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

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IDEA - Opportunities in the Games Industry - 15 November 2011

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