38 Studios: Rhode Island Economic Development Corp. (“RIEDC”) Discussion Materials

June 14, 2010

Public Session – Private and Confidential Interactive Entertainment Industry Overview Interactive Entertainment Market Opportunity

Growth in the Interactive Entertainment Market will be Primarily Driven by Software Sales . Worldwide revenue representing retail value of shipments of videogame consoles, dedicated handheld gaming devices, and packaged software for consoles and handhelds reached a record high of $71.7 billion in 2008, up 15% from 2007’s record high of $62.4 billion.

. The worldwide market is expected to reach $124.1 billion in 2013, a projected compounded annual growth rate of 11.0%.

. While hardware revenue is projected to decline and then rise again in 2012 and 2013 due to the console cycle, the retail value of software shipments is expected to increase at a compounded annual growth rate of 14.3% in the projected years, reaching $101.8 billion in 2013.

Worldwide Interactive Entertainment Revenue by Component

($ in Billions) Hardware Software '09E-'13E $150.0 CAGRs:

$124.1 11.0%

$108.7 $96.8 $100.0 $91.5 $81.9 $71.7 14.3% $62.4 $101.8 $89.8 $80.0 $59.7 $71.1 $50.0 $39.1 $46.6 $40.7

$25.4

$21.6 $25.1 $22.2 $22.3 $13.7 $20.3 $16.8 $18.9 0.1% $0.0 2006A 2007A 2008A 2009E 2010E 2011E 2012E 2013E

Source: IDC, May 2009

38 Studios: Rhode Island Economic Development Corp. 2 Market Opportunity by Geography

North America and Western Europe Each Currently Represent 40% of Total Market Share

. Revenue in North America is expected to grow at a compounded annual growth rate of 7.1%, growing from $32.8 billion in 2009 to $43.2 billion in 2013.

Worldwide Interactive Entertainment Revenue by Geography

'09E-'13E ($ in Billions) CAGRs: 11.0% $124.1 $125.0 $108.7 $17.6 19.8% $96.8 $100.0 $91.5 $15.7 $12.8 11.8% $12.7 $81.9 $10.1 $11.5 $71.7 $9.8 $75.0 $8.5 $8.7 $62.4 $8.2 $7.3 $50.5 11.8% $9.0 $7.5 $43.7 $37.2 $39.6 $50.0 $7.8 $32.3 $38.8 $27.7 $2.9 $5.7 $21.3 $25.0 $13.6 $43.2 $32.8 $35.5 $34.6 $37.8 $24.2 $29.2 $16.6 7.1% $0.0 2006A 2007A 2008A 2009E 2010E 2011E 2012E 2013E

North America Western Europe Japan Rest of World

Source: IDC, May 2009

38 Studios: Rhode Island Economic Development Corp. 3 North America Market Opportunity

Within North America, Hardware Revenue is Projected to Decline Slightly While the Retail Value of Software Shipments is Expected to Increase at a Compounded Annual Growth Rate of 9.9% in the Projected Years, Reaching $35.5 Billion in 2013

North America Interactive Entertainment Revenue by Component

($ in Billions) Hardware Software

$50.0 Hardware '09E-'13E CAGR: (2.5%) Software '09E-'13E CAGR: 9.9% $43.2

$40.0 $37.8 $35.5 $34.6 $32.8 $29.2 $30.0 $24.2 $35.5 $24.4 $28.9 $31.8 $20.0 $16.6 $19.8 $30.0 $16.2

$10.0 $11.2

$8.0 $9.4 $8.4 $7.6 $5.4 $6.6 $4.7 $6.0 $0.0 2006A 2007A 2008A 2009E 2010E 2011E 2012E 2013E

Source: IDC, May 2009

38 Studios: Rhode Island Economic Development Corp. 4 Composition of Console Installed Base in the U.S. and Worldwide

U.S. Console Unit Sales (in millions)

PlayStation Xbox Game Cube 25.0 20.9 19.7 20.0 17.7 17.8 16.5 0.2 10.2 15.0 6.3 9.5 11.6 11.6 8.0 7.0 10.0 10.0 2.3 0.8 1.7 1.1 4.6 4.7 4.6 4.0 2.8 4.3 4.3 4.0 5.0 5.3 5.5 5.4 6.6 6.0 5.6 5.5 5.5 0.0 2004 2005 2006 2007 2008 2009E 2010E 2011E

Worldwide Console Unit Sales (in millions)

PlayStation Xbox Wii Game Cube 50.0 43.4 40.3 37.2 37.7 40.0 34.7 0.3 21.4 30.0 26.6 14.8 20.1 23.0 23.7 18.0 15.5 4.9 3.4 1.2 20.0 6.9 2.9 6.8 8.1 6.7 4.9 7.8 7.3 7.0 10.0 14.8 14.7 11.8 15.3 13.9 12.9 12.7 12.5 0.0 2004 2005 2006 2007 2008 2009E 2010E 2011E

Note: “PlayStation” includes PlayStation, PlayStation2 and PS3; “Xbox” includes Xbox and Xbox 360 Source: Wall Street research

38 Studios: Rhode Island Economic Development Corp. 5 Top U.S. Interactive Software Publishers and Key Titles

While the Industry Leaders Command a Large Portion of the Entertainment Software Industry, the Industry is Fragmented and Numerous Small, Privately-Held Players Exist

2008 Top U.S. Interactive Entertainment Software Publishers 1

Electronic Arts Others 20% 24%

Sony 3% Activision Blizzard Microsoft 17% 4% THQ 4% Ubisoft 5% of America Take-Two Interactive 17% 1 Based on U.S. Retail Sales 6% Publisher Top Brands (U.S. Sales 2008)

