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Forbes Digital Gaming Report Summer 2020

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"The Digital Gaming industry continues to be a juggernaut in the face of the pandemic, with 2Q ushering in unprecedented earnings growth, soaring game and console sales, and record viewership across streaming platforms. While the momentum in the overall gaming industry is undeniable, Forbes believes that there are cracks in the façade, particularly related to the esports sector. We touch on this potential bubble on p.13 and will be publishing a report specifically on this topic in the coming month.” - JJ Lane, Head of Forbes M+A Digital Gaming Group

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Forbes Digital Gaming Report Summer 2020

  1. 1. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 IndustryReport–Summer2020 C O N F I D E N T I A L DIGITAL GAMING
  2. 2. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 Click to edit Master title style CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 Agenda I Digital Gaming Overview II The Forbes M+A Group Overview III Appendix 1
  3. 3. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 I. Digital Gaming Overview 2
  4. 4. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 3 DigitalGamingOverview Digital gaming consists of console, PC, and mobile games and encompasses esports, streaming, and sponsorships. Gaming is becoming more mainstream, merging the casual and competitive scenes, reaching larger audiences than ever before. Mobile gaming is continuing to grow in popularity as the mobile device population continues to boom. Digital gaming is expected to reach $164.6B in revenue in 2020. The U.S. and China are dominating the gaming universe with nearly 50% of revenue market share. DIGITAL GAMING OVERVIEW ~2.7 Billion Gamers Worldwide 21 - 45 Most Popular Gaming Age +5.2 Billion Hours Streamed in 2Q 2020 Source(s): Newzoo, Twitch Tracker x
  5. 5. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 4 RecordGrowthin2QbutTroubleontheHorizon? DIGITAL GAMING OVERVIEW Source(s): Twitch Tracker, Newzoo, Konvoy Ventures, The Esports Observers, The Verge  Twitch users have streamed over 5 billion hours of content (over 570k years) in 2Q 2020, shattering the previous record of 3.2 billion hours in 1Q 2020  Mixer shuts down July 22nd after only 4 years of operating; current partners and streamers will be moved to Facebook Gaming  Video game spending reaches $6.6 billion in the first 6 months of 2020, increasing 19% from 2019  Revenue forecast for esports drops 8% as events slow down  The next gen consoles, Xbox Series X and PS5, are officially slated to be released in Q4 2020 and will soon start taking preorders  Mobile gaming continues to rise in popularity – YoY mobile gamers installed 84% more gaming apps – Mobile gaming users increased 14% in daily average users  Epic Games’ (developer of Fortnite) valuation reaches $17.6 billion as Sony acquires a $250 million minority stake  Tencent’s online gaming revenue increased 31% with the rise of people playing video games “The Digital Gaming industry continues to be a juggernaut in the face of the pandemic, with 2Q ushering in unprecedented earnings growth, soaring game and console sales, and record viewership across streaming platforms. While the momentum in the overall gaming industry is undeniable, Forbes believes that there are cracks in the façade, particularly related to the esports sector. We touch on this potential bubble on p.13 and will be publishing a report specifically on this topic in the coming month.” JJ Lane – Head of Digital Gaming Group x
