Social Gaming Overview: Too Big To Ignore

2. OUTLINE Contents • Overview @MARKSILVA • Dynamics @KIMJAMES • NEXON+Asia @TIMECHANGE • International Trends @KIMKYAW • Toyota Pwns Social Gaming • Appendix #SOCIALGAMING Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved 4680

3. OVERVIEW TOO BIG TO IGNORE 50000000 Top Social Game apps earn the reach of TVs top- rated shows, the 37500000 Dancing With he Stars engagement of an addictive game and the ol 25000000 American Id popular culture impact of CityVille FarmVille Rock and Hollywood TX HodeEm 12500000 NCIS stature. NCAA Frontier Ville Sources: 1) Nielsen TV Ratings: 3/28/11 2) AllFacebook.com 0 Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved TV Social Gaming

4. OVERVIEW IT’S THAT BIG Facebook-Like Growth and Scale • Over half of Facebook’s 500 million users play Social Games • Every other check-in for Facebook is for Social Gaming Source: AllFacebook.com August 2010 Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

5. OVERVIEW BIGGER THAN GAMING • Social Gaming is tracking Facebook’s ongoing growth eclipsing the reach and engagement of most media • Social Games eclipse classic, console-based games in audience by over 10-times Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

6. OVERVIEW IT’S THAT BIG Bigger Than... • The Population of England on any day and the US any month • Email--Social Gaming passed email in 2010 to become 2nd leading activity online with >10% time use • Any other Social Network Source: AllFacebook.com August 2010 Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

7. OVERVIEW BIGGER THAN SHREK? “I would like to be [Zynga CEO] Mark Pincus. He has nailed the next killer app, the next compelling thing that’s going to happen in media.” Jeffrey Katzenberg CEO, Dreamworks Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

8. OVERVIEW BIGGEST & BEST EVER “Zynga is the most-profitable, fastest-growing, and has the happiest customers of any company that Kleiner Perkins has invested in.” John Doerr VC, Kleiner Perkins Caufield & Byers Investors in Amazon, Google, Intuit Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

10. OVERVIEW PLAYERS AND WORLDS Snapshot of leading players in Social Gaming 268,386,159 36,367,080 18, 763, 314 MAU MAU MAU Monthly Active Users Monthly Active Users Monthly Active Users 58,370,803 5,753,580 2,147,100 DAU DAU DAU Daily Active Users Daily Active Users Daily Active Users Source: http://www.appdata.com/leaderboard/developers Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

11. OVERVIEW • Zynga leads Social Games with the #1 blockbuster hit, CityVille, and a most of the top-20 Social Games • As a network Zynga engages 250+ million players/month • We see Zynga making Social Games a network unto itself Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

12. OVERVIEW • EA/Playfish is a leading developer engaging 35+ million players a month • Developing Social Gaming versions of popular EA titles • We see Playfish bringing more of its Gaming DNA and cross-device integration into its aproach Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

13. OVERVIEW • Playdom is a leading player in Social Gaming engaging 18+ million players each month • Cable TV-size audiences for Social Gaming • With Disney acquision , we see a publishing/media model emerging for Playdom and expect Disney Network IP for the platform Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

14. OVERVIEW • As you can imagine in a space that has grown meteorically in the past 24-months, many other players exist and more entering each month • We can expect to see indie developers produce hits and have a key role in the space Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

15. DYNAMICS MORE THAN FUN & GAMES • Social Networks create a “rich-get-richer” dynamic where early and fast movers dominate as their footprint grows • Zynga grew aggressively through user and developer acquisition • In addition to great games, Zynga learned how to optimize its transactions and network effect • Applying this dynamic, Zynga built FrontierVille to the #2 World in under 30 days then CityVille to 100m users in under 8 weeks • Zynga’s rapid ascension and distribution creates significant barriers to replication Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

