service

Design & Creation

Tools Providers

MiddlewareProviders

Developers Publishers Distributors Retailers

Home Consoles(Microsoft, Nintendo, Sony, and a lot of traditional publishers)

Mobile Phones & Smartphones(Apple, Samsung, HTC, Nokia, RIM…EA Mobile, Gameloft, SuperCell, King and many indies)

Computers and Online Games(Zynga, King, CD Projekt, Wargamming.net)

Smart TV(Onlive, Playcast, Visiware, Tectoy, SreenAngels…)

Handheld Consoles(Nintendo, Sony, and less and less traditonal publishers)

Tablets(Apple, Samsung, Microsoft…EA Mobile, Gameloft, SuperCell, King)

Value Chain : Hardware + Software + Service

Design & Creation

Tools Providers

MiddlewareProviders

Developers Publishers Distributors Retailers

Home Consoles(Microsoft, Nintendo, Sony)

Mobile Phones & Smartphones(Apple, Samsung, HTC, Nokia, RIM…)

Computers(PC, Mac)

Smart TV(Onlive, Playcast, Visiware, Tectoy, SreenAngels…)

Handheld Consoles(Nintendo, Sony)

Tablets(Apple, Samsung, Microsoft…)

8 Key Trends

Introduction: A Secular Growth

World Video Game Market, 2012-2016 (millions EUR)

2012 2013 2014 2015 2016

Mobile Games 5 165 6 352 7 661 9 092 10 643

Offline Computer Games 2 778 2 553 2 259 1 887 1 504

Online Computer Games 13 292 15 377 17 351 19 146 20 834

Home Console Games 15 063 12 251 12 472 15 365 18 664

Handheld Console Games 5 572 7 303 8 416 9 087 8 995

Total 41 870 43 836 48 159 54 577 60 640

Growth Rate 4.7% 9.9% 13.3% 11.1%

World Video Game Market, 2012-2016 (millions EUR)

Source : IDATE – December 2012

10

1/ More than half of World Video Game Revenue comes fr om digital sales

Source: IDATE, December 2012

Digital Revenue Breakdown (Million EUR)

8 Key Trends

Source IDATE, December 2012

World video game market: physical vs. digital game sales, 2012-2016(Million EUR)

2012 2013 2014 2015 2016

Total World Video Game Market 41 429,9 44 211,7 49 436,6 54 776,0 59 113,9

Digital Video Game Market 23 917,3 27 981,5 33 420,3 40 031,1 46 556,0

Digital Market Growth Rate 17,0% 19,4% 19,8% 16,3%

Digital Market / Total Market 57,7% 63,3% 67,6% 73,1% 78,8%

2012 2013 2014 2015 2016

Home Console 2 863,3 3 643,3 5 551,7 8 428,9 11 285,6

Handheld Console 336,9 662,3 1 241,7 2 059,4 2 817,0

Computer 15 078,0 16 955,3 19 013,5 21 129,1 23 373,0

Mobile 5 639,1 6 720,5 7 613,3 8 413,6 9 080,5

Total 23 917,3 27 981,5 33 420,3 40 031,1 46 556,0

Copyright © IDATE 2012

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8 Key Trends

Importance of digital revenue

Activision In FY2012, net revenues from digital online channel account for 34% of total revenues.

Electronic ArtsAccording to company forecasts, digital net revenue will definitely overtake physical net revenue by the end of 2014. 36% of Non-GAAP net revenue.

Ubisoft In FY2013, Online/digital sales leaped 86% to €148 million, which represented 11.7% of the Group’s total sales.

Nintendo On the 15 Nintendo-published titles available on 3DS, in 2012, 11% have come through full digital downloads of those games

Take Two Interactive

Revenue from digitally delivered content grew 148% year-over-year and accounted for 22% of Non-GAAP net revenue.

Digital Revenue of Traditional Game Publishers

Source : IDATE – 2013

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8 Key Trends

2/ The 2012-2016 period confirms the success of Free2Play busi ness modelwhich could cross the Rubicon and will tease consoles, handh eld consoles andconnected TVs.

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8 Key Trends

2/ The 2012-2016 period confirms the success of Free2Play bu siness modelwhich could cross the Rubicon and will tease consoles, handh eld consoles andconnected TVs.

3/ Intense competition in the segment of mobile games. Even if t he gameexperience is quite different, Smartphones are getting to c ompete withhandheld consoles… and home consoles.

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8 Key Trends

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# Apps

# Games

Source: IDATE d’après 148apps.biz, mai 2013

Evolution Appstore Games , 2008-2013

Platform # Apps # Games % of Games

Apple Store 880 090 148 614 17%

Android Market 696 527 95 935 14%

Source: IDATE d’après 148apps.biz, mai 2013

Games and Application within Stores

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8 Key Trends


3/ Intense competition in the segment of mobile games. Even i f the gameexperience is quite different, Smartphones are getting to c ompete withhandheld consoles… and home consoles.

4/ The tablets game features fit gamer expectations.

