M&A in Gaming has hit record levels in 2013 and 2014 H1. For the first time, Corum Group has put together research M&A trending within the Gaming Ecosystem. I gave this talk at Casual Connect SF July 2014 detailing increased appetite of Asian buyers and driving trends of innovation and interest activity across the gaming industry.

1. San Francisco 2014
Alina Soltys
Senior Analyst

2. 2
Corum – Sell Side Advisory Firm
 Establishedin 1985.
 Focusedon transactions in technologyproductsand services businesses.
 Professional staff drawn from senior positions at technologycompanies.
 300+ M&A transactions. Over$7 billionin transactionvalue.
 25+ year relationshipswith global software companies.
 Most extensive databasein the industry (approx. $25millioninvested).
 Integratedglobal operations; transactions in 21 countries.
 Educational Leader,creatorof the world’s most attended techM&A
conference,sponsor of the World FinancialSymposiums,frequentguest on
CNBC, MSNBC and other industry events.

3. 3
Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup

4. 4
Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup

5. 5
Technology Index: Quarterly
Subsectors: Vertical, IT Services, Internet, Infrastructure, Horizontal, and Consumer

6. 6
41
39
33
20
18
17 17
16
15
14 14 14 14 14
Top Strategic Acquirers: 2013 - YTD

7. 7
41
39
33
20
18
17 17
16
15
14 14 14 14 14
Top Strategic Acquirers: 2013 - YTD

8. 8
Top Strategic Acquirers: 2013 - YTD*
*

9. 9
Representative M&A Transactions
Acquirer: Facebook
Target: Oculus Rift
Deal Value: $2 Billion
Date: April 2014
Sold to
Following the Acquisition
Target: Carbon Design Group
Acquirer: Oculus VR
Transaction Value: Undisclosed
Sold to
Target: Jenkins Software (RakNet)
Acquirer: Oculus VR
Transaction Value: Undisclosed
Sold to

10. 10
Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup

11. 11
0
10
20
30
40
50
60
70
80
90
100
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
2009 H1 2009 H2 2010 H1 2010 H2 2011 H1 2011 H2 2012 H1 2012 H2 2013 H1 2013 H2 2014 H1
Reported Gaming Transactions
Transaction Value ($B) Billion Dollar + Total Deals
Transactions in the Gaming Ecosystem
Sources includecompany filingsand releases,industry databasesand CorumGroup.
• Both majority andminority dealsincluded.
• Transactionsrelatingto thegamingecosystemwereincluded,notlimited to gamingstudios.
• Only announced or availabledeal valuesincluded.

12. 12
Source:Corum
0
10
20
30
40
50
60
70
80
90
100
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
$10.0
2009
H1
2009
H2
2010
H1
2010
H2
2011
H1
2011
H2
2012
H1
2012
H2
2013
H1
2013
H2
2014
H1
ReportedGamingTransactions
Transaction Value ($B) Billion Dollar + Total Deals
Transactions in the Gaming Ecosystem
Deal Volume Highest in 2 years
Record 2013 & H1 2014
Excluded Billion $ Transactions:
• H2 2013: $3.05B
• H1 2014: $2.27B
$0
$20
$40
$60
$80
$100
$120
inMillions
AverageDealSizeTrending
Average Deal Size:
5 Year Growth : 98.9%$42m to $84m
YoY: 57% $53.5m to $84m

13. 13
Asian DominanceIncreased, Focused Regionally
Source: Corum
$1.53B for 51%
$330M for 40%
$1.4B for 6%
Global Transactions
Top 7 of 10 Deals Top 9 of 10 Deals
(2013)(2012)
ChangYou will invest
$600M in mobile game
developers
South Korean GameVil sets $150M+ for
M&A / investment. Acquires Com2uS &
Nine Wheels plusother partners.
$200m –
Acquisition$200m –
Marketing$200m -- Rev
Share

14. 14
Top Asian Gaming Acquirers
10
10
4 4
3 3
2 2
1 1 1
50%+
Growth
50%+
Growth
235%
Growth

15. 15
Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup

16. 16
BRICS Growing Up
BRIC outpacing Downloads and Revenues by 2.7x compared to US & Asian Markets
Brazil and Russia are growing rapidly!