16. DYNAMICS NOT FOR AMATEURS • Pace of innovation and optimization is continual-- too fast to attempt replicating or “DIY” • Strong agency recommendation: Collaborate over DIY Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

17. DYNAMICS ENTERING THESE WORLDS • Advertising is less than 10% of revenues and Social Games monetize only 1-5% of users • Beyond endemic placements (ingredients in FarmVille or CPG brands in Cafe World, for instance) look to aligning values and audience • Seek fit and utility, not just reach and demographics Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

19. DYNAMICS SOCIAL GAMERS KEY VALUES • Games are a way to amplify fun had with friends • Social Gaming is more about getting together with friends than the game itself Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

20. DYNAMICS LEVELS OF COMMITMENT Br a n Br a n N ew Mult Build i 1 2 3 4 5 de de -C Ga a Game h d Ga m d V ir t u me M ns ann ion tio el e s ec s Interac t al Integra G o od hanic Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

21. DYNAMICS Br a n LEVELS OF COMMITMENT 1 de d V ir t u s al G o od 1. Branded Virtual Goods • The lowest level is a branded virtual good or service. Just put your name on it. • This can be thought of like a media buy. Doesn’t really affect game play in a branded way, but not to be discounted. The right good for the right brand can be very effective. Time frame: weeks to months Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

23. DYNAMICS Br a n LEVELS OF COMMITMENT 2 de d Ga m ns tio e Interac 2. Branded Interactions - Existing Game Mechanics • Involves creating custom branded items that give customized rewards within existing game mechanics that can reflect brand values. • For instance, specific brand-centric power-ups or rewards that can affect characters, earn further game rewards or be gifted to others. Time frame: three to four months Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

24. DYNAMICS BING + ZYNGA Microsoft launched Bing with great fanfare in traditional media, online and in FarmVille. Users clicked from Bing logos to like the search engine in Facebook. Results: Bing acquired 425,000 new fans, a 360% jump in less than one day. 70% of them visited Bing in the following month. Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

25. DYNAMICS PUBLIC ENEMY WARS Universal dropped John Depp/Dillinger into Mafia Wars with killer results Gaming mechanic: task achievement earned points, energy, status Results: • Nearly 1 billion impressions • 54mm loot interactions • 44mm jobs completed • 19 million unique players • STRONG DVD sales Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

26. DYNAMICS GOOD MONEY By offering custom virtual goods that improved the performance of crops Zynga raised over $1.5 million dollars for Haiti in the first month and $3 million overall. Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

27. DYNAMICS N ew LEVELS OF COMMITMENT 3 Ga me M ec s hanic 3. Branded Interactions - New Game Mechanics This is a large custom build. Not just a product or a power-up, but something like a large, branded build out (a bar in a restaurant or a kitchen area with specific game play) or even as large as an independent venue (café, shop, etc.) Time frame: three to four months At this level, services like tracking and analytics may become part of the package. Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

28. DYNAMICS GATORADE + EA SPORTS Gatorade wanted to reach highly engaged, difficult to target young athletic male audience to drive product sales. They integrated their product in authentic ways across multiple EA Sports titles. • 24% volume increase in purchases within user group • Positive ROI of $3 earned-$1 spent • Product penetration increased 9% among Gatorade Bath Cheat Code new consumers of the brand. Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

29. DYNAMICS Mult LEVELS OF COMMITMENT 4 i -C h anne t ion l Integra 4. Multi-Channel Integrated Campaign Involves tying multiple channels (including online and offline) together into an immersive, well-branded campaign. Involves a high-degree of planning and requires significantly longer lead time and coordinated involvement by multiple parties. Big Idea thinking combined with specialists needed for retail components, sweeps, and any 360º production and execution. Time frame: four months to eight months Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

30. DYNAMICS ZYNGA + 7-11 Consumers earned virtual gifts for buying anything program related. Buy. Specially marked items from 7-Eleven. Earn. Codes for exclusive virtual gifts. Play. Get a leg up on your friends. How it Performed: • Impacted nearly every KPI in retail: • Daypart • Frequency • Demographic diversification • Basket mix • Favorability Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

