Clipperton Finance Whitepaper: The new era of social gaming, who can topple Zynga's tower?
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Clipperton Finance Whitepaper: The new era of social gaming, who can topple Zynga's tower?

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A research paper covering the trends and evolutions in the social gaming space....

A research paper covering the trends and evolutions in the social gaming space.

Many questions are in the investors’ minds as Zynga prepares for a mega IPO while the growth in usage has been slower since the change of rules imposed by Facebook.

This report highlights the main changes in the market since early 2010 and focuses on the European landscape where quality developers have emerged.
We will also take a look at the potential strategies to be a winner in the new context of social gaming.

European companies featured in the newsletter include: Wooga, King.com, Kobojo, Peak Games, MegaZebra, Pretty Simple, Social Point, Ubisoft, Weka Entertainment, SocialPoint

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  • 1. Social Gaming – Research Report June 2011The New Era of Social Games: Who Can Topple Zynga’s Tower? Thibaut Revel, Partner Alexis Barba, Associate trevel@clipperton.net abarba@clipperton.net
  • 2. HeadlinesHEADLINES Zynga has taken advantage of the new barriers to entry on Facebook to become the one and only gorilla of social gaming – closest challengers like EA, Playdom or Crowdstar have been unable to follow the tremendous pace of the leader, now on track for a mega IPO providing them even further financial firepower However social gaming still attracts an impressive flow of VC money and Zynga will face a new type of competition: – challengers coming from Europe are gaining strength on Facebook, following the steps of Berlin based wooga, now #2 in terms of global audience – other recent winners come from different activity segments such as mobile gaming (Digital Chocolate) It will take now more than capital and talent to be able to succeed under Zynga’s rule: winning strategies will focus on differentiation – on specific audience targets (e.g. highly customized local content, male hardcore games moving to Facebook), on fast porting to mobile / tablets, or new monetization models… Will “old-generation” gaming leaders manage to close the gap? There seems to be a strong case for even more M&A activity, and another one for real innovation in game play. 2008/2009 Games 2011 Games MindJolt Games Gardens of Time PetVille Empire & Allies 2Clipperton Finance Research Paper, 2011
  • 3. IntroductionINTRODUCTIONAt a time when more and more voices express their fear about a new Internet bubble due to thepuzzlingly high valuations reached by a few Internet darlings, it is worth noting that in certain spacesof the new Web, there exists a clear rationale for the appetite of investors: in less than 4 years, thenew industry of online social gaming has attracted hundreds of millions of users and flourishingcompanies, as well as plenty of capital. Born in 2007 with the first games by Zynga and Playfish,social gaming is no longer in infancy with more than one hundred monthly active users on Facebookalone, and 2010 revenues estimated north of $2bn.The recipe of this explosive but sustainable growth is now well known: leveraging the power of socialnetworks, social games have dramatically widened the reach of the video games industry, which hadfocused on the core target of young males for decades. There was already a growing audience of“casual gamers” with the Wii phenomenon and the emergence of online game portals such asOberon, and titles such as Bejeweled or Dinner Dash. However, Facebook has taken this trend to anew scale and through a new model: the core attributes of simplicity, self-expression and socialinteractions of hit games such as Farmville and Pet Society have attracted very different demographicgroups all over the world, with a special success with females between 15 and 40 years old. Theother key achievement lies in the monetization of social games: they are free to play and rely mostlyon virtual good purchases. This means that the most addicted users can potentially pay significantamounts whilst first time users can initially discover the game for free and at some point could in thefuture choose to make a small payment in order to have access to special features or to progressthrough the game more quickly.The social gaming model looks solid and is financially virtuous enough to have a long lasting impacton the whole $50bn games industry. However, the landscape has changed since the first game ofZynga in 2008. With new barriers to entry, more and more invested capital and fierce competition, itwill take a lot for new winners to challenge existing leaders Zynga, EA or Crowdstar. This paperintends to look at available statistics on Facebook games to pinpoint the key sea changes that havehappened behind the surface, and to focus on a couple of fundamental questions for the Europeanweb and gaming ecosystem: • Is there room for new companies to become leaders? • Will some of the winners come from Europe? • What are the new rules of the game and how to differentiate in this highly competitive environment? 3Clipperton Finance Research Paper, 2011
  • 4. The New Era of Social Gaming THE NEW ERA OF SOCIAL GAMING From 0$ to Several Billions in 3 years Facebook counts more than 500m active users, and website Inside Facebook estimates up to 675m in terms of monthly audience as of May 2011, with now below 25% of users located in the United States. In key Facebook countries, it is estimated that more than half of active Facebook users play social games, which creates a pool of around 250/300m monthly social gamers on Facebook alone. FIGURE 1 Penetration rate of social gaming in major Facebook markets (July 2010) 61% 60% 61% 50% USA UK Germany FranceSource: HiMedia It is far less straightforward to assess the revenue of the social gaming industry, as most companies are private. A bottom up approach based purely on the micro-transaction revenues from virtual goods purchases1 gives a first order of magnitude: on the average game, 2% to 5% of monthly users will be paying users, the average basket per purchase is in the range of $5 to $10, which leads to a monthly ARPU2 of around $0.25 to $0.5. Of course, there is no “average game” and there are strong variances in terms of game monetization, which can even be seen at game segment level as shown in figure 2. Nevertheless, taking into account 250/300m social gamers in developed countries3, some of whom play multiple games every month, and a $0.5 monthly ARPU, indicates a range of $1.5bn to $3bn for the industry gross revenues on Facebook at the current run rate. This is in line with Zynga’s numbers revealed by recent press articles stating a target of $1.5/1.8bn revenues in 20114 – it can be expected that Zynga takes around (or at least) half of the total revenues of social games on Facebook. 1 It is estimated that advertising and other non microtransaction revenue account for about 10% of overall revenues 2 ARPU : Average Revenue Per User 3 Monetization variance is strong between countries like US / UK / France and developing countries with large Facebook audience 4 New York Post article of March 2011 mentioning $1.8bn revenue and over 30% profit target for Zynga in 2011. WSJ cites $850m for 2010 revenues. 4 Clipperton Finance Research Paper, 2011