  6. 6. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 “I think you're going to see a long-lasting increase in demand…And I think you're seeing a systemic shift in favor of interactive entertainment.” ~ Strauss Zelnick, CEO of Take-Two Interactive 5 DoesGamingHaveStayingPowerBeyondthePandemic? DIGITAL GAMING OVERVIEW Source(s): CapitalIQ, MSN Entertainment x $0.84 $0.22 $0.43 $2.89 $0.63 $0.75 NasdaqGS:EA NasdaqGS:TTWO NasdaqGS:ATVI2Q 2019 2Q 2020 Game Publishers Experienced Dramatic YoY EPS Growth in 2Q… + 246.3% + 184.6% + 75.7% …As Did Console Manufacturers With Consumers in Search of Entertainment “With real world sports disrupted, EA SPORTS has become the center of the emotional connection to sports, and we've brought millions of new, returning, and existing players into their own personal sports stories through our games.” ~ Andrew Wilson, CEO of Electronic Arts “Knowing how long COVID-19 lasts is unimportant to our video game valuation thesis because video game companies benefit near term and long term from rapidly rising hours played, broadening demos, more new games tried, higher in-game spending.” ~ Laura Martin, Needham Analyst + 166% + 64% + 32%
  7. 7. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 66 94 100 94 Mar-20 Apr-20 May-20 Jun-20 1,218 1,790 1,756 1,629 Mar-20 Apr-20 May-20 Jun-20 1.6 2.5 2.4 2.3 Mar-20 Apr-20 May-20 Jun-20 6 LargeandEver-ExpandingMarket DIGITAL GAMING OVERVIEW Source(s): Twitch Tracker as of 6/30/2020, Konvoy Ventures 2.2 million Average Concurrent Viewers 1.6 billion Average Hours Watched (Viewers in Millions) (Hours in Millions) 210 million North American Gamers88.5K Average Concurrent Streamers (Streamers in Millions) Average concurrent viewers on Twitch sees significant rise in April as more people turn to video games The number of streamers sees multiple records in April and May Greater than 1/3 of the North American population is playing video games 2Q 2020 broke the record for hours watched on Twitch x
  8. 8. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 7 DiverseGamingDemographics DIGITAL GAMING OVERVIEW ($ in Millions) x $1.6 $1.3 2020 2019 21.0% 38.0% 26.0% 9.0% 6.0% < 18 18 - 34 35 - 54 55 - 64 +65 Video Game Player Ages 73.0% 43.0% 19.0% 25.0% Console Handheld System VR Device Mobile VR Video Game Players by Age Console Spending Through 2Q is up 23% in 2020 Devices Owned by Gamers When People Play Years Spent Playing Video Games Why People Play(1) After Work or School 51% Waiting for Appointment 30% During a Break From Work or School 26% During a Commute 16% 21.0% 29.0% 25.0% 9.0% 1 - 5 6 - 14 15 - 24 +25 Connect With Family and Friends 62.5% Relaxation 80.0% 84.5% Brain Stimulation Note: (1) Percentages vary based on age range and gender Source(s): Venture Beat, Theesa
  9. 9. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 Source(s): Newzoo, Konvoy Ventures, Company Websites DigitalGamingIndustryOutlook DIGITAL GAMING OVERVIEW U.S. and China Dominate the Global Gaming Market ($ billions) 47% 23% 4% 26% 2019 Total $152.1B +9.6% YoY EUROPE, MIDDLE EAST & AFRICA $34.7 +11.5% YoY NORTH-AMERICA $39.6B +11.7% YoY LATIN AMERICA $5.6B +11.1% YoY ASIA-PACIFIC $72.2B +7.6% YoY CHINA TOTAL $36.5B U.S. TOTAL $36.9B 48% of all consumer spending on gaming in 2019 came from the U.S. and China. $19.3 $20.4 $21.5 $22.6 $41.5 $43.0 $47.0 $51.0 $137.9 $151.9 $165.9 $180.3 2018 2019 2020 2021 Music Films Videogames Global Gaming Is on the Rise With the Help of Smartphones ($ billions) Gaming Sales Continue To Outpace Music and Movie Sales 35% 36% 38% 40% 41% 9% 9% 8% 8% 8%31% 31% 31% 31% 31% 2% 2% 2% 1% 1% 35% 36% 38% 40% 41% 2018 2019 2020 2021 2022 Smartphone Tablet Console Browser PC Boxed/Downloaded PC $138.7 $164.6$152.1 $178.2 ($ billions) $196.0 The Top 5 Gaming Markets Are Nearing 1 Billion Combined Players (Players in millions) 37.5 44.6 65.9 176.1 644.0 U.K. Germany Japan U.S. China 8 x