33. [ What is Online Gaming?] • Synchronous/Concurrent Play with other users through the internet • Access through PC or Mobile Devices • Immersive Content provided as a service than product. Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

35. [ Global Game Market Size ] Global Game Market Global Online Game Market 14.7% 144,149 132,609 125,425 115,702 117,372 100,754 2007 2008 2009 2010(E) 2011(E) 2012(E) [Unit: million USD] Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

36. [ Global Online Game Market Share ] South America Asia Europe North America Japan 11% SE Asia 11% Korea 33% China 45% 2007 2008 2009 2010(E) 2011(E) 2012(E) Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

38. [ The Growth Trend ] Annual double digit growth 771 EBITDA Revenue 45% 5-year CAGR 52% 10-year CAGR 551 389 384.0 326 306.6 256 211 147.4 128.7 86 102.0 103.1 41 56 24 12.8 21.3 22.1 27.2 22 0.41 0.42 4.88 15.9 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(E) [Unit: million USD] Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

48. [ Successful Campaigns=Investments] • Trail and Error= Time and Effort • Online Games : Real Time, Interactive Platform • Invest time and money to define: Value of Items Metrics, Online, Mobile, Offline, UX Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

50. SECTION TITLE  Norwest Venture Partners Overview: ‣ Inception in 1961 ‣ Funded more than 400 companies ‣ Managing >$3.7B in venture capital ‣ Current fund of $1.2B raised in 12/09 ‣ Global VC firm based in Palo Alto, CA – investing in US, India, China, Israel ‣ Consistently ranked in top quartile of venture capital firms  Gaming/Gamification-related Investments: Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

51. SECTION TITLE  Global Trends Overview: ‣ The Social Gaming Warfront and Landgrab has Expanded Beyond the US ‣ Players Battling for Distribution Power, New Revenue Streams, Talent Acquisition ‣ Mobile is the New Hope for Social Gaming ‣ New Publishing Models Emerging Across Regions ‣ Facebook Global Growth vs. Incumbent Networks ‣ New Genres Emerging Beyond Copycat “x-Ville” Games Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

53. SECTION TITLE Global Battleground Snapshot  Japan: (New Revenue Streams) ‣ Small market (DAUs), high ARPU ‣ Players used to freemium + MTX model, and paying via mobile) ‣ 80% mobile (Flash-supported on legacy phones = no app builds needed) ‣ 3 different networks: DeNA, GREE, Mixi – opening app platforms and expanding into US, China, etc Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

54. SECTION TITLE Global Battleground Snapshot  China: (Talent Acquisition; Distribution and Revenues Still Challenging) ‣ Large market (DAUs), low ARPU ‣ Familiarity with freemium + MTX via MMO games + virtual goods on QQ ‣ Primarily online play; smartphone apps still on the come ‣ 1 dominant network (Tencent QQ), 3 challengers (Kaixin001, RenRen, 51) – not fully open platforms yet, poor revenue splits ‣ Lower cost labor pool ‣ MMO companies and Tencent entering US for IP and Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

55. SECTION TITLE Global Battleground Snapshot  Korea: ‣ Traditionally a hardcore/midcore gaming market: MMO RPGs, client downloads ‣ NHN, Nexon aggressively expanding overseas ‣ Best-suited for midcore if free to play MMO companies go browser-based and leverage social networks for publishing Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

56. SECTION TITLE Global Battleground Snapshot  Brazil: ‣ VERY social player base: Orkut is dominant network, with Facebook growing quickly ‣ Payment methods remain challenging, but on the rise with healthy ARPU ‣ Native players like Mentez and Vostu looking to dominate distribution before Zynga and others can enter via Facebook Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