  • 5. The New Era of Social Gaming 5 FIGURE 2 Typical social gaming metrics Metric Typical Value ARPU $5 to $15 or "Average Basket" Daily Conversion rate (paying users) 0.1% to 0.5% Monthly Conversion rate 2% to 10% DAU/MAU 20% to 40% over or "Stickiness rate" the game life cycle Top games: $1-2 => Resulting Monthly ARPUs Poker games: $2-3 Average game: $0.2-0.5Source: Inside Virtual Goods, Interviews This is also in line with most top down market figures from gaming industry analysts. Research driven investment bank Think Equity estimates the social gaming market to be worth $3.7bn in 2010 and $6.1bn in 2011, which is higher than our “back of the envelope” assessment as it includes large non Facebook sources revenues and notably $1.4bn in 2010 coming from Japan and China, where other social networks are dominant. These figures prove that a new multi billion dollars industry has emerged in a very short time frame. However, the question of the growth to come deserves a closer look. It is clear that the dynamics have changed. Looking at consolidated usage statistics of Facebook games in figure 3, it is obvious that since 2010, the viral growth has slowed down. In the second half of 2008 and in 2009, social gaming on Facebook experienced an initial phase of explosive growth driven by the intrinsic virality of the game experience: inviting friends to play and getting their help to reach the next level are the fundamental drivers used by developers to create a strong viral marketing across the social graph. This created an opportunity for the first entrants to enjoy an unprecedented growth at minimal acquisition costs. The Rules of the Game Have Changed At the end of 2009, Facebook introduced a set of changes to hinder the virality and protect the platform users from the spamming effects: October 2009: developers no longer have the possibility to directly post game invitations on the News Feed. Practically, the developer-to-user communication moves from the News Feed home page to the Inbox or direct emailing. 5 Metrics definition : MAU=Monthly Active Users / DAU=Daily Active Users 5 Clipperton Finance Research Paper, 2011
  • 6. The New Era of Social Gaming March 2010: the end of application-to-user and user-to-user notifications on Facebook. The platform encourages communications between developers outside Facebook by direct emailing. October 2010: Facebook groups the information and the posts regarding the games applications in a separate user interface. Non gamers won’t receive games invitations or any related information anymore. These changes affect the ability of developers to recruit new gamers as easily as in the past. The developers now rely a lot on their user base for cross promotion and virality, and are more likely to invest marketing money to recruit new users. This has spurred a strong inflation in cost of customer acquisition. Marketing services providers on Facebook, such as RockYou, charge rising unit costs per download6 to deliver gamers installs; these costs are highly dependent of the targeted demographics (country, gender, age) and are above $1 in most Western countries. However, the goal of Facebook is not to hinder the growth of the social games. Just look at the other big move by Facebook in its relation with game developers: the introduction of Facebook Credits, its own virtual goods payment offering, based on the principle of one single virtual currency enabling social gamers to make purchase on any game. This scheme has a strong traction with leading developers, and shows the commitment of Facebook to nurture the social gaming ecosystem. It is also one of the major sources of revenue for the platform as they earn 30% on all Facebook Credit transactions, thus replicating the business model of Apple’s iStore. 7 FIGURE 3 MAU evolution of the Top 60 2011 Developers (MAU stands for Million Active Users) 800 700 600 500 All Players 400 All Players 300 without Zynga 200 Zynga 100 0Source: AppData, Clipperton Finance Analysis 6 Developers tend to pay CPA (Cost per Action) or CPI (Cost per Install) to traffic providers to control their customer acquisition budget on a performance mode 7 There is skew in these consolidated statistics as they take into account only the top 2011 developers as seen in Appdata – however, most of the gaming usage in previous years was also driven by the current leaders 6 Clipperton Finance Research Paper, 2011
  • 7. The New Era of Social Gaming This change in pace of growth for Facebook games has also come with a decline in the user engagement. This critical metric for social games, which measures both the stickiness of a game and the frequency of play, computed as the ratio of daily users over monthly users, has gone down from 25-28% on average for top games in fall 2009 to around 20% today. The impact of the “new regulation” imposed by Facebook at the end of 2009 is very clear with a steep decline in November – December 2009. FIGURE 4 User Engagement Evolution for Facebook games (for Top 150 games as of April 2011) 35% 30% 25% 20% 15% 10%Source: Clipperton Finance Analysis Does the Winner Take it All? The other major take away of the evolution of the gaming usage (as seen in figure 3) is the weight of Zynga. The arch-leader has taken more than the lion’s share: Zynga accounts for around 40% of the monthly users of Facebook games (based on the Top 60 developers), and even more in terms of daily users. Zynga has taken share to its most serious challengers of 2009: Electronics Arts / Playfish, Playdom (acquired by Disney in July 2010) and Crowdstar. Each of these 3 American competitors – it is fair to consider that Playfish is headquartered in the US since its acquisition by EA - now account for less than 10% of the cumulative MAU as of April 20118, implying a scale factor of at least 7x between Zynga and its US rivals. Regarding Playfish and Playdom, the post acquisition period and the integration into large corporate groups has certainly been a source of loss of focus. Electronic Arts has clearly changed the editorial strategy of Playfish, a company who had experienced success with games tailored for a female audience, while EA has pushed to social gamers its sports franchises such as FIFA and NFL American Football, which appeals to a men only audience. As such, EA has now “two legs” in terms of social gaming audience, but this disruptive strategy certainly had a cost in terms of users’ metrics. 8 Based on the Top 60 developers as of April 2011 7 Clipperton Finance Research Paper, 2011