  10. 10. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 DigitalGamingUniverse(1/3) DIGITAL GAMING OVERVIEW Hardware Augmented & Virtual Reality Streaming and Content Technology Fantasy Sports and Betting esports Betting 9 Source(s): Konvoy Ventures x
  11. 11. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 DigitalGamingUniverse(2/3) DIGITAL GAMING OVERVIEW Engines Distribution Developers Publishers User Generated Content Major Games Game Development Related Services Data Analytics Peer to Peer Sponsors and Sponsorship Services 10 Source(s): Konvoy Ventures x
  12. 12. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 DigitalGamingUniverse(3/3) DIGITAL GAMING OVERVIEW Teams Leagues/Organizers Competitions Community Conferences and Exhibitions Events Professional Scene Tournament Platforms Coaching Service Providers Merchandise Communications and Forums News Reporting Venues 11 Source(s): Konvoy Ventures x
  13. 13. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 $776.4 $957.5 $973.9 $1,598.2 2018 2019 2020 2023 Source(s): The Esports Observer, Newzoo, and CapitalIQ as of 6/30/2020 TheProfessionalSceneContinuestoExpandinSizeandPopularity… DIGITAL GAMING OVERVIEW Representative Companies Professional esports organization. Game developer and content provider Value EV/Revenue $400M 11.4x $75M 30.1x ($ in thousands esports Revenue Growth 1 2 3 Prize Pools Awarded in 1H 2020 $10.2M $5.2M $6.9M 12 15.5% CAGR x
  14. 14. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 $400 $400 $320 $240 $210 $185 $175 $170 $165 $160 11.4x 13.8x 13.3x 6.9x 19.1x 20.6x 10.9x 21.3x 7.5x 16.0x 0.0x 5.0x 10.0x 15.0x 20.0x $0 $100 $200 $300 $400 $500 Team SoloMid Cloud 9 Team Liquid FaZe Clan Immortals Gaming Club Gen.G Fnatic Envy Gaming G2 Sports 100 Thieves …ButtheCurrentesportsModelMayBeaBubbleWaitingtoBurst DIGITAL GAMING OVERVIEW Teams Are Being Valued Like Tech Companies… ($ millions) Median EV/Revenue Note(s): (1) TTM period is 7/31/2019 – 6/30/2020 Source(s): Twitch Tracker, Forbes, CapitalIQ, and Company Websites, Allied Esports ...But Fail to Generate Revenue and Appear Overvalued… 13 Value EV/Revenue 13.6x x $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 7/1/2019 8/1/2019 9/1/2019 10/1/2019 11/1/2019 12/1/2019 1/1/2020 2/1/2020 3/1/2020 4/1/2020 5/1/2020 6/1/2020 …While the Publicly Traded esports Companies Have Seen a Dramatic Decline Over the Last Year(1) $88.0 $69.0 $52.0 $35.0 $2.0 MLB NHL NFL NBA Esports esports - 64.3% - 39.0% -70.8%
  15. 15. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 46.9 55.8 75.7 110.4 Note: (1) Lifetime Unit Sales as of 6/30/2020; (2) Projected sales through 2024 Source(s): Company Websites, Forbes, Amphere Analysis TheConsoleMarketisBeingDrivenbyNewHardwareandRefreshesofExistingHardware… DIGITAL GAMING OVERVIEW 8th Generation Consoles Are Selling Strongly(1) While the 9th Generation Looks More Crowded Than Ever Projected Sales(2) PS5Xbox Series X Q4 2020 Q4 2020 14 Current Generation Consoles Are Selling Strongly(1)… (Units sold in millions) …While the 9th Generation Consoles Are Prepping For Launch x Release Date Manufacturer Name (Units sold in millions) 37.0 66.0
