F2P In Europe - April 2010

Free to Play Games in Europe April 2010

Context This presentation was built to support a lecture given by Thomas at different conferences: Game Forum Germany in Hannover (Jan 2010) Quo Vadis in Berlin (Apr 2010) Numbers and estimates were last revised in Apr 2010 Other presentations on the topic: Online Games market in Europe – KGC, Séoul (Nov 2009) Free to play games in Europe – Develop, Brighton (Jul 2009)

Presentation Thomas BIDAUX France Telecom NCsoft Europe ICO Partners Who are you?

Introduction Free to play games in Europe… Europe Free to play games defined Freemium & Micro Transactions games Excluding Facebook games, Casual (Try before you buy) and free games (flash light games not monetized). They are relevant, but would need more time to cover as well.

Introduction Free to play games in Europe… Europe

Introduction Free to play games in Europe… Free to play games ?

Introduction Free to play business models: Free access to the game or part of the game Monetized extra features via different means Long term value from the users Online games

Introduction Keys to Free to Play analysis: ARPPU (Average Revenue Per Paying User) ARPU (Average Revenue Per User) CPA (Cost Per Acquisition) Lifetime Value (LTV) Active Users Peak Concurrent Users (PCCU)

Basic F2P economic principles Online games = Persistent Social Entertainment Entertainment : has value from day 1 Persistent : day 1 value increases with time Social : day 1 value = low (except Facebook games), increases with time Network effect (works both ways!) Recurring costs needs recurring revenue Service not Product Marginal costs tend to zero Free = no friction Lowest possible barrier to entry Others are important : accessibility, downloads, signup forms... Keep CPA < LTV

Introduction Various forms of Free to Play games: Client-based MMOs Browser-based games Social Games (Facebook, Bebo, MySpace) Casual games Etc.

Disclaimer All numbers are estimates

The Plan European Market Market profile Market size Maps Freemium Games Micro Transaction Games Game Portals Conclusion

The European Market The market size (P2P and F2P) – M of Players Source: idate Sept. 2008

The European Market The market size (P2P and F2P) – $ ARPU Source: idate Sept. 2008

The European Market P2P vs F2P

The European Market Estimated market size: 30M+ F2P online games players in Europe 400+ games Estimated revenue : 400-500M€/year

The European Market Free to Play games profiles

Freemium games Freemium is: Free to Play game or part of a game Extra game elements and features are unlocked by a subscription (fix ARPPU). One-time fees exist, but usually not sustainable. Set fee, easy to project and control, ceiling on ARPPU Prefered for kid games (so far) Well known freemium services are Runescape and Club Penguin

Important Freemium games Game: Dofus Genre: Client Fantasy MMO (Flash/java) Developer: Ankama (France) Numbers: 250 000 PCCU; 500 000 +Active Subscribers, 3M monthly active users; ARPPU 5 € Key territories: France, Spain Premium features: Zone privieges Item privileges No combat cap PVP Pets No cap on crafting Housing

Important Freemium games Game: Runescape Genre: Browser-based fantasy MMO (java) Developer: Jagex (UK) Numbers: 250 000 PCCU; 900 000 Subscribers; ARPPU 5 $ Key territories: US, UK, Netherlands, Scandinavia Premium features: Zone privileges Item privileges Quests privileges Extra skills Transport privileges Dedicated servers Dedicated mini games Extra Bank space Housing Extra emotes

Important Freemium games Game: Tibia Genre: Client-based fantasy MMO Developer: Cipsoft (Germany) Numbers: 50 000 PCCU; 850 000 Active, 100 000 Subscribers; ARPPU 5 € Key territories: Poland, Sweden, Eastern Europe Premium features: Zone privileges Extra spells Transport privileges Housing Dedicated servers Bank privileges Leveling privileges

Important Freemium games Game: Panfu Genre: Browser-based kid virtual world (flash) Developer: Young Internet (Germany) Numbers: 10M registered ; 800 000 active users; ARPPU 10 € Key territories: UK, Germany, Poland Premium features: Housing privileges Clothes Pets English or Spanish content

Other Freemium games in Europe Game From Genre Size Country Tribal Wars Innogames (DE) Management 3.4M active DE, EEU, PO, NE, TU Travian* Travian (DE) Management 900k active FR, IT, TU, PO, SP Hattrick Extralives (SE) Sport Management 900k active IT, DE, SP, PT Managerzone Power Challenge (SE) Sport Management 750K active PO, ES Stardoll* Stardoll (SE) Life Sim 57M registered, 5M active UK, PO, DE, FR Moshi Monsters Mind Candy (UK) Virtual World 15M registered, 1M active UK AQ Worlds Artix (US) RPG 14M registered, 200k active US, UK Spineworld Playdo Virtual world/RPG 3M registered US, UK, Nordic Wizard 101 Kingsisle MMO 5M registered US, UK Free Realms SOE MMO 9M registered US, UK

Micro Transaction games Micro Transactions are: Free to Play game Extra game elements and features are unlocked by low-priced items They are actually not « real » Micro Transactions « Paying users » finance « Free users » (indirectly or more directly via Dual Currency models) More difficult to project, no ceiling

Important Micro Transaction games Game: Habbo Genre: Browser-based kid virtual world (flash) Developer: Sulake (Finland) Numbers: 15 M active users; ARPU 1.3 $ Key territories: Nordic, UK, Germany, France MT features: Furnitures Clothes Pets and Pet food Mini-games access Screenshots Home page perks

