Russian and Ukrainian internet market: major verticals

UKRAINE AND RUSSIA COMBINED TO REACH 100 MILLION INTERNET USERS IN THE NEXT FEW YEARSGDP percapita, $(2011) UKRAINE 143.0M 13,262 30 # of users*, M Penetration, % people, 25 90% the world`s 6th 25 CAGR largest +22% economy 20 70% 58% CAGR RUSSIA 15 +34% 14 50% 80 # of users**, M Penetration, % 10 10 8 32% CAGR 70 90% 6 70 25% 30% +11% 5 15% 20% 60 70% CAGR 0 10% +14% 51 2008 2009 2010 2011 2014F 50 45 62% 53% 50% 39 45.8M 40 3,560  In September 2011, Russia 32 39% people overtook Germany as 34% 30% Europe’s largest Internet 30 28% market by number of users  65M users combined in Russia and Ukraine as of 20 10% 2008 2009 2010 2011 2014F end of 2011 163 1,9 GDP, $BSource: comScore, GFK Ukraine, IMF (2011)*older than 18 years old**older than 15 years old 2

E-COMMERCE IN RUSSIA TO MAKE EVEN BIGGER GAINS GDP (PPP) per capita in Russia and Europe E-commerce is gaining momentum, capturing increasing share in Russia`s retail turnover CAGR 2009-11,%  Russians and Total retail turnover, $B 621 7%  E-commerce in Disposable S32.7K Europeans have Russia is to almost the same E-commerce turnover, $B grow by 40-50% income shopping power 579 10.3 51% to reach $30- 40B in the next  16M people (33% few years S15.0K of Internet users) 545 7.6 made online  E-commerce in $13.1K Europe will $10.5K purchases over 4.5 a 6-month- grow just 12% period p.a. over the Average VS Average next 5 years Russian European 2009 2010 2011 Selected retail sectors most heavily disrupted by e-commerce sales Clothes, Consumer Cosmetics Children`s Air tickets footwear and electronics and toiletries toys accessories and home appliances 52M women +10.0% 15-64 spend 22M children $62.5 12% of under the age $56.8 income on 14 +81.8% Total, $B cosmetics (2X $40.0 vs. US&EU) 2010 $21.5 +9.2% +15.2% +23.6% 2011 $10.9 $11.9 $9.8 $11.3 $9.2 $7.4 +75.1% +31.7% +44.7% +41.8% +106.7% Online $641M 1,11B $2.6B $3.4B 47M 69M $322M $457M $537M 1,10B

ONLINE ADVERTISING IN RUSSIA AND UKRAINE: THEFASTEST GROWTH RATES IN THE WORLD RUSSIA UKRAINE Revenues from online advertising to Advertising budgets in Ukraine are yet double every other year to move online +50% p.a. +50% p.a $2.8B $123M $1.8B $83M $0.8B $1.4B $55M $35M 2010 2011 2012E 2013F 2010 2011 2012E 2013F Online ads per capita, $ Online ads per capita, $ $5,7 $9.5 $12.8 $19.2 $0.8 $1.2 $1.8 $2.7 Online ads in Russia exceeded ads in Although online ads have increased by the press for the first time in 2011 and 57% over the last year, they still represent finished the year with 56% growth the smallest market when compared to (highest growth rate in the industry) other media Online $55M Online Out- TV TV Press Out- $1.4B door $4.3B $440M $305M door $1.1B $125M Press $1.3B +18% +56% +6% +15% +33% +57% +10% +25% 4

ENTERPRISE SAAS MARKET CAN REACH $4-5B, IS SET TO GROW BY 100-150% P.A. FROM A MODEST BASE OF $100 MILLION Russia Ukraine Quantity 536K 67K LLCs and corporations Potential SaaS $5,000 $3,000 budget, $ Quantity 1.7M 381K SMBs Potential SaaS $1,000 $500 budget, $ Potential SaaS $4.4B $0.4B market size Existing enterprise $9.1B $0.1B software market  In Russia, the SAAS market (~100M in 2011) is likely to grow by seizing share from the existing $9B enterprise software market, especially in collaboration, business intelligence, CRM, ERP and security segments (to reach $4.5B in the next few years).  In Ukraine, the SaaS market is yet to emerge and is likely to grow organically thanks to new users (to reach $0.4- 0.5B in the next few years)Source: IDC, Russian and Ukrainian Statisctics Committees

