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Smart and Social
The Industry’s Crown Jewel

2.
Introduction
• Senior Research Analyst at Robert W. Baird & Co.
• Baird is one of the largest private investment banks
• Prior experience as software developer, Internet
start-up and Wall Street background at JP Morgan
and Lazard
• Covered Internet and Interactive Entertainment for
10 years
• Based in San Francisco
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3.
Overview
• Industry performance
• Market forecast
• Power of Exponential
• Influence of Facebook and shift to Mobile
• Conclusions
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4.
Global Video Game Market
Source: RW Baird & Co. estimates
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5.
Video Games Fastest Growth Media
Source: RW Baird & Co. estimates
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6.
Games are the most important
form of digital media
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Platform Growth Rates
Source: RW Baird & Co. estimates
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8.
E-commerce model to monetize games
Source: RW Baird & Co. estimates
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Beauty of Free-to-Play
Source: RW Baird & Co. estimates
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10.
Forecast for Mobile and Social
Source: RW Baird & Co. estimates
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Significant Opportunity in Mobile Advertising
Source: RW Baird & Co. estimates
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12.
Global Video Game Industry Growth
will be driven by Smart Devices
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Smart + Social are exponential
• Rapid increase in smart devices
• Social game mechanics now available on Mobile O/S
• Virtual goods sales expand monetization
• Global opportunities
• Competitive platform wars good for developers
– Android
– iOS
– Windows
– Samsung
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14.
Smart + Social are exponential
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15.
Filling the Stadium
1) 45 minutes
2) 3 hours
3) 12 hours
4) 2 days
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Wave of Smart Devices
500 M
400 M
300 M
200 M
100 M
M
2008 2009 2010 2011
Android iOS
Source: RW Baird & Co. estimates
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17.
Game Usage on Smartphones
Source: RW Baird & Co. estimates
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Exponential – GREE mobile users (in M)
Source: Company Reports
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Tablet Sales Growing Faster than Phones
Source: RW Baird & Co. estimates
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Multi-device Lifestyle
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% of Internet Traffic from Smart Devices
Source: RW Baird & Co. estimates
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App Sales are Global
Source: Flurry
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% of Internet Traffic from Smart Devices
Source: RW Baird & Co. estimates
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24.
Payments Growth on Facebook is Slowing
Facebook Revenues Zynga Growth Rate
Source: RW Baird & Co. estimates
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25.
Focus Turning from Facebook to Mobile
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Smart Devices are a disruptive force
similar in scope to web browsers
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Platforms are key
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Conclusions
• Huge wave of smart devices
• Exponential growth dynamics
• Global opportunities
• More attractive growth profile vs. Facebook
• Efficient distribution – use the tools, play the
platforms
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Questions/Discussion
E-mail: csebastian@rwbaird.com
Twitter: @colin_sebastian
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