  16. 16. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 10.0+ 10.0+ 13.3 16.0+ 10.7 12.2 18.1 18.6 20.0 22.4 26.7 Animal Crossing Sells Nearly 23M Copies In 2Q 2020 …WhileSoftwareStillPullsUsersBetweenPlatforms DIGITAL GAMING OVERVIEW PC Gaming Market Value Forecasts (Units sold in millions) Microsoft has stopped disclosing sales numbers for 1st party software Mario Kart 8 Super Smash Bros. Ultimate Mario Odyssey Breath of the Wild Pokémon Let’s Go Splatoon 2 Spider-man Horizon: Zero Dawn Uncharted 4 God of War Halo 5 Gears of War 5 Forza = Sony = Nintendo = Microsoft ($ billions) $26.6 $28.0 $29.6 $31.4 $33.6 2016 2017 2018 2019 2020 15 Gaming Market Value Forecasts 4.8% CAGR Source(s): Newzoo, Company Websites Animal Crossing: New Horizons x
  17. 17. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 5.37 6.66 7.07 8.73 14.7 summit1g Myth shroud Tfue Ninja 56 60 77 86 95 101 120 107 105 100 126 210 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2017 2018 2019 2020 737 789 952 1,044 1,120 1,162 1,287 1,267 1,265 1,206 1,468 2,370 25 27 36 39 43 46 56 49 48 45 58 96 0 20 40 60 80 100 120 0 500 1,000 1,500 2,000 2,500 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2017 2018 2019 2020 1,618 1,740 2,037 2,279 2,444 2,563 2,776 2,767 2,794 2,661 3,210 5,175 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 2017 2018 2019 2020 StreamingViewershipContinuestoGrow DIGITAL GAMING OVERVIEW Twitch Exceeds 1.2B Average Concurrent Viewers in 2018 (Hours in millions) Top Streamers Are Gaining Millions of Followers (Viewers and Channels in thousands) (Followers in millions) 16 Source(s): Twitch Tracker as of 6/30/20 Twitch Sees Sharp Increase in Average Viewers and Channels2Q Shatters Previous Record of Hours Watched Viewers Channels Twitch Exceeds 1.2B Average Concurrent Viewers in 2018 (Hours in millions) Hours of Content Nearly Doubles As Streamers Are Becoming More Active x
  18. 18. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 $584.1 $163.3 $543.7 $158.0 Sponsorship Media Rights 2020 2019 Sponsorship and Media Revenues Are Adjusted Down MainstreamBrandsContinuetoInvestinVideoGames DIGITAL GAMING OVERVIEW Select Endemic Sponsors Select Non-Endemic Sponsors ($ millions) 17 Source(s): The Esports Observer, Newzoo 7.4% YoY Growth 3.3% YoY Growth x
  19. 19. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 46.8x 12.6x 26.9x 26.8x 21.0x 10.3x 58.3x 27.7x 23.2x 17.4x 12.4x 9.0x 43.1x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x 11.0x 12.0x 13.0x 14.0x 5.9x 1.1x 8.6x 6.1x 4.3x 1.5x 19.1x 10.7x 3.4x 3.4x 1.3x 0.9x 14.3x 2.1x 1.0x 2.0x 3.0x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x 11.0x 12.0x 13.0x 14.0x SelectPublicCompanies DIGITAL GAMING OVERVIEW Median EV/Revenue Median: 3.9x Game Development – Mobile Games Game Development – Developer/Publisher Technology - Hardware Technology – Streaming/Content Median EV/EBITDA Median: 23.2x Game Development – Mobile Games Game Development – Developer/Publisher Technology - Hardware Technology – Streaming/Content 18 NM Source(s):CapitalIQ as of 6/30/20; Note: “NM” only applies to multiples less than zero. x
  20. 20. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 7.3x 5.4x 5.2x 3.9x 3.6x 3.4x 2.8x 2.0x 1.7x 0.8x Candywriter Saber Interactive Funcom The Sims Resource Eko Software Storm8 UMG Media The TrailerFarm Snowed In Studios roccat Source(s): CapitalIQ as of 6/30/20, Company Websites SelectPrecedentTransactions DIGITAL GAMING OVERVIEW EV/Revenue Median: 3.5x Target: Acquirer: 19 x
  21. 21. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 II. The Forbes M+A Overview 20