  • 8. The New Era of Social Gaming FIGURE 5 Share of Cumulative MAU of the Top 60 Games Developers (Top 60 as of April 2011) 60% 50% 40% 40% 30% Acquisition Zynga of Playfish Acquisition Playdom 20% by Disney EA 10% 6% 3% 0%Source: AppData, Clipperton Finance Analysis Social gaming is undoubtedly a blockbuster driven industry. And Zynga has been the only contender showing the ability to launch massively successful games period after period. Responsible for 6 of the top 10 games on Facebook and 4 of the 5 top positions, Zynga has already launched 10 “blockbuster games” – if we define blockbuster as a game that one day exceeds 1m DAU. th FIGURE 6 Top 10 Facebook games & developers with more than one “blockbuster” – June 30 2011 Game ranking by MAU # of blockbusters (>1m DAU) June 30th 2011 June 30th 2011 Zynga 10 # Game MAU (#m) Developer 1. CityVille 87,8 Zynga CrowdStar 5 2. Empire&Allies 44,2 Zynga 3. Farmville 38,5 Zynga Playdom 5 4. TexasHoldEm Poker 35,5 Zynga 5. Monster Galaxy 19,2 Gaia Online Electronic Arts 4 6. Gardens of Time 14,2 Playdom 7. Frontierville 13,9 Zynga wooga 3 8. Café World 11,8 Zynga 9. Bejeweled Blitz 10,4 Popcap Games Popcap Games 2 10. Diamond Dash 9,9 wooga Digital Chocolate 2Source: AppData, Clipperton Finance Analysis Zynga seems to be building a solid competitive advantage as its huge lead in terms of users installed base, coupled with strong marketing budget firepower, enables them to cross promote aggressively 8 Clipperton Finance Research Paper, 2011
  • 9. The New Era of Social Gaming their new releases on their existing and long lasting blockbuster traffic. They target both very fast ramp up at launch, as CityVille for instance reached 10m DAU in less than two weeks (!), and long game lifetime as titles such as Farmville or Frontierville have been in the top 5 for two years and one year respectively. Nevertheless, Zynga faces new competition, notably from Europe (focus of Section 2 of this report), and from challengers coming from different horizons than the Facebook games, such as Digital Chocolate and Booyah (originally focused on mobile games), as well as Gaia Interactive (originally focused on its own social gaming community Gaia Online). Investors apparently think that it is still possible to get a piece of the pie despite Zynga being such an impressive leader; more than ten major Venture Capital investments have been made in emerging social gaming companies since the beginning of 2011, totaling more than $150m, with a large number of these deals financing European companies.FIGURE 7 Selected Financing in the Social Gaming Space since January 2011 Date Name Country Description Investor Firms Amount Raised Develops social games for social Jun-11 Social Point Spain Nauta Capital $3,4m networks Designs and develops online social Highland Capital Partners, Tenaya Capital, May-11 wooga Germany games to play with friends and Balderton Capital, HV Holtzbrinck $24m family Ventures Publishes social games developed May-11 Pixonic Russia Ventech, Kite Ventures, TA Ventures $5m by studios Develops and publishes May-11 Peak Games Turkey Earlybird Venture Capital $5m entertaining games Develops addictive games (RPG) for May-11 Kabam USA Google Ventures, Pinnacle Ventures $85m social networks Develops and Publishes Games May-11 Pretty Simple SA France Idinvest Partners SA $2,8m (RPG) on social networks Devleops Games (RPG & Casual) for Apr-11 Kobojo France Endeavour Vision, IDinvest Partners $7,5m social networks Operates as a game portal Apr-11 MindJolt USA developing casual games for social Austin Ventures, L.P. n.a networks Develops and publishes fun games Doughty Hanson Technology Ventures, Mar-11 Megazebra Germany $2-3m (Casual) for social networks Kizoo Technology Ventures, Markus Stolz. Develops and publishes Feb-11 Peak Games Turkey Hummingbird Ventures $1,5m entertaining games Develops Games (Casual) for PC and Intel Capital, Sutter Hill Ventures, Feb-11 Digital Chocolate USA $12m mobiles Bridgescale Partners. 9 Clipperton Finance Research Paper, 2011
  • 10. The European landscape THE EUROPEAN LANDSCAPE Increasing weight of European players in global social games market If we take out Playfish which can be considered US-based since its sale to Electronic Arts in 2009, there used to be in Europe a scarcity of noticeable social gaming companies. This has changed in the last 2 years, with more and more hits launched by European developers. European players have seen their market share within the Top 60 game developers grow from 4% in 2009 to7% in 2010 and accelerating even faster in early 2011 as it reached 12% during the Jan- April 2011 period.FIGURE 8 Facebook Gaming Market Share by Region – Based on MAU of Top 60 Developers 85% 79% US 87% Europe* Asia 4% 7% 12% 10% 8% 8% FY 2009 FY 2010 Jan-Apr 2011 * Excluding Playfish considered US-Based The growing presence of European players has been driven first by the emergence of a global leader (wooga) and then by the emergence of several interesting European challengers. wooga, the clear European audience leader Founded in Berlin in 2009, wooga (world of gaming) launched its first game (Brain Buddies) in late June 2009 and its rapid growth enabled the company to be the first European player to reach 5m MAU, in September 2009. The company completed a €5m round of financing led by Balderton and Holtzbrinck Ventures in November 2009, and subsequently released several other successful games that entered the Top 30 Facebook games: Bubble Island, Monster World, and more recently Diamond Dash. 10 Clipperton Finance Research Paper, 2011
  • 11. The European landscape FIGURE 9 wooga – Evolution of MAU on Facebook (m#) 35 MAU (m#) 30m 30 25 Launch of Diamond Dash 20 Launch of Monster World 15 Launch of 10 Launch of Bubble Island Brain Buddies 5 0Source: AppData, Clipperton Finance Analysis The current key figures for wooga are impressive: # 2/3 Facebook Game developer in terms of MAU - very close race with Electronic Arts 30m MAU as of early June, strong audience in France & Germany +220% in audience (MAU) over the last 12 months 3 games in the Top 20 Facebook games (Diamond Dash, Bubble Island and Monster World) 85 people as of May 2011 Revenues have not been disclosed – it’s very likely that Zynga’s US challengers such as Playdom and Crowdstar still outreach wooga revenue-wise, given their skills in monetization, their lower reliance on pure casual games and their strong presence outside Facebook (MySpace, mobile, Japanese networks…). It’s worth noting that wooga’s spike in audience and growth drivers have come mostly from the 2 “casual games” titles, Bubble Island and Diamond Dash9, which is a clear difference with the US leaders. It may also have an impact on the monetization metrics, as successful role playing games (RPG) tend to attract more paying users than casual games. A new round of financing of $24m has just been completed in May 2011, with Highland Capital Partners leading the transaction along with Tenaya Capital and existing investors Balderton Capital and Holtzbrinck Ventures. This fresh capital will help the company strengthen its leading position in Europe and continue to grow at a global scale. The funding will be mainly used to “hire the most talented artists, game designers and engineers” and “grow the team up to 150 people by the end of 2011”. 9 We define casual games among social games as games where the users play short session based on skills (e.g. “destroying bubbles”) by opposition to management and role playing games, where the player gets into the skin of a virtual character for a quest or to become the best farmer for instance 11 Clipperton Finance Research Paper, 2011