OPPORTUNITY IN MOBILE APPLICATIONS SMARTPHONE USAGE IN RUSSIA SMARTPHONE USAGE IN UKRAINE 45M total # of mobile internet 5-9M total # of mobile internet 21-29M 4M users (3G USB modems & users (3G USB modems & SIMs, 2G) SIMs, 2G) 12M 1.5-3M 2G mobile internet users 15M 3G mobile internet users 1M (microSIMS) 21M 3G mobile internet users 50K (microSIMs) 6M 16.1M +116% 5.79M +28% 4.54M 1.10M +80% 5.3M +60% +200% 7.6M +292% 0.45M 20M 2.0M 4.69M +15% 5M 10.8M +95% 4.09M 5.6M 6 01`2011 01` 2012 01` 2014F 01`2011 01` 2012 01` 2014F Major drivers:  Growth of mobile-only Internet users;  25-40% of social network users check in via mobile devices (up to 10M daily unique mobile users in Russia and Ukraine(  Emerging interest to social/local mobile commerce  Middle-class and younger users demand more engaging mobile content  LTE network development in Russia in 2012 and beyond  New licenses for 3G mobile internet via carriers` microSIM expected in Ukraine in 2012-2013  Alternative monetization models preferred (affiliate programs etc.) - Apples App store and Googles Play accept payments almost exclusively through bank cards, which Russians and Ukrainians are reluctant to use for digital paymentsSource: MTS, Kyivstar, Life:), AIN.UA, Informa Telecoms & Media, eMarketer, Svyaznoy, Xyologic, i-Free

OPPORTUNITIES IN GAMES: RUSSIA Russian online gaming market, $B TOP-5 Russian original game developers* $1.40 +35-40% Revenue, Company Game type 2011 Social, Casual, Mail.ru Games $129M +21% p.a. $1.00 Browser $0.74 Game Insight Mobile $40M $0.68 MMOG and Innova Systems $36M browser Alawar Casual $30M ZeptoLabs Mobile $24M 2009 2010 2011 2012E Highlights:  Russian gaming industry is relatively young, most of its top players emerged in mobile/social era  Total gaming audience represented by 38M people, casual games being the most popular (played by 29M people), while console games attract some 14M players only.  Total industry revenue reached estimated $1B, despite the fact that 75% of PC or console games are being downloaded illegally.  Casual and mobile game developers are globally oriented businesses, while social games are fine-tuned for domestoc social network users  The market is still fragmented and awaits consolidation*other successful gaming companies include VC-backed Drimmi and PixonicSource: Discovery Research Group, NewZoo, Forbes.ru 7

OPPORTUNITIES IN GAMES: UKRAINE Major original game developers in Ukraine Company Game type Examples of games International publisher/ client GSC Game World Console & PC S.T.A.L.K.E.R, Cossaks: European WARS THQ Inc (USA) Action Forms / Tatem Console & PC/ iOS Carnivores, Vivisector Beeplex Group (USA) Games mobile 4A Games Console & PC Metro 2033, etc., Men of War THQ Inc , Best Way (USA) Quest games Sherlock Holmes, World of Frogwares Console & PC, mobile Frogwares Games (Ireland) Battle, etc. Dereza Production Studio Console & PC, casual Turnips Quest games, Sinbad IDDK Group (Russia) Overload, Family Game Night, World of Microsof, Disney, Zynga, Persha Studia Console & PC, casual tanks, World of warplanes etc. Casual, social, mobile Absolutist 100+ titles Self-publisher & PC Mistery of the Earl, Celtic Lore, online Zen-producers Social, casual, PC Self-publisher portal Funlinker Highlights:  Ukrainian gaming industry emerged in the late 1990s when Ukraine became a hotbed of outsourced labor for major Western games publishers  Most Ukrainian game developers are represented by “legacy” players specializing on expensive AAA console games; cumulative annual budget of top players is greater than $100M  The monetary value of internal market is unclear, with lion`s share of revenues going to Russian social networks` gaming applications  Casual and mobile game developers are globally oriented / most of them combine original products with outsourcing workSource: Bagnet org, team analysis 8

Russian and Ukrainian internet market: major verticals

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