IDEA - Opportunities in the Games Industry - 15 November 2011

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Sean Kauppinen's presentation from AnimfxNZ 2011. Opportunities and market info. More available at www.iesherpa.com

Sean Kauppinen's presentation from AnimfxNZ 2011. Opportunities and market info. More available at www.iesherpa.com

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  • 1.  
  • 2. Sean Kauppinen
      • 16+ years experience in the games industry
        • Sony Online, Ubisoft, 3dfx, bleem!, Frogster, PlayFast
        • CEO or advisory board member to dozens of start-ups
        • Launched more than 500 titles to date
          • Strategy
          • Business development
          • Corporate communications
          • Product Launches
          • Funding
          • Marketing
        • Online games expertise (more than 20 MMO titles + virtual worlds and social network games)
        • Global view due to frequent international travel and contacts (Europe, Asia, North America – now South America)
        • Serves on advisory boards for GDC Europe, SXSW Screenburn and is The Special Advisor to The Academy of Interactive Arts & Sciences
  • 3. Opportunities in the Games Industry As of 15 November, 2011
  • 4. Social Games
    • The challenge is getting users
    • No Zynga virality anymore
    • Will cost $1-$1.50 Cost Per User
    • Monetize 2-2.5%
    • Facebook Ads – (bid low for liquidity and high for quality) – they deliver at any price!
  • 5. Browser Games
    • Flash is the dominant format
    • Unity will be the dominant format – mobile and cross-platform – (Flash for mobile is dead – now Flash is native app for mobile)
    • Monetization is getting harder, but less competition than true social
    • HTML5 is B.S. (standard hasn’t been finalized, no native rendering capability)
  • 6. MMOs
    • Free-to-play of “Freemium” is now the prevailing business model
    • Expensive to build, but you can make money
    • User base is growing as more people are exposed to this model
  • 7. MMOs
    • The market for online games is growing fast with ABI Research predicting that The overall online game market will grow to just over $29 billion by 2015 (14.8 percent CAGR).
    • IHS Screen Digest released a report outlining the MMO sector in North America and Europe:
    • Microtransaction revenue in North America and Europe rose to $1.13 billion in 2010, an increase of 24.2 percent.
    • Microtransaction revenue is predicted to reach $1.8 billion in 2015.
    • Combined MMOG/MOG revenue in North America and Europe is predicted to reach $3.13 billion in 2015
  • 8. MMOs
    • According to Newzoo, there are More than 86.5 Million MMO Gamers in the USA and Europe (excluding Scandinavia and Eastern Europe)
      • France – 9 Million
      • Germany – 13 Million
      • Spain – 6 Million
      • UK – 11 Million
      • USA – 47.5 Million
  • 9. Platforms
  • 10. Mobile Devices
    • iPhone – Free-to-play (freemium) is now the prevailing model
    • Going Free is no longer beneficial as it doesn’t increase sales
    • The Android market is severely fractured and full of “profiteers”
    • Angry Birds gamed the system, it’s no longer possible
  • 11. Smartphone Growth
    • China captured the No. 1 position in 2010
    • Brazil will have a CAGR of 43% over the next five years
    • India will have a CAGR of 39% over the next five years
    • Turkey will have a CAGR of 37% over the next five years
    • Nigeria will have a CAGR of 34% over the next five years
    • Latin America will be the fastest growing region at a compound annual growth rate of 48%
    • Africa and the Middle East will have a 39% CAGR
    • Pyramid also forecasts sales of 1.8 billion smartphones over the next five years
  • 12. Freemium
    • Freemium games on iOS and Android now account for over 65% of all revenue generated among the Top 100 grossing apps in the App Store
    • 25 – 34 year olds account for 49% of total dollars spent
    • 35 – 54 year olds account for 28% of total dollars spent
    • The average consumer spending money in these games is 32 years old
  • 13. Thanks Flurry!
  • 14. Smart TVs
    • Publishers are currently looking at their own virtual consoles
    • Android and the Chrome OS are making headway in this market
    • Developing on Unity could be a smart way to get on these systems
    • This is the way the industry is approaching emerging markets in Asia, Latin America and China – markets where consoles are scarce and there’s massive piracy
  • 15. International Markets
    • Russia
    • Brazil
    • Latin America
    • USA
    • Korea
    • China
    • Asia Pacific
  • 16. DFC Estimates Global Videogame Market to Reach $81 billion in 2016