  22. 22. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 TheForbesM+AGroup THE FORBES M+A OVERVIEW Senior-level attention and transaction leadership Focused, dedicated transaction teams Vertical and industry focused expertise Unbiased, trusted advisory services Quality of service and execution over quantity Track record of successful outcomes ✓ Founded in 2004 with offices located in Denver, Colorado & Salt Lake City, Utah ✓ Transaction sizes ranging from $10M — $200M ✓ Nationwide clientele with global market reach ✓ Nationwide clientele with global market reach ✓ Swarm transactions with senior advisors, with more than $85B and 250 years of combined experience Rocky Mountain West boutique investment banking advisory firm focused on closely held companies with strong growth stories and market dominant products or services. Focused on Excellence in Execution… Middle Market Leader 21
  23. 23. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 TheForbesM+ATransactionTeam THE FORBES M+A OVERVIEW Head of Digital Gaming Group 303.872.6445 JJ.Lane@ForbesMA.com Industry leading veterans that possess a depth and breadth of experience across both M&A and private industry as founders, operators, advisors, and executives. JJ Lane Bob Forbes President Bill Nack Partner / Managing Director Dan Pellegrino Partner / Managing Director Jon Wiley Partner / Managing Director Garit Lawson Managing Director Steve Quisenberry Managing Director James Morgan Managing Director Doug Freyschlag Director Blake Shear Director JJ Lane Vice President Cassie Dobos Associate Bryce Dietz Analyst Jarred Olson Analyst Liam Narozanick Analyst John Kiernan Analyst 22
  24. 24. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 23 SoftwareasaService(“SaaS”)IndustryReport TheForbesM+AGroupAdvantage THE FORBES M+A OVERVIEW EVERY DETAIL COUNTS.™ In managing the ownership transition of a closely-held company, the old adage that “the devil is in the details” is widely underestimated. At THE FORBES M+A GROUP, we are hyper vigilant about details – not only based on the merits of the phrase above but because, as our tagline reveals, we recognize the “deals” are also in those details. The best deals. The ones that offer the most strategic and financial value to all of the key stakeholders involved in the transaction. We fully grasp and internalize clients’ goals. We understand clients’ businesses exhaustively and tell their stories meticulously. We design a comprehensive blueprint of each client’s best future. We find ideal targets, not just the easy ones, and compel them to compete. We advocate fiercely for our clients, creating extraordinary outcomes.
  25. 25. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 24 SoftwareasaService(“SaaS”)IndustryReport WhatClientsandAdvisorsSay THE FORBES M+A OVERVIEW “Their industry knowledge, relationships with buyers, extensive transaction experience, and adaptive and creative deal making were essential in achieving an outcome that met our goals.” ~ Tres Coors, CEO of Novelty Lights “Their guidance was invaluable as we reviewed offers and negotiated a deal structure that was exactly what we needed.” ~ Doug Larson, President at Eldorado Artesian Springs “Forbes is like a bulldog with a rag in its mouth. If there is a deal that serves the interests of their client, those guys don’t let go until it crosses the finish line.” ~ Bob Roth, Partner at Kutak Rock “They exceeded every expectation by taking the time to understand our objectives, delivering the best possible partner and terms.” ~ Christine Crane, CEO of BoldLeads “We wanted to entrust the business to an advisor with similar core values and high- quality standards.” ~ Tom Tolkacz, CEO of Swingle “PASCO selected The Forbes M+A Group amongst competing advisory firms because of their reputation for identifying excellent strategic partners.” ~ Ryan Zeiger, CEO of PASCO “From identifying the perfect buyer, to maximizing our value, and ultimately continuing our legacy, the Forbes M+A team was there from start to finish.” ~ Stephanie White, CEO of Top Gun “The Forbes M+A Group was recommended to us as a company that would truly partner with us to achieve our goals.” ~ Mike Franklin, President of TouchSource