  • 12. The European landscape Ten other European developers above 2.5m MAU Beyond its strong audience performance, wooga showed that becoming a big European player in this very competitive and US-centric market was achievable. Following their steps, a breed of new companies, from all over Europe, have emerged. Today ten other European game developers reach more than 2.5m MAU. th FIGURE 10 Top 10 European Challengers – Based on Facebook MAU (June 9 2011) MAU DAU DAU/ MAU (m#) Developer Inception Country (m#) (k#) MAU Current Games @ 250k+ DAU June 9, 2011 Avg. May 2011 Diamond Dash, Bubble Island, wooga 2009 Germany 30,5 28,0 4.665 17% Monster World & Happy Hospital Social Point 2008 Spain 14,3 17,0 913 5% King.com 2003 UK 13,1 9,5 1.466 15% Bubble Saga & King.com Peak Games 2010 Turkey 5,2* 4,9 674 14% Okey Game Insight 2010 Russia 5,2 6,0 827 14% Mystery Mannor & Resort World Megazebra 2008 Germany 4,9 4,6 589 13% Mahjong Trails Kobojo 2009 France 4 3,3 676 21% PyramidVille & Goobox Playtika 2010 Israel 3,4 2,8 618 22% Slotomania GameDuell 2003 Germany 3,1 3,1 429 14% Nordeus LLC 2010 Serbia 2,9 2,6 600 23% Top eleven Ubisoft 1986 France 2,7 3,0 434 14% CSI:Crime CITYSource: AppData, Clipperton Finance Analysis *8.8m MAU including the publishing of Komşu Çiftlik (The Farm by The Broth) Social Point and King.com are today the strongest challengers to wooga in terms of monthly audience. Social Point has even been the European audience leader from August 2010 to late February 2011, before wooga’s Diamond Dash explosive growth. Based in Barcelona and founded in 2008, Social Point has created numerous basic Facebook casual games adapted from well known real life games such as Pool Master, Mahjong Zen or Trial Madness. A bunch of them are still attracting a significant audience, but this is the only company in the Top 10 of Europe along with GameDuell not to have a single game reaching more than 250k DAU as of early June 2011. Social Point posts today by far the lowest retention factor (DAU/MAU ~5%) among the European leaders but its recent move towards management games10 may help the company increase this figure (current DAU/MAU on Social Empires is around 13%). King.com is currently the third European player in terms of MAU with 13m MAU. A recognized leader in online casual and skill games with community features around its King.com portal, the UK based company has started to try to capitalize on the Facebook wave since 2009. Its audience has recently surged: the MAU were below 3m until April, and they surged in two months up to 13m MAU, notably thanks to the launch of casual game Bubble Saga in mid-April 2011 which reached 6m MAU in less than 2 months. All King.com’s games are casual. 10 Management games are games where the players is in charge of expanding either a universe (a farm, a city, a kingdom, a sports team…) with a strong identification and often a long time spent per session, in contrast with casual games. Role playing games (RPG, very common in console games and browser games) can be seen as a subset or a close segment, where the player is identified to a virtual character. 12 Clipperton Finance Research Paper, 2011
  • 13. The European landscape Behind these two challengers, Peak Games (Turkey, founded 2010) should be distinguished from the other players as it reaches close to 9m MAU, taking into account the audience of both its own social games such as Okey (Turkish card game) and the published Turkish version of Barn Buddy (Komşu Çiftlik), a Farmville me-too originally developed by US developer The Broth. Peak capitalizes on the strong Facebook audience in Turkey which has become the 4th largest Facebook country with almost 30m users. Then a limited number of players have between 2.5m and 5+m of MAU: GameInsight (Russia, 2010), MegaZebra (Germany, 2008), Kobojo 11 (France, 2009), Playtika 12 (Israel, 2010), GameDuell (Germany, 2003), Nordeus (Serbia, 2010) and Ubisoft (France, 1986). Among them Kobojo enjoys a strong momentum, driven by the success of management game PyramidVille, recently proposed to non-French audience (Spanish and Italian versions). Still looking at audience performance, and beyond the sheer number of players per month (MAU), it is also important to look at retention (game stickiness) i.e. DAU/MAU. Most European leaders have a DAU/MAU around 15%. A few players stand out by superior retention metrics such as Nordeus (23%), Playtika (22%) and Kobojo (20%) in contrast with Social Point’s very low retention level of around 5%. Most European leaders still relying heavily on a limited number of games Despite the different number of games launched, European leaders (excl. Social Point and GameDuell) still rely heavily on their top 3 games which account for more than 80% of their total aggregated monthly audience. This is particularly noticeable for MegaZebra and Ubisoft who both have launched 19 games. For certain players such as King.com, Peak Games, Kobojo, Playtika, Nordeus and Ubisoft, the dependency is particularly strong on one single game which represents more than half of their total audience. st FIGURE 11 Weight of Top games in Aggregated MAU for European leaders – As of June 1 2011 Total # of Games 6 18 5 6 8 19 6 3 18 1 19 100% Game 1 Game 2 50% Game 3 Others 0%Source: AppData, Clipperton Finance Analysis 11 Disclaimer: Clipperton Finance acted as the sole financial advisor of Kobojo in early 2011 for their €5.3m A round 12 Playtika was partially acquired in May 2011 by Harrahs, a unit of Caesars Entertainment Corp. (US casino chain), for a rumored $80m valuation. 13 Clipperton Finance Research Paper, 2011
  • 14. The European landscape Over the past 12 months European leaders developed and launched games on Facebook at different paces: from only one game launched by Kobojo to 15 by GameDuell (more than one every month). King.com and Game Insight have been the top performers, launching 3 successful games (> 250k DAU) over this period of time, while Kobojo showed great efficiency with a success on their sole launch (PyramidVille), their first attempt in the management game segment. Considering the Top 8 companies (excl. GameDuell, Nordeus and Ubisoft), 38 games have been launched over the last 12 months and 11 of them reached more than 250k DAU, which leads to an average ratio of one success out of every three launches13. FIGURE 12 Launching Pace and Success Ratio over the last 12 months – European Leaders Since June 2010 MAU Ranking #Games # of Hits (as of June 9th) launched @250k+ DAU Success Ratio Wooga 3 2 67% Social Point 9 0 0% King.com 4 3 75% Peak Games 8 3 38% Game Insight 5 0 0% Megazebra Gmbh 5 1 20% Kobojo 1 1 100% Playtika 3 1 33% GameDuell 15 0 0% Nordeus LLC 0 0 n.a Ubisoft 10 1 10%Source: AppData, Clipperton Finance Analysis European leaders’ audience still dependent on casual games While the global social gaming market is dominated by management and role playing games (around 75% of the cumulated audience), European players are still mainly positioned on casual/skill games: except from GameInsight and Ubisoft who are RPG-oriented developers and Nordeus whose sole game is a sports RPG, all other top European players have less than 50% of their audience playing on RPG games, and most of them are still relying heavily on casual games. 13 The success threshold at 250k DAU is not an optimal metric but one can consider that below 250k DAU, a game is below the radar on Facebook, even if it can still monetize strongly on a limited number of users. 14 Clipperton Finance Research Paper, 2011