57. SECTION TITLE Global Battleground Snapshot  Russia: ‣ Kontakti is incumbent social network leader ‣ “Importer Publishers” like i-Jet often critical for market entry ‣ Tricky region to operate in… Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

58. SECTION TITLE Global Battleground Snapshot  India: ‣ Still nascent – big potential for mobile social gaming as grey market Android smartphones gain adoption Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

59. SECTION TITLE Mobile Social Gaming: The Shiny New Toy • Ngmoco brought the social gaming model to mobile, and created > $400M of value in barely 2 years… • …attracting a string of copycats and bandwagon jumpers, desperate to get off of Facebook and away from battling Zynga • iOS App Store is a wide-open playing field since the 3 Pillars of Facebook social gaming don’t apply: • iOS App Store is extremely noisy though, giving rise to: • Android is Next Big Thing…if In App Purchases work • Tablets may enable whole new genres of mobile social games Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

60. SECTION TITLE New Publishing Models Across Regions: • Some US publishers like Zynga “going direct” by hiring or acquiring teams to launch localized versions of their games into Japan, Europe, etc. • Others using localization partners to publish and operate their games overseas: Mentez, 6waves, i-Jet, etc. • Publishing partner needed if regional social networks, payment methods, and player tastes are significantly different • Overseas publishers like Tencent also trying to do the same in the US market, but have failed to compete with Facebook… (trying mobile now instead – DeNA/ngmoco) • Approaches: - Local team building original IP - Copy and localize (the rip-off strategy) - License and localize - Co-develop and rev share • Lessons learned: owning IP is important; access to source code for true localization is critical Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

61. SECTION TITLE What’s Next? • If Facebook dominates more of the global online social gaming market, will import/export publishers go away? • Will dominant mobile social gaming networks arise in the US, giving challenge to Facebook? • Asian free2play game companies are poised to bring “midcore” gaming to social platforms – an area that’s hard for Zynga to copy and compete in? • The end of Social Gaming 1.0 is nearing – what are the next big genres after copycat Farm/City/Pet/ Fish games? (Midcore? ARG? Truly social games? Casual MMO RPG? Social RTS? Youth Edutainment?)l Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

63. Objectives & Strategies  Objectives ‣ Build awareness of the new Prius Family portfolio ‣ Increase brand favorability and purchase consideration  Strategies ‣ Leverage the entire gaming eco system ‣ Engage consumers: enhance experiences, encourage positive action, and add value ‣ Foster social interaction and viral sharing on YouTube, Facebook etc.  Prius Target: “Eco Modernists” Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

64. Why Gaming for Prius?  Gaming fits with the Prius mindset as it provides an outlet for creativity and sharing  Gamers are auto influencers and decision makers ‣ 48% of gamers provide frequent advice about automotives  Strong in-game branding experiences lead to: ‣ Increased awareness ‣ Purchase intent ‣ Positive lift in perception Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

67. Car Town  Top 20 game on Facebook: 8MM users  Leverage a large user base of auto enthusiasts to generate buzz  Program description: ‣ Virtual Prius Showroom opens simultaneously with the Detroit Autoshow ‣ Users vote for the favorite plural and receive a T-Shirt ‣ Prius Family models become available for in-game purchase ‣ Collecting all four vehicles grows coins on Family Prius Tree ‣ Prius c concept available for free for those who “Like” the Prius page Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

69. Measuring Success  Prius Showroom Total visits: 13.3MM ‣ Prius Plural Unique Votes: 1.5MM (80% of Total Prius Goes Plural Votes) ‣ Prius Video Plays: 1.4MM (90% of all showroom visitors watched video)  Prius is the #1 largest market share (in units) of any model in CarTown ‣ Increased from .04% to 14%  Toyota Prius Facebook Fan Page Prius c Integration: ‣ 147% Growth ‣ Average Fan Retention rate of 96% (Like vs Unlike) Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