  26. 26. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 SoftwareasaService(“SaaS”)IndustryReport TrustedbytheWorld’sTopFinancialInstitutions THE FORBES M+A OVERVIEW Forbes has developed strategic partnerships with some of the largest financial institutions in the world with its strong reputation for servicing the middle market. 25
  27. 27. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 Click to edit Master title style CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 26 2020
  28. 28. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 III. Appendix 27
  29. 29. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 Date Target Buyer / Investor(s) Target Description Target Category Transaction Type Implied EV ($ in millions) EV / Revenue EV / EBITDA Jun-20 Peak Games Zynga Peak Games develops multiplayer mobile games in Turkey and the Middle East and North Africa (MENA) region. Mobile Games Merger/Acquisition $1,934.0 na na Jun-20 Ready At Dawn Studios Facebook Technologies Ready At Dawn Studios develops video games. Game Development Merger/Acquisition na na na Jun-20 Gaming licenses of Majesco Entertainment Company Ziggurat Interactive Gaming licenses of Majesco Entertainment Company including BloodRayne. Game Development Merger/Acquisition na na na Jun-20 LetsGoRacing Torque Esports LetsGoRacing comprises a YouTube channel that broadcasts motorsport and esports racing content. Community Merger/Acquisition $1.6 na na Apr-20 PierPlay Scopely PierPlay engaged in development of mobile video games. Game Development Merger/Acquisition na na na Apr-20 3DO games catalog of Prism Entertainment Ziggurat Interactive 3DO games catalog of Prism Entertainment comprises game licenses. Game Development Merger/Acquisition na na na Apr-20 Candywriter Stillfront Group Candywriter develops and publishes mobile games. Game Development Merger/Acquisition $204.0 7.3x 12.7x Feb-20 DriverDB Torque Esports DriverDB AB provides data to racing drivers and general motorsport industry. Community Merger/Acquisition $0.8 na na Apr-20 Hypixel Studios Riot Games Hypixel Studios designs and develops computer games. Game Development Merger/Acquisition na na na Apr-20 Moneyweek Torque Esports Moneyweek operates an online motor sports community for motorsport enthusiasts, industry influencers, and Formula 1 teams, as well as former drivers. Community Merger/Acquisition $0.5 na na Mar-20 MTD Gaming Ainsworth Game Technology MTD Gaming develops and supplies computer games. Game Development Merger/Acquisition $26.0 na na Feb-20 Saber Interactive Embracer Group Saber Interactive develops online interactive games in the United States. Game Development Merger/Acquisition $596.2 5.4x 9.2x Feb-20 Kolibri Games Ubisoft Entertainment Kolibri Games operates as a mobile games company. Mobile Games Merger/Acquisition na na na Jan-20 Phoenix Labs Garena Online Private Phoenix Labs develops games for personal computers. Game Development Merger/Acquisition na na na Jan-20 Streamlabs Logitech International Streamlabs develops Streamlabs application that provides in-stream popup alerts. Community Merger/Acquisition $130.3 na na SoftwareasaService(“SaaS”)IndustryReport SelectDigitalGamingM&ATransactions(1/2) VALUATION SUPPORT 28 Source(s):CapitalIQ as of 6/30/20 x