17. 17
BRICS Growing Up - Brazil and Russia
Source: PwC
Russia
$460M
in 2011
$1.5B
in 2014E
Latin
America
$1.4B
in 2013
$1.8B
in 2016E

18. 18
BRICS Growing Up - Brazil and Russia
Source: PwC
OnlineGaming
2nd largestin
Europe
Hits Top 5 for iOS and
Google Play in 2013
Mobile penetration
& long commutes
drive further growth
Brazil gaming
market 5th
largest in the
world
Consoles
prohibitively
expensive, push
users to FTP on
Mobile & PC
Russia
$460M
in 2011
$1.5B
in 2014E
Latin
America
$1.4B
in 2013
$1.8B
in 2016E

19. 19
Overview
Technology M&A Update
Gaming M&A Update
Gaming Market
Driving Trends
@CorumGroup

20. 20
Messaging Is Disruptive
WeChat
Upgrade
adds games,
emoticons &
mobile
payment
system
Line filed
to go
public in
Tokyo
Feeling the Pinch,
March Year end -10%
3 mo. after releasing Kakao Games,
monthly revenue soared 9x to $35M
396
Million +
Players
Monetizing
similarto

21. 21
Messaging Apps Driving Adoption
Rank
2013
Game
1 모두익마줌 for Kakao
2 Million Arthur
3 마구마구2013 forKakao
4 Wind Runner for Kakao
5 DevilMaker for Kakao
6 Puzzle& Dragon
7 카드뫼 샨 샵략지
8 Everytown for Kakao
9 Clash of Clans
10 Hello Hero for Kakao
Korea
Top iOS Games
Rank
2013
Game Publisher
1 Puzzle& Dragons GungHo Online
2 LINEBubble! LINE
3 Pokopang LINE
4 LINEPOP LINE
5 LINEWINDrunner LINE
6 LINEHIDDEN CATCH LINE
7 LINEJELLY LINE
8 PrincessPuntSweets GungHo Online
9 LINEPLAY LINE
10 TempleRun 2 Imangi
Japan
iOS & Google Play Downloads
+ + =
950M+
Users

22. 22
Candy Crush Saga uniting with WeChat
Key Markets Exposed to Candy Crush through WeChat
Top 20 in
US
Top 80 in
China

23. 23
M&A Making Huge Impact in OTT
Acquirer: Facebook
Target: WhatsApp
Deal Value: $19 Billion
Latest User Counts: 465M
Sold to
Acquirer: Alibaba
Target: Tango
Deal Value: $215M
Received
funding
Acquirer: Rakuten
Target: Viber
Deal Value: $900M
Latest User Counts: 100M
Sold to
Dedicated Gaming Fund
$25M

24. 24
Social and Real Money Casino Companies
21%
11%
9%
7%6%
5%
Restof
Market**
41%
SocialCasino GameMarket Share - 2Q14
SOCIAL ONLY
MOBILE ONLY
$2.7BSocial Casino
Gaming Market
46%
20%
on Mobile &
Growing
of Top 100Publishers
have at least one social
casino game
Source: App Annie, Eilers Research

25. 25
Billion Dollar Consolidation Spree
Acquirer: Amaya Gaming
Target: Rational Group Ltd.
Deal Value: $4.9B
Deal Multiple:3.5x* Revenue
Date: June 2014
Sold
to
Acquirer: AristocratTechnologies
Target: VideoGaming Technologies
Deal Value: $1.3B
Deal Multiple:5.5x Revenue
Date: July2014
Sold
to
Acquirer: GTECH
Target: IGT
Deal Value: $6.4B (cash plus debt)
Deal Multiple:3.0x Revenue
Date: July2014
Sold
to

26. 26
Games as a Service
Source: Wandoujia. April –November 2013
Top $100M+
Games
90%
FTP
Continuously deliveringnew value to Gamers
• Players pay as they go & what they use - “FTP”Service Concept
• Startingwith trailer thru game play, online presence,
community, etc.All Encompassing
• Stronganalytical solutions and strategies
• Keep the users coming back
Monetization is Key

27. 27
Consoles adopting FTP Model
$30M+
in
Microtransactions
“Console-tainment”
Source: SuperData
$2B $2.5BRevenue Growth(YoY)
$295M $352M
in 2012 in 2013
Worldwide Console Spend
Microtransactions

28. 28
Security Concerns Heightening
Especially relevant to outfits
with payment systems
97%
of all mobile
malware*
*Predominatelyin
Middle East & Asia
Global Transactions
RoMaster
Mobile Is Here:
Record amounts of internet traffic

29. 29
Attractive Traits of Companies
Industry Traits of Attractive Companies
Highest performers grow 100%+ annually while generating 20-50% EBITDA margins
Spread across multiple platforms – developed in unison with the intent from beginning
Continuous, low-cost development pushes to game – maintain player interest
Analytics – key to improve and build upon performance; often in-house systems
KeyThemesDrivingGamingM&A
F2P
Developer
Services
Regional
M&A
Past
Growth
Stage
Geographic
Strength

30. Thank You
www.corumgroup.com
Alina Soltys
For copy of the presentation:
alina@corumgroup.com