Team 5 fy2013 drexel case competition v final

PinnacleGames, Inc.
Moving to the Cloud
Universal | On-Demand | Quality

Drexel-Deloitte 2013 Business Technology Case Competition
Pinnacle
Games, Inc.
Agenda
Industry Outlook
Customer Profile
Game Development
Financial Model
Company Structure
The People
The Roadmap
Industry
Customer
The Game
Finance
Structure
Roadmap
The People

Pinnacle
Games, Inc.
Market growth is moving away from console games
Source: Nielson VOD and Streaming Service Survey 2012
According to Nielsen usage of Video-on-demand (VOD) and streaming services accounted
for:
•  22% of users overall time in 2012
•  Compared to 19% in 2011 and 13% in 2010
Playstation 3 accounted for most growth:
•  24% in 2012 compared with 15% in 2011
Wii has already captured a large audience:
•  32% of current users spend their overall time
with VOD and streaming
XBox users focus on online game play:
•  33% of current users play video games online
Industry Customer The Game Finance Structure The People Roadmap

Pinnacle
Games, Inc.
Gaming dominates the Smartphone industry
Mobile applications is a $10 billion software
industry
•  More than 80% of all revenue generated is from
gaming
•  76 of the top 100 grossing iOS apps are games
Gaming is biggest Smartphone application
use in:
•  BRIC (Brazil, Russia, India, China) where current
economic growth is 6.9% compared to 1.5% for
advanced economies
On a global scale over 30% of all Smartphones activities are for gaming

Pinnacle
Games, Inc.
Cisco Predicts Cloud is the Future
Mobile Network connection speeds will
follow the same trend
•  A 700% increase in network data transfer
from 2012 to 2017
Mobile video/streaming currently accounts
for 50% of all data traffic
•  By 2017 will be 66% of all data traffic
Overall Growth in data traffic will grow exponentially
•  A 1,300% increase in traffic from 2012 to 2017
Figures in Legend refer to traffic share in 2017.
Source: Cisco VNI Mobile Forecast, 2013

Pinnacle
Games, Inc.
Zynga
•  Create games with revenue bookings for a significant period
•  Moving from web to mobile and gaming
•  Monetize player base more effectively
Activision
•  Continue growth through strategic acquisitions and alliances
•  Slowly shift delivery of digital content and online services
•  Exploration of new business models for delivering content digitally
Electronic Arts
•  Fastest growing part of business is delivering games through online networks
•  Providing games for mobile devices & internet games through online delivery
•  Struggling to meet support requirements by consumers
Competitors Hint Investment in Cloud Service Integration

Pinnacle
Games, Inc.
The market is shifting to social gaming
Console Game Customer Profile Social Game Customer Profile
Gender: Male
Age: 18-35
Game Price: $40-60
Console Price: <$200
Preference:
•  Rich graphics and sounds
•  A solid storyline
Gender: Male, Female
Age: 5-55
Game Price: <$10
Console Price: N/A
Preference:
•  Easy-to-use games (time killer)
•  High enjoyment at low cost
•  Low demand for quality
Gross Margin (High):
High cost; low volume
Gross Margin (Low):
Low cost; high volume

Pinnacle
Games, Inc.
Vendor List

Pinnacle
Games, Inc.
Cloud Gaming Revolutionizes Gaming Delivery Experience
Cloud Gaming à Game Delivery
•  Setup
•  On-Demand
•  Accessibility
•  Multiple platforms capabilities
•  Continue saved games anywhere
•  Hardware
•  No independent console
•  No more gaming discs
•  Customer’s After-purchase Experience
•  No digital downloads
•  No game installations (universal
compatibility)
•  No more game patches (seamless
updates)
•  Anti-piracy DRM

Pinnacle
Games, Inc.
Games are Developing with the Cloud
Console Games
•  Currently used for providing older content
•  Cloud won’t be major part for 5 years or more
Social and Mobile Games
•  Much more content to compete with
•  Market cycle is more rapid
–  Puts more stress on development studios
•  Acquisition is best way to enter market
–  Trend in the industry
–  Will bolster studio capacity

Pinnacle
Games, Inc.
Missing Out on the Social Gaming Industry can be Costly
Console Games PC and Mobile
Games
Online/Social
Netork Games
28
20 19
22
25
35
Forecasted Revenue Growth by
Sectors (billions)
2012 2017
2012 2017
Revenue(Billions)
Forecasted Revenue Growth In
Global Video Game Market
Console Games
PC and Mobile Games
Online/Social Netork Games
67
Revenue(Billions)
82
What if we stick with Console
games instead?
•  It is forecasted that 39% of console game
revenue will come from online distribution
and sources by 2017.
•  Global market for video games is expected
to grow from $67 billion in 2012 to $82
billion in 2017
•  Revenue from PC games is estimated to
grow to more than $25 billion by 2017, up
from $20 Billion in 2012
•  Revenue from Online/Social Network
games is estimated to grow from $19 billion
to more than $35 billion in 2017