  30. 30. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 Date Target Buyer / Investor(s) Target Description Target Category Transaction Type Implied EV ($ in millions) EV / Revenue EV / EBITDA Jan-20 Streamlabs Logitech International Streamlabs develops Streamlabs application that provides in-stream popup alerts. Community Merger/Acquisition $130.3 na na Jan-20 Funcom Tencent Cloud Europe Funcom develops and publishes massively multiplayer online games for PCs and consoles worldwide. Game Development Merger/Acquisition $1,223.5 5.2x 11.3x Jan-20 FoxNext Games Scopely FoxNext develops virtual and augmented reality, mobile, console/personal computer games, and location-based entertainment for studio's film and television operations. Game Development Merger/Acquisition na na na Jan-20 Storm8 Stillfront Group Storm8 develops social mobile games for the iPhone, iPod Touch, and Android devices. Mobile Games Merger/Acquisition $403.9 3.4x 6.6x Dec-19 Typhoon Studios Google Typhoon Studios is an independent game developer. Game Development Merger/Acquisition na na na Dec-19 Scuf Gaming International Corsair Components Scuf Gaming International manufactures and markets video game controllers for gamers. Hardware Merger/Acquisition na na na Nov-19 UMG Media Torque Esports UMG Media operates as an esports company in North America. Professional Scene Merger/Acquisition $4.8 2.8x na Oct-19 Fullcube ReKTGlobal Fullcube develops a platform for subscription management. Community Merger/Acquisition $4.2 na na Aug-19 Insomniac Games Sony Interactive Entertainment Insomniac Games develops various games for PlayStations. Game Development Merger/Acquisition $229.0 na na Jun-19 Greenlit Content ReKTGlobal Greenlit Content provides web development and content creation services for video gaming industry. Community Merger/Acquisition na na na Jun-19 Infinite Esports & Entertainment Immortals Infinite Esports & Entertainment owns and operates an esports organization and provides a gaming platform, which creates a roster of online game players and competes in online championship Community Merger/Acquisition $100.0 na na Mar-19 Mellanox Technologies NVIDIA Mellanox Technologies, a fabless semiconductor company, designs, manufactures, markets, and sells interconnect products and solutions. Hardware Merger/Acquisition $6,401.0 6.3x 28.7x Mar-19 ROCCAT TBC Holding Company ROCCAT manufactures computer components and accessories. Hardware Merger/Acquisition $18.9 0.8x na Jan-19 The Sims Resource Enthusiast Gaming Properties The Sims Resource comprises female video gaming content. Community Merger/Acquisition $20.6 3.9x 5.2x Median $50.0 3.0x 10.6x Mean $690.4 3.2x 12.0x SoftwareasaService(“SaaS”)IndustryReport SelectDigitalGamingM&ATransactions(2/2) VALUATION SUPPORT 29 Source(s):CapitalIQ as of 6/30/20 x
  31. 31. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 Stock % of Equity Price 52 Week Market Enterprise EV / Revenue EV / EBITDA Company 6/30/2020 High Cap Value LTM LTM Game Development - Publisher/Developer Microsoft Corporation (NasdaqGS:MSFT) $197.88 91% $1,543,306 $1,489,689 10.7x 23.2x Tencent Holdings Limited (SEHK:700) $62.99 11% $609,684 $622,940 11.0x 30.9x Sony Corporation (TSE:6758) $68.64 1% $83,575 $98,288 1.3x 9.0x Activision Blizzard, Inc. (NasdaqGS:ATVI) $75.69 92% $58,480 $55,175 8.6x 26.8x Nintendo Co., Ltd. (TSE:7974) $446.74 1% $53,052 $41,767 3.4x 12.4x Electronic Arts Inc. (NasdaqGS:EA) $132.61 94% $38,125 $33,610 6.1x 21.0x Take-Two Interactive