Important Micro Transaction games Game: Metin 2 Genre: Client-based Fantasy MMORPG Publisher: Gameforge (Germany) Numbers: 7 M active users; ARPPU 20 € Key territories: Germany, Poland, Turkey MT features: Gameplay buff Experience buff Gold gain buff Repair items In Game shop Potions Trasnports Looks Gender swap

Important Micro Transaction games Game: Dark Orbit Genre: Browser-based Space management game Publisher: Bigpoint (Germany) Numbers: 35M registered, 80K PCCU; ARPU 3.6 € Key territories: Turkey, Germany MT features: Elite items Faster real time game features Discounted items

Important Micro Transaction games Game: Ogame Genre: Browser-based Space management game Publisher: Gameforge (Germany) Numbers: 1M active users Key territories: France, Germany, Turkey. Exists in many languages. MT features: Commander: Building queue, More UI Admiral: More fleet slots Engineer: Less damage taken Geologist: Better mining Technocrat: Better espionage Trading ressources

Important Micro Transaction games Game: Flyff Genre: Client-based MMORPG Publisher: Gala Net Europe (Ireland) Numbers: 300K active users; ARPPU 20 € Key territories: Germany, France MT features: Loot buff Experience buff Look items/outfits Respecs Potions Pets Group summon Speed buff

Important Micro Transaction games Game: Runes of Magic Genre: Client-based MMORPG Publisher: Frogsters (Germany) Numbers: 3M registered ; 600 K active users; 30 K PCCU; ARPPU 20 € Key territories: Germany, UK, Nordic MT features: Transport Mounts Death management Housing customization Experience Buff Loot buff Crafting tools Respecs Chests keys Pets

Other Micro Transaction games in Europe Game From Genre Size (estimates) Main Countries Dragonica Gala Net Europe MMORPG 50k FR Rappelz Gala Net Europe MMORPG 300K FR, DE, PL Last Chaos Gamigo MMORPG 200K DE, PL Silkroad Online Joymax MMORPG 500K TU, PL Florensia Burda IC MMORPG 120K DE, FR, IT 4Story Gameforge MMORPG 300K EEU, PO, IT Perfect World Games Masters MMORPG 250K DE, PL Knight Online K2 MMORPG 400K TU Cabal Online Games Masters MMORPG 100K TU, EEU, DE Allods Online Gala Net Europe MMORPG 250K FR, Nordic, EEU Atlantica Online Ndoors Europe MMO/Turned-based strategy 50K DE, FR Shaiya Aeria Games MMORPG 250K DE, EEU Air Rivals Gameforge Air Combat/MMO 50K TI, IT, EEU

Top Free to play games in Europe Red: Client-based Blue: Browser-based

F2P European Portals Portal: Gpotato.eu (Gala Net Europe) Games: Flyff, Rappelz, StreetGear, Draconica, Allods Online, Canaan, Castle of Heroes Numbers: 4M registered users Key territories: France, Germany Notable facts: Started in the UK, Polish, Italian and Turkish markets this summer

F2P European Portals Portal: Gamersfirst (K2) Games: Knight Online, Sword of the New World, War Rock Numbers: N/A Key territories: Turkey Notable facts: Not related to 2K/Take2. No physical presence in Europe. Publishing European-developed Parabellum (Acony, DE) and Victory (Vae Victis, IT). Also publishing Runes of Magic in Turkey.

F2P European Portals Portal: Game forge (Game forge) Games: Metin 2, Nostale, Air Rivals, 4Story, Cabal Online DE, Ogame, Ikariam, Bitefight, +more. Numbers: 100M registered users ; 20M monthly active; 540 000 PCCU Key territories: Germany, Poland, France, EEU, Turkey Notable facts: Started with Browser based games and started Client-based business in 2006.

F2P European Portals Portal: Bigpoint (Bigpoint) Games: Seafight, Darkorbit, Space Invasion, Mafia 1930, The Pimps, +20 more. Numbers: 110 M registered users ; 200 000 PCCU Key territories: Germany, France, EEU, Turkey Notable facts: Has strong media partnerships with Viacom and NBC (broadcasting TV ads on channels)

F2P European Portals Portal: Aeria Games Games: Shaiya, Grand Fantasia, LA Tale Numbers: 400K active EU players (est); 10M total registered users (US + EU) Key territories: Germany, France Notable facts: Very active on community/social networking front

Other F2P Portals Portal Games Based in Registered users (estimate) Alaplaya 4 Casuals, 2 MMOs Germany 4 M Frogster 3 MMOs, 1 Casual Germany 4M (US + EU) Game Masters 3 MMOs UK 2.5M GEE 1 Casual, 1 MMOs Netherlands 1M Gamigo 10 Casuals, 4 MMOs Germany 3M Nexon Europe 1 FPS, 2 MMO UK 3M

F2P developers in Europe overview Direction taken by EU devs

F2P developers in Europe overview Studios Geographical breakdown

Conclusion F2P are already in Europe, doing well and growing More coming this year, including: More Social Networks integrated More coming on other platforms (F2P on iPhone and Android, F2P on Game Consoles) Q&A?

Thank you! [email_address] www.linkedin.com/in/tbidaux www.icopartners.com/blog @icotom www.slideshare.net/ICOPartners

F2P In Europe - April 2010