  • 15. The European landscape FIGURE 13 Top 10 European Social Games Developers – MAU Split by Type of Game 100% RPG 50% Casual/Skill 0%Source: AppData, Clipperton Finance Analysis * Not considering published games European leaders will certainly seek to change or rebalance their game positioning in order to leverage their large user base on more RPG games on which the retention and the monetization can reach higher levels. Over the past months, clear moves towards RPG games were initiated by developers who built their user base on casual/skill games. – Kobojo with PyramidVille successfully launched in late January and currently at 2m+ MAU with a DAU/MAU around 20% – Social Point with Social Empires launched in January 2011 and currently at around 1.4m MAU – Peak Games launched RPG Komşu Şehir in February 2011, reaching 900k MAU in a few days but then falling rapidly. Though, RPG games have already shown their potential on Peak Games’ audience as the publishing of Komşu Çiftlik (Turkish version of Barn Buddy developed by The Broth) is a great success in Turkey: launched in late December 2010 the game reaches today more than 3m MAU, while it has lost most of its English speaking audience due to the domination of Farmville in this game segment. The development/publishing of more RPG games from the players who have the biggest cross- promotion capacity is likely to change the overall European gameplay balance. It will also require more creative and development talent than the basic casual games. Moreover, this trend may be accelerated by newcomers successfully entering the social gaming industry through RPG games, such as the French company Pretty Simple who were Founded in 2010 by two former employees of zSlide, where they had collaborated on the launch of hidden object title Treasure Madness (hit game - 900k+DAU in early 2010). Pretty Simple launched in late November 2010 its first game (My Shops) which has been steadily growing since then to reach 330k DAU in early June. 15 Clipperton Finance Research Paper, 2011
  • 16. The European landscapeMonetization is Different from AudienceThe three pillars of social game developers are Virality, Retention (both dedicated to audienceperformance – reach and loyalty) and Monetization. The combination of audience and monetizationperformances leads to revenue. Existing players have different strategies regarding their focus onaudience (reach and/or retention) and on monetization. The previous sections have mainly focusedon top European developers in terms of audience but it should be clear that other players tend tofavor games for which the audience retention and the monetization per player can reach higherlevels, thus not requiring high audience to generate significant revenue. A good example is publiclytraded Weka Entertainment (France) who, despite a relative low reach on Facebook (avg 2010 MAU:2.4m), manages to get a good retention factor (avg 2010 DAU/MAU: 22%) and apparently strongmonetization performance as the company posted a €9.1m revenue in 2010. The company seems tobe making the most of its application Is Cool, a card collection game, where users exchange cardswith friends and optionally pay to complete their cards families. Quite a simple game play but amoney spinning recipe: assuming that 80% of their 2010 revenues stem from Is Cool on Facebook,this would imply a monthly net ARPU of about €0.5 for this game (or $0.7), an impressive metric for acasual game. 16Clipperton Finance Research Paper, 2011
  • 17. What Does it Take to Win Today? WHAT DOES IT TAKE TO WIN TODAY? In a space characterized by an arch leader, a benign but sometimes unpredictable regulator (Facebook) and a clear advantage for established players with a solid base of users, one could think that new entrants face an uphill battle. This is partly true but social gaming remains an entertainment space driven by editorial talent and creativity, and a fast moving arena where innovation is well rewarded. Today’s Fast Growth Developers Ups and downs in the Facebook league tables are a clear sign that top seats are still up for grabs. New entrants who had no presence on Facebook in early 2010 have been able to attract up to 10m MAU. FIGURE 14 Winners & Losers – MAU evolution on Facebook (Apr 2010 to Apr 2011) Developer Apr-10 Apr-11 YoY MAU YoY % Developer Apr-10 Apr-11 YoY MAU YoY % Top 10 Winners* (%) Top 10 Losers (%) Booyah 0.02 2.00 1.97 8044% Meteor Games 7.47 1.60 -5.87 -79% Icebreak Games 0.04 3.16 3.12 7413% Slashkey 9.50 2.16 -7.34 -77% Ubisoft 0.05 3.21 3.16 6218% LOLapps 38.22 12.87 -25.35 -66% Gaia Online 0.26 9.71 9.45 3678% Country Life 9.40 3.28 -6.12 -65% Playfirst Inc 0.12 2.31 2.19 1783% Playdom 40.56 18.65 -21.91 -54% Casual Collective 0.25 4.28 4.03 1591% Elex 4.36 2.65 -1.71 -39% Social Point Inc 2.10 17.81 15.71 748% Crowdstar 51.46 31.58 -19.88 -39% Zipzapplay 0.33 2.44 2.11 639% Mindjolt 17.72 10.96 -6.76 -38% 50 Cubes 0.78 5.61 4.83 618% Electronic Arts 55.99 35.98 -20.01 -36% Digital Chocolate Inc 2.00 13.20 11.20 562% Gamehouse 4.39 3.31 -1.08 -25% *: Excl. OUAT Entertainment & DNA Games: not relevant Top 10 Winners (m.) Top 10 Losers (m) Zynga 248.00 265.21 17.21 7% LOLapps 38.22 12.87 -25.35 -66% Social Point Inc 2.10 17.81 15.71 748% Playdom 40.56 18.65 -21.91 -54% Wooga 8.72 21.22 12.50 143% Electronic Arts 55.99 35.98 -20.01 -36% Digital Chocolate Inc 2.00 13.20 11.20 562% Crowdstar 51.46 31.58 -19.88 -39% Gaia Online 0.26 9.71 9.45 3678% Slashkey 9.50 2.16 -7.34 -77% Cie Games 0.00 8.29 8.29 n.a Mindjolt 17.72 10.96 -6.76 -38% Telaxo 0.00 7.40 7.40 n.a Country Life 9.40 3.28 -6.12 -65% Minimax 0.00 7.24 7.24 n.a Meteor Games 7.47 1.60 -5.87 -79% Popcap Games 10.47 17.15 6.68 64% Elex 4.36 2.65 -1.71 -39% GSN 2.32 8.88 6.56 283% 6 Waves 18.32 17.13 -1.20 -7%Source: AppData, Clipperton Finance Analysis Let’s take a look at two clear winners of the last twelve months: Digital Chocolate, founded by EA veteran Trip Hawkins, became famous for its hit mobile games on the iStore before making a successful move towards Facebook games in 2010 with titles such as Millionaire City and MMA Pro Fighter. Following the success of Millionaire City, the company launched a slate of social games titles based on a similar game play and game engine, such as Hollywood City and Vegas City, with a mitigated success. The most interesting aspect of Digital Chocolate’s strategy is their ability and consistency in publishing their games both on Facebook and on mobile platforms. Millionaire City was on the iStore less than three months after the launch on Facebook, and the other way round, Zombie Lane enjoys now a tremendous audience growth on Facebook, capitalizing on the success of the zombie theme developed by Digital Chocolate on iPhone games. The targeted audience is now clearly a young 17 Clipperton Finance Research Paper, 2011