Software, Inc. (Nasdaq:TTWO) $138.37 89% $15,127 $13,303 4.3x 26.9x BANDAI NAMCO Holdings Inc. (TSE:7832) $53.12 1% $11,548 $9,837 1.5x 10.3x Ubisoft Entertainment SA (ENXTPA:UBI) $78.53 97% $10,080 $10,475 6.0x 106.2x Square Enix Holdings Co., Ltd. (TSE:9684) $51.39 1% $6,020 $4,876 2.0x 13.1x Capcom Co., Ltd. (TSE:9697) $36.59 1% $3,882 $3,346 4.4x 14.1x Mean 44% $221,171 $216,664 5.4x 26.7x Median 11% $38,125 $33,610 4.4x 21.0x SoftwareasaService(“SaaS”)IndustryReport PubliclyTradedCompanies(1/3) VALUATION SUPPORT $ millions, except per share data 30 Source(s):CapitalIQ as of 6/30/20; Note: “NM” only applies to multiples less than zero. Stock % of Equity Price 52 Week Market Enterprise EV / Revenue EV / EBITDA Company 6/30/2020 High Cap Value LTM LTM Game Development - Mobile Games Zynga Inc. (NasdaqGS:ZNGA) $9.56 91% $9,125 $8,582 5.9x 46.8x Glu Mobile Inc. (NasdaqGS:GLUU) $9.21 85% $1,544 $1,470 3.5x 274.5x Rovio Entertainment Oyj (HLSE:ROVIO) $6.27 91% $460 $331 1.1x 12.6x Mean 88.8% $3,710 $3,461 3.5x 111.3x Median 90.6% $1,544 $1,470 3.5x 46.8x x
  32. 32. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 SoftwareasaService(“SaaS”)IndustryReport PubliclyTradedCompanies(2/3) VALUATION SUPPORT $ millions, except per share data 31 Source(s):CapitalIQ as of 6/30/20; Note: “NM” only applies to multiples less than zero. x Stock % of Equity Price 52 Week Market Enterprise EV / Revenue EV / EBITDA Company 6/30/2020 High Cap Value LTM LTM Professional Scene Torque Esports Corp. (TSXV:GAME) $0.55 9% $60 $75 NM NM Allied Esports Entertainment Inc. (NasdaqCM:AESE) $2.09 33% $60 $69 2.7x NM Super League Gaming, Inc. (NasdaqCM:SLGG) $2.40 30% $25 $20 18.8x NM Gfinity plc (AIM:GFIN) $0.02 49% $18 $15 1.7x NM Mean 30% $41 $45 7.7x NM Median 31% $42 $45 2.7x NM Stock % of Equity Price 52 Week Market Enterprise EV / Revenue EV / EBITDA Company 6/30/2020 High Cap Value LTM LTM Technology - Hardware Microsoft Corporation (NasdaqGS:MSFT) $197.88 91% $1,543,306 $1,489,689 10.4x 22.7x Alphabet Inc. (NasdaqGS:GOOG.L) $1,396.88 88% $966,497 $866,072 5.2x 17.9x NVIDIA Corporation (NasdaqGS:NVDA) $372.56 86% $233,696 $224,920 19.1x 58.3x Sony Corporation (TSE:6758) $68.64 1% $83,575 $98,288 1.3x 9.0x Advanced Micro Devices, Inc. (Nasdaq:AMD) $51.16 83% $61,616 $60,930 8.4x 60.1x Nintendo Co., Ltd. (TSE:7974) $446.74 1% $53,052 $41,766 3.4x 12.4x Seagate Technology plc (NasdaqGS:STX) $47.99 75% $12,423 $14,977 1.4x 8.6x Logitech International S.A. (SWX:LOGN) $64.41 91% $10,961 $10,264 3.3x 24.8x Plantronics, Inc. (NYSE:PLT) $14.58 34% $563 $2,017 1.2x 14.0x Razer Inc. (SEHK:1337) $0.20 11% $1,678 $1,159 1.4x NM Turtle Beach Corporation (NasdaqGM:HEAR) $14.85 78% $215 $208 0.9x 17.4x Mean 58% $269,780 $255,481 5.1x 24.5x Median 78% $53,052 $41,766 3.3x 17.7x
  33. 33. CONFIDENTIAL D i g i t a l G a m i n g U p d a t e – S u m m e r 2 0 2 0 SoftwareasaService(“SaaS”)IndustryReport PubliclyTradedCompanies(3/3) VALUATION SUPPORT 32 $ millions, except per share data Source(s):CapitalIQ as of 6/30/20; Note: “NM” only applies to multiples less than zero. x Stock % of Equity Price 52 Week Market Enterprise EV / Revenue EV / EBITDA Company 6/30/2020 High Cap Value LTM LTM Technology - Streaming & Content Sea Limited (NYSE:SE) $109.08 84% $50,722 $49,714 19.6x NM Bilibili Inc. (NasdaqGS:BILI) $45.30 88% $16,093 $15,586 14.3x NM HUYA Inc. (NYSE:HUYA) $18.99 67% $4,098 $2,655 2.1x 43.1x Mean 80% $23,638 $22,652 12.0x 43.1x Median 84% $16,093 $15,586 14.3x 43.1x Aggregate Metrics Mean 55% $171,333 $164,754 6.0x 36.6x Median 77% $11,986 $11,889 3.5x 21.0x

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