Pinnacle
Games, Inc.
Invest in the Future
Console
Games
50%PC/
Mobile
Games
20%
Online
Games
30%
REVENUE
BREAKDOWN - YEAR
1
•  Gross margins of leading firms
of the sectors
•  Console: 55-60%
•  Social/Mobile: 65-70%
•  We expect 65% overall gross
margin under our product mix
and pricing model by 2017
•  Cost savings from console
game development
•  At least 22% Top Line growth
by 2017
( Revenue in
Billions)
2012
2017
Growth

Market
67 82 22%

Pinnacle
3.093
3.785
22%

Market Share
4.6%
4.6%
-

Social/
Mobile
Games
20%

Pinnacle
Games, Inc.
Acquisition of small social gaming companies
•  Acquisition Targets
–  Start-ups
–  Online casino games
–  Budget: $50M
•  Additional studios
–  Developing PC/Mobile Apps
–  Adapting the established franchises to new markets
•  Capitalize Growth in Emerging Markets
–  PC/Mobile is the major platform
–  Highest percentage of paying casual and social gamers
Listing games on Vendor’s cloud
•  New distribution channels
•  Cost savings
Increasing M&A Activities Lead the Way to Social Gaming Market

Pinnacle
Games, Inc.
Traditional Console games
•  High price, low volume, high profit margin
“Freemium” - PC/mobile/Social Network games
•  F2P
•  Paying gamers ranging from 2.5%-10% and more of all players
•  High volume, low profit margin
Cloud game pricing models
•  Monthly subscriptions
•  One time purchase for new games
•  Reformat old console games and list on vendor stores
•  Demo new games
Growing Revenue through Non-traditional ways

Pinnacle
Games, Inc.
Game Delivery
Cloud Computing will Create more Collaboration within the Company
Development
Consolidation
Culture
•  Refer to previous
•  Live customer
feedback with CRM.
Increase specificity and
speed of targeted
updates
•  15 Worldwide Studios
•  Integrate development
process
•  Tools in the cloud allow
for ability to collaborate
•  Cut down on delivery
time among
•  Increased
connectedness with
consumers
•  Increased camaraderie
within company
•  In depth understanding
of gaming industry
through communication
with customers and
local markets of global
studios

Pinnacle
Games, Inc.
Retrain
The Cloud provides many employee motivating tools
Lower Attrition Refocus
IT Department
•  Interactive learning
experience using cloud
bank of information
•  Any device on any
platform anywhere:
more personalized and
time convenient
•  Job security is highest
concern: Transparent
at all times during
change
•  80/20 rule work
implementation
•  Real time tracking
progress, automatically
updated in cloud,
reward accordingly
•  Current employees will
need new skills
•  Areas of the
department will be
shifted over to cloud
provider
•  Involve transitioning
workers with
implementation
process. Will increase
their skill set, give time
to find other work,
understand industry
trends

Pinnacle
Games, Inc.
Proper Mitigation of Risk will Ease Cloud Integration
Risk of
Relationship
with the
Vendor
Due diligence in
implementing and
optimizing cloud
solutions
Understanding
contract
management
process and
agreements
Thorough analysis
of current assets
and technology to
understand what is
transferrable and to
what degree

Pinnacle
Games, Inc.
1. Foster long term partnership with
cloud gaming vendors.
2. Utilize vendor cloud for initial 3 years.
Then develop own cloud system.
3. Same as 2.
1. Forecasted revenue to increase by
22%.
2. Better organizational integration with
cloud.
3. Cloud allows better customer
interaction.
1. Cloud and Social gaming on the rise.
2. Oracle ERP to be implemented.
3. No customer relations management
system in place.
1. Partner with the top cloud gaming
providers.
2. Partner with Oracle for ERP, CRM,
and HRM (3 Years).
3. Begin develop own cloud.
1. Constantly research for gaming
market change and top cloud gaming
providers.
2. Reassess partnership with Oracle
after 3 years. Assess own cloud
system after year 5.
3. Same as 2.
Project
Identification
and Selection
Project Initiation
and Planning
Analysis
Design
Implementation
Maintenance
1. Game delivery in the cloud.
2. Business functions in the cloud.
3. Customer service in the cloud.
Cloud System Development in 5 years
1. Game Development | 2. Organizational | 3. Customer Service

Pinnacle
Games, Inc.
Year 1 Year 2 Year 3 Year 4 Year 5Year 0
Oracle Cloud Service
Oracle Cloud Service
Develop own cloud system
Cloud storage
Cloud CRM
Partner with top cloud gaming services
Cloud HRM
Acquire social gaming arm
Acquire additional gaming development studio

Team 5 fy2013 drexel case competition v final

Team 5 fy2013 drexel case competition v final

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