  • 18. What Does it Take to Win Today? male audience, with the Zombie game and the most recent release, a war game named Army Attack. Cie Games has only one application on Facebook, Car Town, which attracts 8m monthly actives, and has been the first developer to adapt the popular men’s car theme to social gaming. The surprising bit of the story is that Cie Games is neither a brand new VC-backed company nor a seasoned game developer porting its titles to social networks. The mother company, Cie Studios, was founded in California in 1999 and is specialized in B2B interactive services for customers like Pioneer Electronics and Volkswagen, to whom they provide different channel management software, mobile applications and online product visualization tools. The New Growth & Differentiation Avenues Male audience and the “hardcore” social gamers The focus on a female audience was at the core of the emergence of social gaming, and in 2009 the top themes were around pets, farming, nursing or managing your shop. Women found on Facebook games more immersive than traditional casual games, where the universe was designed to their tastes and where they could interact with real life friends. Men were also targeted with Poker games and role playing title such as Zynga’s Mafia War. As of Q1 2011, it can be estimated that “male centric” titles account for only 15 to 20% of the social gaming activity on Facebook. FIGURE 15 MAU Split by Games’ Gender Category – 2011 – Based on Top 150 games 69% Female-oriented games (65% + of MAU are women) 15% Male-oriented games (65% + of MAU are men) 16% Cross Gender games 2011Source: AppData, Clipperton Finance Analysis 18 Clipperton Finance Research Paper, 2011
  • 19. What Does it Take to Win Today? The segment of male online gamers looking for role playing games such as World of Warcraft still remain to be attracted to Facebook. Cie Games has not been the only player to focus on traditional men’s interests. Beyond cars, other new favourite themes include war / strategy (Zynga’s latest title Empire & Allies), street fighting (Funzio’s hit Crime City, noticeable for its high quality graphics with a console game flavour), sports (EA’s Soccer, Golf and American Football titles or Nordeus’ Top Eleven Football Manager).FIGURE 16 Men’s Stuff: Crime City and NFL Madden - Screenshots Crime City NFL Madden US company Kabam, who received one of the largest recent fundings with $85m in a Series D private placement led by Google Ventures and Pinnacle Ventures, just four months after a $30m Series C with Redpoint Ventures and Intel Capital, has chosen to focus solely on the male audience target with role playing games around classic themes such as heroic fantasy (Kingdown of Camelot, Dragons of Atlantis14) and adventures in history (Glory of Rome). Their first hit Kingdom of Camelot was characterized by superior ARPU and retention metrics. CEO Kevin Chou commented on the latest round of funding “We’ve tapped into a major shift in hardcore gamer behavior, as we create compelling social gaming experiences for traditional console and PC gamers”. This is in line with their announced strategy to become the “Blizzard of social games” and to create the segment of “Massively Multiplayer Social Games”. One of the very different features of Kabam social games is the synchronous play that allows users to find the MMORPG15 real time flavor on Facebook. This type of games and technology must imply more budget per title than a management game like Farmville or Happy Aquarium, which can explain the large amount of capital received by Kabam and its hiring spree (from 25 to 400 employees across US, Europe and Asia in less than two years). The shift to mobile social games Mobile and social gaming seem to be bound to grow with a significant overlap. As Internet usage rapidly shifts to mobile devices, addicted players expect to have a seamless experience enabling them to keep on playing when they are on the move. 14 Title coming from the acquisition in October 2010 of the social gaming studio Wonderhill 15 Massively Multiplayer Online Role Playing Games – best known example is World of Warcraft from Blizzard. 19 Clipperton Finance Research Paper, 2011
  • 20. What Does it Take to Win Today? So far, the lack of support of the Flash content in the iPhone environment was an obstacle to enable this genuinely pervasive experience of social games from PCs to smartphones. Hence even the leading developers offered mobile applications that offered only very limited features compared to the PC experience and it was hard to recreate the “real thing” on mobile. The rapid emergence of the Android ecosystem and the decision by Apple to relax (partially) the restrictions on the tools developers can use should facilitate the playability and the full game experience on mobile, and even more on the wider screens of tablets. The real challenge for developers remains to be able to launch a high quality mobile adaptation of their games for the leading mobile OS as fast as possible after the launch of the PC version, which requires experience in mobile environment and best in class development processes. PopCap is maybe one of the few examples of social game developers making a substantial business on mobile screens as they announced that 25% of their revenues at end of 2010 came from mobile; their simple casual games are easier to adapt on a smaller screen and the company has a long history of publishing games on all platforms, from desktop to browser games, Facebook games and now mobile. Actually, the integration seems to happen the other way round, from mobile to social: companies like Digital Chocolate have been successful in shifting their focus from mobile apps to Facebook. It will be interesting to see if Angry Bird’s developer, Finland based Rovio will try to follow the same route. Recent M&A activity also proves the strong interest for expansion into mobile. Mobile social games are already a strong market in Japan, and the largest deal in the mobile gaming space has seen US leader for iPhone games, NGMoco acquired for about $300 to 400M in December 2010 by Japan based DeNA, the local leader in mobile social games through its mobile gaming community Mobage. Google is also on a similar track. In the summer 2010, having just acquired US social game developer Slide, the US giant targeted SocialDeck a company with a particular know how in mobile porting, and one that had developed a social gaming platform technology facilitating a simultaneous game play across different social platforms and mobile devices. The local content angle The high level of competition between Zynga, Playdom, EA, Crowdstar, Digital Chocolate and their followers creates a tough turf for new entrants in the core market of English speaking countries. All the more in terms of acquisition costs, as the US, the UK and countries like Australia exhibit the highest revenue per users, which goes with high acquisition costs. That’s why smaller players try to take an early lead in emerging Facebook countries. As mentioned above, Peak Games from Turkey is a good example of this strategy. As there was no adaptation of the leading games to the Turkish market, they decided to create a local gaming market with the popular local card game Okey, and then publish adaptation of US games on a revenue share basis. 20Clipperton Finance Research Paper, 2011