70. EA: Monopoly  2nd fastest growing app on Facebook * ‣ Launched on 1/26, over 5MM players as of 3/28  Ownership of Monopoly across all game platforms: mobile, tablet, PC, Facebook  Program description: ‣ In-game integration encourages sharing and time spent with the brand ‣ Positive impact and authentic integration ‣ Custom Prius Mover ‣ Green “Eco” homes to gift to others Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

72. Measuring Success  More than 800,000 Prius movers and Green Eco Houses gifted  More than 250,000 Green Eco Houses purchased for gold Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

73. Little Big Planet 2  Allows gamers to play, create and share Prius inspired content  Custom Prius level built into the game  Program description: ‣ Timing: 1/18/11 – 3/31/11 ‣ Developer made “LittleBigPrius” level - Animated XMB theme - Prius model featured in Central Square of HOME ‣ Prius items were given to users to create their own Prius levels for the contest ‣ Along with prizing, winner received presence in Playstation HOME , in-game and on Playstation network Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

75. Measuring Success  Prius LBP2 Level ranks (out of 4MM total) ‣ rank #9 for “most hearted” level ‣ rank #16 for “most played” level ‣ 81% completion rate amongst players (as of 3/3)  Contest Stats: - On average 10 minutes to complete level ‣ 897 contest entries ‣ contest winner: ‘eco adventure’ - 798 total plays, hearted 243 times Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

76. Learning  Gaming can be used to achieve various media objectives  Allows for unique and innovative advertising integrations beyond the realm of traditional media  Partnership opportunities require extensive lead times for asset development  Social gaming can successfully grow fan base  Increase brand recognition and positive association by enhancing organic in-game user experience  Advertiser must provide 3D render data to partners to be able to include the vehicle in-game  Audience sensitivity is higher in gaming than other media Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

79. APPENDIX GLOSSARY ARPU Exit Event Average Revenue Per User is measured as total revenue divided by the number The last actions a user performs before exiting the game. of subscribers. K Factor Churn K Factor measures the virality of your product. The turnover rate of a social game’s active players. Churn refers to this K Factor = (Infection Rate) * (Conversion Rate). constant loss and gain of members. • An Infection Rate is how much a given user exposes the game to other players. Cohort • A conversion rate is when that “infection” results in a new sign up. “A group of subjects who have shared a particular experience during a Ex. A K Factor of 1 means every member is bringing you one additional member. particular time span.” Cohorts are used for analyzing retention. Lifetime Network Value DAU The value a user provides to your network over the course of their entire Daily Active Users is the number of active users over the course of a single “lifetime” on the network. day. MAU DAU/MAU Monthly Active Users tracks the total number of users in a given month. Comparing Daily Active Users to Monthly Active Users shows roughly how many days per month your average user engages with your game. It is strongly Re-Engagement correlated with social gaming success. Re-engagement is how you get users who have quit playing to come back. It includes re-engaging gamers who have been signed off for an hour, a day, a Engagement month, or more. Engagement measures how long users spend playing your game. How many features do they access? Are they spending hours or seconds? How many Retention pages does the average user view? What percentage are returning visitors? Retention is how well you maintain your userbase. Entry Event Viral Rate/Virality The first action a user performs when they enter the game. Measured by K Factor, the Viral Rate/Virality shows how much your users are promoting, evangelizing and spreading your game. Source: http://bit.ly/sgglossary Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

80. APPENDIX SOCIAL GAMING DYNAMICS • The new “Hardcore” Social Gamer is a midwest mom • Think friends not gamers • Part of value is bringing friends together • Respect the user • Add value Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

85. APPENDIX SOCIALGAMING STATISTICS • Social Gaming inspires a majority of daily and weekly play • Gender and age change based on the world and activities • While average demographic composition skews slightly male, average time and engagement skews female Copyright ©2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

Social Gaming Overview: Too Big To Ignore

Social Gaming Overview: Too Big To Ignore

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