Newzoo Trend Report: DLC, Pre-owned, Digital Distribution - November 2011

console pc/mac console pc/mac casual social mobile mmo retail retail digital digital websites networks devices gamestopic report DLC , Pre-Owned & Digital Distribution Key facts behind game publishers drive towards digital © 2011 Newzoo www.newzoo.com games market research

DLC, Pre-Owned & Digital Distribution. Key facts behind game publishers drive towards digital. games market research Introducing the Newzoo Topic Reports At Newzoo, we are dedicated to providing the total picture when it comes to the games market. This means we specialize in analyses Newzoo offers detailed market data and insights on 13 Western, across platforms, business models and countries. Our Topic Reports Emerging and Asian countries. Countries are benchmarked on more than 200 topics. take a trend as starting point and give insight across topics and countries. Newzoo Data When it comes to a topic like Console DLC, we believe it is key to Explorer: include Pre-Owned, PC/Mac digital distribution and Players vs Online Acces to Payers in the discussion. This brief report aims to provide a our Full comprehensive overview of the key factors behind the current drive Datasets of game publishers towards digital distribution of content and full games. As digital business models are per definition international, we will look at the US and key EU territories . The data and insights included in this report are based on analysis of our own proprietary research amongst consumers, our database of publically accessible data and exclusive access to business and tracking data through our clients and partners. I hope you appreciate this report. Up next: MMO Games. We will include a limited number of company cases in coming editions. Let Newzoo Analysis Reports: me know if you are interested and willing to share data. 2011 Games Market Revenue Report 2011 MMO Games Market Report (nov 2011) Peter Warman, CEO Newzoo, peter@newzoo.com, +31 (0)20 6635816Topic Report | DLC, Pre-Owned & Digital Distribution | November 2011 © 2011 Newzoo | www.newzoo.com | 2

Key Trend Drivers. games market research Free-riders, DLC and Pre-owned drive publishers towards digital. Key trend Casual games paying audience is growing. Unlike the large music publishers 5 to 10 years ago, game publishers Many casual console titles never make it into retail but are have a positive attitude towards digital distribution of their products offered exclusively in the console download shop. The and services. There simply is too much upside. Retail will always increasing popularity of mobile as well as online casual and remain important but what shops sell is changing rapidly under social games, plus demand for these games on the TV screen is influence of a combination of drivers. expected to increase significantly. Console publishers will soon have to compete with TV App Stores and Cloud Gaming. Retail Free-riders outnumber payers. already sells download codes of XBLA titles. Of the 82M Americans who state they play console games, only Virtual currency has become mainstream. 36M, or 44% spends money doing so. Boxed games are often As the use of virtual currency gains broad acceptance, actively shared within families or groups of friends. The share of 52 thresholds are disappearing for those not comfortable yet with million American (F2P & P2P) MMO gamers spending money is 43%, direct online purchases. just slightly behind console gaming. For Mobile and Social gaming New business model on the horizon. this figure is lower: 36% and 25% but still… Games are quickly becoming services, enabling a variety of Pre-owned spending is huge. proven online business models to be integrated with console 85% of all American PC/Mac and console gamers in the US also buys games. games second-hand. 25% states to spend at least half of its budget Multi-player games have become services. on second-hand games. Publishers see no revenues from this. Digital As all games go more social, players have come to expect distribution does away with all of this. exciting multiplayer modes. But if players only play the first Console DLC has taken off. couple of weeks after launch, these possibilities become A few months ago, Activision announced that they sold over $180 obsolete very quickly, accelerating the loss of its audience. million worth of Map Packs for their Call of Duty franchise. Spending In this respect, online MMO games are showing the future. on downloaded PC/Mac games has already surpassed boxed sales These games are completely depending on a large number of end 2010 in the US. Publishers are growing in confidence because of simultanuous players and been through the evolution of games this success and stand stronger in their negotiations with retail. becoming a continuous service. Not possible without DLC.Topic Report | DLC, Pre-Owned & Digital Distribution | November 2011 © 2011 Newzoo | www.newzoo.com | 3