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8 Key Trends

Media Tablet Domestic Shipments (Million units)

2012 2013 2014 2015 2016

North America 37.7 45.1 48.5 50.1 50.9

USA 36.1 42.6 45.5 46.8 47.4

Rest of North America

1.6 2.5 3.0 3.3 3.5

Europe 27.3 39.1 51.0 60.7 67.7

France 3.8 5.4 6.2 6.6 6.8

Germany 6.2 8.0 9.1 9.7 10.0

Italy 3.4 4.8 5.6 6.0 6.1

Spain 2.5 3.7 4.3 4.6 4.8

United Kingdom 4.8 6.4 7.2 7.5 7.8

Rest of Europe 6.6 10.8 18.7 26.2 32.1

Asia/Pacific 40.7 57.9 74.2 86.5 93.1

Japan 8.4 12.7 15.9 17.2 17.8

Rest of Asia/Pacific

32.3 45.2 58.3 69.3 75.3

Latin America 4.4 6.8 10.1 14.1 17.7

Total 110.1 148.7 183.9 211.4 229.3

Source : IDATE, décembre 2012

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8 Key Trends




5/ Social Gaming Act 2. Better graphics, more virality, multip layer synchronizedsystem, Facebook Home

188 K

ey T

rend

s

Source: AppData – June of 2013

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8 Key Trends




5/ Social Gaming Act 2. Better graphics, more virality, mult iplayer synchronizedsystem, Facebook Home

6/ Gamers need ubiquitous games. The multiplicity of connecta ble mediaallows access to play through different screens, but the exp erience is too ofteninterrupted from one screen to another. Ubiquity is a contin uous experiencewhatever screen or device.

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8 Key Trends

7/ Games and Smart TV: an irreversible convergence, in the cont ext of cloud gamingspread. Beyond streamed game, this convergence will operat e through a new form ofinteractivity which has to be designed by audiovisual playe rs, TV channels andproducers.

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8 Key Trends

0

100

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2013 2014 2015 2016 2017

North America

Europe

Asia Pacifique

Latin Amrerica

Total

2013 2014 2015 2016 2017USA 46,5 60,8 75,2 89,6 108,6

France 7,8 11,6 15,6 19,7 25,0

Germany 12,4 16,8 20,9 24,8 30,0

Italy 7,1 10,3 13,3 16,3 20,0

Spain 4,7 6,6 8,7 11,1 14,4

United Kingdom 11,3 15,0 19,0 22,8 27,2

Japan 21,8 26,0 33,0 41,1 50,6

China 21,4 36,6 57,2 82,7 119,4

Connectable TV Set Installed Base (Million Units)

Source: IDATE - janvier 2013

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8 Key Trends

7/ Games and Smart TV: an irreversible convergence, in the co ntext of cloud gamingspread. Beyond streamed game, this convergence will operat e through a new form ofinteractivity which has to be designed by audiovisual playe rs, TV channels andproducers.

8/ Crowdfunding: a new way to finance games and especially inde pendent studios gamesand industry veterans games. Few games have been developed b y this way and wouldn'thave not been otherwise.• The New York-based Kickstarter hosted amazing industry veteran fund projects:

- 3.9 millions USD on Project Eternity d’Obsidian Entertainment, (Feargus Urquhart, Chris Parker, DarrenMonahan, Chris Avellone Et Chris Jones) from Black Isle Studios, Blizzard Entertainment, Electronic Artsand Neversoft.

- 3.3 millions USD on Double Fine Adventure from Tim Schafer (Day of Tentacle, la série Monkey Island)studio.

- 2.9 millions USD on Wasteland 2 from Brian Fargo inXile entertainment, founder of Interplay.- 2.2 millions USD on Planetary Annihilation from Uber Entertainment created by Steve Thompson, Bob

Berry, Jon Mavor.- 1.8 million USD on Shadowrun Returns from Harebrained Schemes studio , founded by Jordan

Weisman (Mech Warrior, Battletech, Mech Commander, Shadowrun)….

What Synergy between video game and cinema/animation?

What Synergy between video game and cinema/animatio n?

• Cinema/Animation studio are more and more committed in video game industry, but synergies are heterogeneous- They can sell to publisher the rights to operate their licenses- They can link a partnership with a publisher so as to make possible porting of

their best licenses- They can engage themselves in a publishing activity

• When Cinema/Animation studios are video game publisher as well, they operate like video game publishers- To spread out first party, second party or third party agreements.- To invest to cross platform titles- To deal with retail issues through their distribution subsidiary…

• Cross development and marketing raised through 4 stages- First stage: collaborations addressed the possibility for a developer to create a

game based on the cinema/animation studio licenseo The cinema/animation studio sell its licenses rights to a game publisher or a developero The Game company developed the game being conscience that the game should be marketed in the same time of the

film.o It often happened deadline was not respected and cross marketing was a failure.

What Synergy between video game and cinema/animatio n?

- Second stage: collaborations became effectiveo Conditions of license sale are more robust and lead game studio to give more attention to the game

development. o Cinema/animation studio to be deeper involved in the publishing stage.o The film and the game are commercialized simultaneously.

- Third stage: the era of co-creationo Film director are attracted by game creation capability, o Thanks to the interaction used in video games, film director have certainly find a new way to express

their art

- Fourth stage: time for upstream cooperation and cross iterated productiono Both production are prepared in the same timeo Assets are shared between game studios

• Prospective on their strategy- Media groups will integrate video game activities to develop cross media

cross platform strategies

Thank you for your attention

2013 cartoon digital

Entertainment & Humor