  • 21. What Does it Take to Win Today? FIGURE 17 Facebook users split by countries and languages Facebook countries (millions) – Estimates Facebook languages (millions) – Estimates December December 2011 2011 299 209 67 72 41 36 24 22 22 21 21 21 36 20 15 12 12 12 11 22 21 21 20 16 14 12 11 10 6 5Source: Clipperton Finance Analysis As seen on Figure 17, far behind the English speaking market, Spanish, German, Turkish, French and Italian are the top 5 linguistic markets that are already targeted by the leading players with increasingly localized versions – Turkey being an exception. However, there can be another layer of localization on top of the mere language adaptation, linked to the characters, the cities or decors where the action takes place. The local flavor could be an interesting trend to follow. Linguistic areas such as Portuguese or Arabic speaking countries are almost virgin territories, and strategic positions could be built in these markets from local players able to attract some social gaming talent. The cross platform option There have been social games developed in parallel for Facebook and MySpace for a while – this has been initially core to Playdom and Zynga’s strategy. Playdom is still the social game leader on MySpace, with over 15m monthly active on the #1 game on the platform - Mobsters, a Mafia theme game that has lost its audience on Facebook since mid 2009. But with now around 60m users globally of which 35m in the US, MySpace has lost so much momentum compared to Facebook that it is not considered a growth driver by the developers’ community – even though MySpace audience is urban, wealthy and thus clearly “bankable”. Going towards smaller social network sites is often closely linked with the local angle, as Facebook do not (yet) dominate all countries. The most interesting example is maybe Brazil where Google’s owned social network site, Orkut, has a strong leadership position with over 30m monthly unique visitors. This creates barriers to entry for Zynga and the other leaders on Facebook, and has attracted developers who specialize in games for the Brazilian audience. Vostu a US based social gaming company focused fully on the Brazilian market and claiming over 30m active users has attracted a large VC round of $30m led by Accel Partners and Tiger Global Management in November 2010. They are in direct competition with Miami based Mentez who has also decided to focus on the Brazilian market, in parallel with other Latin American countries. Russia, where Facebook is still marginal, and where local social 21 Clipperton Finance Research Paper, 2011
  • 22. What Does it Take to Win Today? networks enjoy high audience rates, is another obvious candidate for local social gaming play. Hi5 is also trying hard to become a social gaming platform, hoping its strength in Latin America will help attract top developers. With around 20m social game players, Hi5 has enabled to attract Facebook titles such as Barn Buddy by The Broth or Millionaire City by Digital Chocolate, and introduces new monetization features with a mix of virtual goods and advertising to maximize developers revenues. Time will tell if these local social networks can resist to the Facebook tsunami (Facebook has already overtaken Orkut in India for instance) and to the local versions of Zynga or Playdom’s games. So far, the cross platform approach is a real bet, and betting against Facebook makes the bet even more interesting. Notably, in Vostu’s case, Jim Breyer from Accel, who is a Facebook board member, will join Vostu’s board; even Facebook insiders seem to think that Facebook will not reign everywhere. New monetization avenues Virtual goods are one of the key ingredients behind the success of social games. They fit the Freemium model very well, as only the players who are really engaged and who want to progress quickly will pay, and they choose the amount they spend on an impulse basis. This monetization model is here to last, and subscription based games on Facebook are still to emerge. However, we should witness some innovation in the monetization front. One emerging feature is in-game advertising. Instead of buying in-game banners, leading corporations turn to building brand awareness on Facebook by partnering with developers on special events.FIGURE 18 McDonald’s Special Event on FarmVille 22 Clipperton Finance Research Paper, 2011
  • 23. What Does it Take to Win Today? Brands like McDonald’s love the concept of engaging directly with their customers in a fun environment, and of course the sheer size of the audience provided by a 24 hour campaign on FarmVille or CityVille – games that attract over 30m users per day, the closest thing to Monday Night Football on the web. This is indeed a marketing proposition that only Zynga and a few of the top developers can propose. Zynga has pushed the bar higher with their recent marketing deal with Lady Gaga, who gave exclusivity on certain songs of new album to FarmVille players; the fans had to pay a visit to GagaVille to get their reward… For this type of new revenue streams, size does matter. Another new business model attempt is social betting. Early stage Crowdpark, based in Germany, proposes to bet with friends on all sorts of events, from sports results to the sex of Victoria Beckham’s next child. The legal trick is to avoid gambling restrictions thanks to a virtual currency used for every bet. Players compete for fun, not for money. But will that scale up to Betfair’s size? For incumbent video games leaders– adapt strong franchises Just a few months after the acquisition of PlayFish in November 2009, EA launched a football management game on Facebook based on its FIFA license. Just in time for the 2010 FIFA World Cup in Germany! The title climbed to 5m MAU during the World Cup and has managed to retain 3m MAU one year after launch. This shows the strategic choice of EA to use social networks as another channel in their content strategy, trying to leverage their highest value IPs from console games on Facebook. Sebastien DeHalleux, a co-founder of PlayFish and advisor to EA, said about this strategy just after the launch of FIFA “People play FIFA because they identify with specific players and teams and want to talk about the sport that they love. The trick is to use the brand assets — 9,000 real-life athletes that we have rights for in games — and build a meaningful exchange between fans and the athletes.” Nevertheless, the experience of FIFA on Facebook is radically different from the console titles, it’s a management game, not a football action game, and the animation and the fluidity can’t be matched. And it’s a complete change from PlayFish’s initial editorial strategy which was centered on female themes with titles such as Pet Society and Restaurant City, two titles who are still the most popular EA’s titles on Facebook… Following FIFA, EA also adapted two of its sports franchises to Facebook, with Madden NFL Superstars and PGA Tour. With limited success in terms of audience. 23Clipperton Finance Research Paper, 2011