Key Take-Aways. games market research American DLC spend closes in on $1bn, or 12% of total. Share of total spend on Key take-aways console* games (US) Only 44% of all 82M Americans that play games on 2011 estimate consoles, ever spends money on console games. 54% of these 36M console spenders also buys DLC: 19.5M Americans. 75% is male, comparable to Europe. 12% $960M On average they spend $49 per year on DLC. Newzoo estimates that US consumers will spend $960M DLC on DLC (all consoles) in 2011. This is 12% of all money DLC spend 2011 estimate spent on console games including pre-owned and import. Americans spend 23% of their console game budget on 65% 23% pre-owned games. In Europe this is an average of 20%. 13% of spending PC/Mac or Console gamers buys boxed new boxed pre-owned Share of total games abroad most of the time or always. spend on PC/Mac EU consumers from seven countries will jointly spend games (US) 13% 2011 estimate $785M on console DLC, or 9% of total console spending. buys games abroad most The UK is clearly the largest European market when it of the time or always comes to DLC: £145M. (online/physical) In the US, money spent on PC or Mac game downloads (56%) has surpassed spending on boxed games. 44%56% boxed 56% In Europe, more than half of PC/Mac game spending is still digital boxed (58%).free-riders * All consoles, including handhelds: Xbox, Xbox360, PS2, PS3, Wii, N(3)DS, PSP.Topic Report | DLC, Pre-Owned & Digital Distribution | November 2011 © 2011 Newzoo | www.newzoo.com | 4

Key Facts. games market research Europe behind US but generates more than $785M DLC spend. Consoles US Europe* UK Germany France Spain Italy Netherlands Belgium 12% 9% 9% 6% 8% 12% 15% 7% 8% $960M $785M £145M €90M €120M €65M €80M €16M €13MDLC 23% 20% 23% 14% 27% 22% 21% 16% 17% Pre- Share of DLC and Pre-Owned in total spend on console Owned games per country / region (% and absolute) 2011 estimate PC/Mac Box Digi- tal Share of total spend on PC/Mac games (%) 2011 estimate * Figures for Europe are an aggregate of the 7 EU countries also featured in this report. 58% 42% 42% 35% 44% 40% 39% 47% 41%Topic Report | DLC, Pre-Owned & Digital Distribution | November 2011 © 2011 Newzoo | www.newzoo.com | 5

Key Demographics. games market research 83% of American DLC spenders are younger than 35. Age & Gender split for Americans and Europeans US Europe* spending more than 25% of 5% 4% their game budget on DLC / 51-65 51-65 Pre-owned games 12% 18% 15% 2011 estimate 36-50 10-20 36-50 30% Gender 10-20 Gender Console DLC 25% 26% 65% female 51% female 21-35 75% 21-35 74% Age male Age male 2% 6% 51-65 51-65 Box 17% 33% 27% 36-50 10-20 Gender 23% 10-20 Gender 36-50 Pre-owned 32% 32% 49% female 44% female 21-35 68% 21-35 68% * Figures for Europe are an Age male Age male aggregate of the 7 EU countries also featured in this report.Topic Report | DLC, Pre-Owned & Digital Distribution | November 2011 © 2011 Newzoo | www.newzoo.com | 6

The next step. games market research How can we help you? Your source for international business Our specialty is analysis across countries, any game platform, genre or business model, from a opportunities and partners consumer’s perspective. Here are a number of ways you could benefit: Free: Showcase your company, Free stuff jobs, games online to a global B2B audience. Find free infographics on our website. Be the first to know and subscribe to our newsletters. www.gamesindustry.com/register New: Overview of key publications with global and local market data as well as investments. Links: www.newzoo.com, www.newzoo.com/newsletter, www.gamesindustry.com/blog Interactive access to country or platform specific data Do you want to gain insight into a specific market, either geographic or in terms of games platform? Our online Data Explorer tool facilitates in-depth analysis across more than 200 topics as well as easy graph making and exporting. Custom pricing. Links: www.newzoo.com/products, www.newzoo.com/dataexplorer 2011 Games Market Revenue Report (€650 / $950) This report (July 2011), provides insight in revenues, the number of payer and players per platform per country for 2009 to 2012. Focus: US and EU. Link: www.newzoo.com/revenuereport 2011 MMO Games Market Report (€990 / $1,390) New: Our 2011 MMO Games Market Report (November 2011) provides detailed insight into the international MMO market, including F2P versus P2P and browser versus client MMO gaming. Focus: US, EU, Brazil, Mexico, Russia, China, Korea. Link: www.newzoo.com/mmoreport Monthly iOS Data We are developing several new periodic data services. The first is monthly revenue and download data on the top 300 free and paid games on iOS platforms. Link: www.iosdata.com Custom analysis & research €990/yr: Showcase your company, We perform custom research work for clients ranging from community surveys to financial jobs, games at events, in print and analysis for investors. We are preparing our research priorities for 2012. If you want to be via our mobile app. involved, we will be starting this discussion with our 2012 launch customers soon. Deadline November 16. www.gamesindustry.com/blackbook Contact Wybe Schutte, wybe@newzoo.com, +31 (0)20 6635816 | www.newzoo.comTopic Report | DLC, Pre-Owned & Digital Distribution | November 2011 © 2011 Newzoo | www.newzoo.com | 7

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Newzoo Trend Report: DLC, Pre-owned, Digital Distribution - November 2011

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