  • 17.
    • The market is expected to grow from $66 billion in 2010 to $81 billion in 2016
    • In 2013, online delivery of games and online business models will surpass sales of physical retail software
    • The traditional worldwide interactive entertainment market reached a high of $58 billion in 2008
    • Over the next few years, there is expected to be a steady decline at retail, reaching a low of $43 billion in 2016
    • Total worldwide sales of online games are expected to increase from $19.3 billion in 2010 to $37.9 billion by 2016
  • 18. Russia – Mail.ru
    • 40+ MMO Games, with 35 million players
    • 70+ Social Network Games, with 45 million players
    • Legend: Legacy of the Dragons, developed in-house, is a bestselling online game in Russia and Europe.
    • AllodsOnline is the most ambitious Russian game development ever, with $15m budget.
    • Perfect World is the most popular client-based online game in Russia.
  • 19. Legend: Legacy of the Dragons
    • The internally developed “Legend: Legacy of the Dragons” is an award winning browser-based MMORPG with a fully animated asynchronous dynamic combat system, castle sieges and global PvP with up to 1,000 simultaneous players.
    • Free-to-Play business model
    • More than 8 million players globally, 5 million in Europe
    • ARPPU more than 120 €
    • 6+ month customer lifetime
  • 20. Brazil
    • 190 Million Brazilians
    • 189 Million Mobile phones
    • 17.5 Million – 3G Network mobile phones
    • 75 Million Internet users
    • 60 Million Computers
    • Brazil makes up 65% of South American Economy
    • 98,000 Internet Cafes
    • $165 million virtual goods market in 2010 – virtual good sales are predicted to double to $320 million in 2014
  • 21. Latin America
    • Mexico – $42.5 Million in 2010
    • Guatemala – $2.3 Million in 2010
    • Costa Rica – $1.2 Million in 2010
    • Panama – $1.7 Million in 2010
    • Dominican Republic – $3.1 Million in 2010
    • Venezuela – $11.9 Million in 2010
    • Colombia $44 Million in 2010
    • Argentina – $19.1 Million in 2010
    • Ecuador – $4.5 Million in 2010
    • Peru – $15.4 Million in 2010
    • Bolivia – $2.3 Million in 2010
    • Paraguay – $0.8 Million in 2010
    • Chile – $13.3 Million in 2010
    • Uruguay – $3.4 Million in 2010
  • 22.  
  • 23. Social Gaming in Japan was $1.43 Billion in 2010
    • Social gaming in Japan was $326 million in 2009
    • 37 percent of all social game users have spent money on a social game
    • 20 percent are still spending money
    • 30 percent of social game players own a smartphone
  • 24. U.S. Digital Distribution Market for Digital Content
    • 51% of Xbox 360 and PlayStation 3 console owners in the US downloaded digital content in 2011
    • 40% downloaded digital content in 2010
    • 39% downloaded digital content in 2009
    • DLC generated more than $875 million in sales in 2011
    • EEDAR estimated DLC to rise to $1 billion in 2012
    • 20 million consumers in North America bought DLC in the past 12 months
    • 14 million consumers bought DLC in 2010
    • 9 million consumers bought in 2009
    • EA also release numbers stating that their ORIGIN digital distribution platform now has 5 million users.
  • 25. Digital Distribution
  • 26. Korea
    • Approximately 61% of Korean smartphone users play games on their phone
    • In a market dominated by Samsung, LG and other local handset manufacturers, Apple has been able to carve market share with 2 million and counting units of the iPhone being sold in Korea
  • 27. China
    • There are 235 million registered social network game players in China
    • There are 150 million active social network game players in China
    • 64.8 percent of registered social network game players in China are active players
    • The number of registered players grew 33.7 percent over the past year
  • 28. China
    • China’s Online Games Industry has a 21.4% growth-rate in 2011
    • Niko Partners estimates market size in China as $5.8 billion for 2011.
    • The market was $4.8 billion last year.
    • 2009 was the first year to see games on social networking sites in China, generating $80 million in revenues by Niko’s estimate.
    • By 2010, the amount of revenue generated from these social networking games had reached $500 million.
  • 29. Asia Pacific
    • Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam are fast growing
    • By 2014, there will be more than  90 million gamers throughout these six Asian emerging markets
    • Southeast Asia Online Game Market is $405.7 million in 2010
    • Will grow to $833.7 million by 2014
  • 30. Thank You [email_address] www.iesherpa.com