  • 24. What Does it Take to Win Today?FIGURE 19 Ubisoft’s success on Facebook – CSI Franchise adaptation Let’s have a look at a European incumbent now. Unlike EA, Ubisoft has not done any acquisition in the social gaming space – the company has an internal team developing their own games (and also managing external developers) to test the waters on Facebook. As said in section 2, they have launched almost 20 games (many should been seen as tests rather than genuine commercial launches) among which one can be considered as a real success: CSI, a role playing game adapted from the TV series franchise where the users solve mystery crimes in Vegas. It would be interesting to see if Prince of Persia, Assassin’s Creed or Rayman will be adapted on Facebook. A new wave of M&A could also help the incumbents to accelerate their shift towards social games. The CEO of Activision recently ruled this out for the American studio, citing “too high valuations”. Indeed, the valuation of Zynga (in the latest private funding rounds and for the much expected but not yet announced IPO) would now be above EA’s enterprise value of around $5Bn. Actually the highest valuation in online gaming today is clearly Tencent: the Chinese web gorilla, active in instant messaging (QQ service) and deriving most of its revenues from online gaming and virtual goods, has a market capitalization north of $40Bn on the Hong Kong Stock Exchange. Zynga is however so far ahead of the rest of the pack that it should not be the only benchmark and one can expect to see deals in lower valuation territories where both incumbents and social game developers see the value to join forces, assets and talents to bring better games to social platforms. 24 Clipperton Finance Research Paper, 2011
  • 25. What Does it Take to Win Today?CONCLUSION The explosive growth of social gaming seems to be built on solid foundations, and Zynga is clearly printing money today, reaching impressive profit levels for a four year old company - an achievement that even Groupon will have difficulties to match despite its even superior topline growth trend. So far, the success in usage experienced by this new industry comes almost only from adaptations of existing game concepts to the social networks. The first wave of games was centered on casual game plays, card games and simple management games often tailored for a female audience, and now we have witnessed the adaptation on Facebook of war games, strategy, cars or heroic fantasy game plays; and also adaptation of existing preeminent game franchises like FIFA Superstars and CSI. At some point, the phase of adapting successful titles and game plays to social networks won’t be enough to sustain the growth. The future winners in the long term should be the companies who are really able to make the most of the new features enabled by the social graph on Facebook and other networks, with new types of interactions between players and game plays designed from scratch for social users. It could be Zynga or it could be newcomers. 25Clipperton Finance Research Paper, 2011
  • 26. APPENDIX: SELECTED M&A ACTIVITYAPPENDIX: SELECTED M&A ACTIVITY Date Target Country Description Acquiror Deal valueMay-11 DNA Games USA Develops games (RPG) for social networks Zynga n.a Designs and develops games for mobileMay-11 Rough Cookie BV NL ngmoco n.a platforms Develops and distributs online games andApr-11 Hallpass Media CA Mindjolt Games n.a virtual worlds (Casual) Publishes and develops social games (RPG)Apr-11 Social Gaming network Inc USA Mindjolt Games n.a for mobile Develops an online portal tracking careerApr-11 MarketZero Inc-Austin Team USA Zynga n.a stats of online poker players. Develops social games (RPG) for socialApr-11 Wonderland software UK Zynga n.a networks and mobile Develops social games (Casual) for socialApr-11 OpenFeint USA GREE International $104m networks and mobile Develops video games (RPG on PC) andApr-11 Floodgate Entertainment LLC USA Zynga n.a casual games for social networks Develops a social browser (blogs and socialJan-11 Flock USA Zynga n.a bookmarking) Develops high-quality entertainment socialDec-10 Newtoy Inc USA Zynga n.a games (RPG) on mobile platforms Develops games and entertainmentOct-10 Ngmoco, Inc. USA DeNa Co Ltd $400m experiences for the iPhone and mobileOct-10 Bonfire Studios USA Develops and operates online social games Zynga, Inc. n.a Offers online application for socialAug-10 Slide, Inc. USA Google Inc. $182m networking websites Develops and publishes online video gamesAug-10 Eyedentity Games Inc KO Shanda Games Ltd $95m through its platform Develops and publishes video games forJul-10 Playdom USA Walt Disney Co $763m social networks Develops social gaming applications forJul-10 Tapulous USA Walt Disney Co n.a mobile Developer of social networking andMay-10 Acclaim Games Inc USA Playdom Inc n.a downloadable casual games softwareMay-10 XPD Media Inc China Provides and develops of online games. Zynga, Inc. n.a Developer of online and social gamesApr-10 Merscom LLC USA Playdom Inc n.a software. Engages in development of social games andFeb-10 Big Six Games, Inc. USA hi5 Netw orks, Inc. n.a designs a social gaming platform Operates as a social gaming platform andFeb-10 Serious Business, Inc. USA Zynga, Inc. n.a produces online games for the users Provides tools and services to support gameJan-10 Mochi Media, Inc. USA Shanda Games Limited $80m developers Develops and publishes video games forNov-09 Playfish Limited UK Electronic Arts $300m social networks 26Clipperton Finance Research Paper, 2011
  • 27. DISCLAIMERDISCLAIMERThis document has been produced by Clipperton Finance (“Clipperton”) and is communicated to you solely for yourinformation and should not be construed as a solicitation or offer to buy or sell any securities or related financialinstruments.This research paper is based on information available to the public and other sources deemed reliable.No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness,accuracy or completeness of the information contained herein and, accordingly, none of Clipperton’s officers or employeesaccepts any liability whatsoever arising directly or indirectly from the use of this document.Clipperton Finance has been engaged as an advisor by a company mentioned in this report: Kobojo.CLIPPERTON FINANCEBased in Paris and London, Clipperton Finance is a European corporate finance boutique dedicated to the High Tech andMedia industries. Clipperton is focused on start-up and high-growth companies in the Internet, Software, Telecom,Components, CleanTech, MedTech and Media spaces, advising them in their financial transactions: fundraising/capitalincreases and Mergers & Acquisitions. Over the past years the company and its team have successfully structurednumerous high level international transactions in the European High Tech sector.For more information, visit www.clipperton.netContactsThibaut Revel, Partner Alexis Barba, Associatetrevel@clipperton.net abarba@clipperton.netFrance | 10, rue du Mont Thabor - 75001 ParisUK | 58 Grosvenor Street - London W1K 3JB 27Clipperton Finance Research Paper, 2011