Electronic Arts Activision Nintendo Take-Two Amount Amount Amount Amount Rank Brand ($ mil) Rank Brand ($ mil) Rank Brand ($ mil) Rank Brand ($ mil) 1 Rock Band $662 1 Guitar Hero $992 1 Brothers $761 1 Grand Theft Auto $361 2 Madden Football 312 2 Call of Duty 446 2 407 2 NBA 2K 60 3 The Sims 143 3 Warcraft 104 3 Wii Play 261 3 Carnival Games 54 4 Need for Speed 106 4 Spider-Man 42 4 Pokemon 119 4 MLB 2K 49 5 NCAA Football 94 5 Cabela's 32 5 Zelda 67 5 Midnight Club 49 6 Tiger Woods 89 6 Kung Fu Panda 32 6 Animal Crossing 54 6 Civilization 37 7 FIFA 79 7 James Bond 25 7 44 7 Bully 17 8 NBA Live 71 8 Transformers 23 8 42 8 Elder Scrolls 14 9 Left 4 Dead 67 9 Crash Bandicoot 20 9 39 9 NHL 2K 12 10 Battlefield 57 10 Tony Hawk 17 10 26 10 Top Spin 9

Total Top 10 Brands $1,680 Total Top 10 Brands $1,733 Total Top 10 Brands $1,820 Total Top 10 Brands $662 %* 71% %* 89% %* 94% %* 90% * % of total company U.S. sell-through attributable to top ten brands Source: Wall Street research

38 Studios: Rhode Island Economic Development Corp. 6 Industry Trends and Drivers

Trends and Drivers

. Broadband penetration to the home, enabling digital distribution and online gaming. . More powerful PCs and laptops at lower prices. . Better graphic processors, more disc space, etc. Current . Improvement in quality of games, often with social elements (VoIP, text chat, etc.). Drivers . Longer console lifecycles. . Growth in adoption of smart phones and other handheld devices that support gaming applications. . Changing demographics: The web-literacy rate among the target audience has been growing constantly.

. Macroeconomic weakness and uncertainty, which impacts consumer spending, advertisements and investment. . Piracy: Illegal file downloading / disks. Inhibitors . Free content available on the Internet, which lowers demand for premium titles. . Platform incompatibility: Some hardware cannot play select software. . High bar to produce sophisticated titles; costly and time-consuming to develop.

38 Studios: Rhode Island Economic Development Corp. 7 U.S. Interactive Entertainment Versus Other Entertainment Sectors

The U.S. Interactive Entertainment Sector Has Grown Substantially Since 2003, While Other Entertainment Sectors are Approximately Flat to Slightly Down

U.S. Entertainment Sectors

($ in Billions)

Source: Wall Street research

38 Studios: Rhode Island Economic Development Corp. 8 Interactive Entertainment Market Demographics

Although Interactive Entertainment Consumption is Well Distributed, Time Spent by 8- to 18-year-olds is Growing Dramatically Interactive Entertainment Market Segmentation by Demographics (2009) . 55% of the interactive entertainment market is 6% Males older than 45 2% comprised of males aged under 45. Females older than 45 8% . Women now represent 40% of game players and 48% of Females under 18 game buyers. 36% . Within the younger demographics (ages 8 to 18), time Males 18 to 45 spent consuming video and computer games has 19% increased dramatically over the past 10 years. Males under 18 . Video games use has increased from 26 minutes a day to 1 hour 13 minutes in a typical day.

. Video games present 11% of media time allocation. 29% Females 18 to 45

Media Use Over Time (8- to 18-year-olds) Media Time Allocation Among 8- to 18-year-olds (hh:mm) 1999 2004 2009 TV Content 3:47 3:51 4:29 Movies Print 4% Music/Audio 1:48 1:44 2:31 6% Live TV 1 Computer :27 1:02 1:29 Video Games 26% Video Games :26 :49 1:13 11% Print :43 :43 :38 Movies :18 :25 :25 Total Media Exposure 7:29 8:33 10:45 Computer Multitasking Proportion 16% 26% 29% 14% Total Media Use 6:19 6:21 7:38 1 19% of time is spent playing computer games Music/Audio Notes: Total media exposure is the sum of time spent with all media. Multitasking proportion is the proportion of media time that is spent using more than one medium TV content on 22% concurrently. Total media use is the actual numbers out of the day that are spent using other platforms media, taking multitasking into account. 17% Source: IBISWorld, January 2010; Kaiser Family Foundation, January 2010

38 Studios: Rhode Island Economic Development Corp. 9 Interactive Entertainment Software Market by Genre

Growth in the Family / Children Segment has Been Driven by Music Themed Games Such as Rock Band and Guitar Hero

U.S. Interactive Entertainment Software Market by Genre

2001 2002 2003 2004 2005 2006 2007 2008 Family/Children 9% 8% 9% 9% 8% 9% 22% 25% Action 19% 26% 27% 30% 31% 25% 20% 21% Sports/Extreme Sports 21% 17% 17% 17% 17% 17% 16% 16% Strategy/RPG 24% 18% 17% 17% 16% 20% 16% 13% Shooter 10% 9% 11% 13% 11% 12% 14% 12% Racing 10% 13% 9% 7% 10% 9% 6% 7% Fighting 5% 5% 6% 5% 4% 4% 4% 5% Other 1% 2% 3% 2% 2% 2% 1% 1% Simulations 2% 2% 2% 1% 1% 1% 1% 0% Total 100% 100% 100% 100% 100% 100% 100% 100%

2008 U.S. Interactive Entertainment Software Market by Genre

Other 1% Racing 7% Family/Children 25%

Shooter 12%

Strategy/RPG 13% Action 21%

Sports/Extreme Sports Source: Wall Street research 16%

38 Studios: Rhode Island Economic Development Corp. 10 Online PC Gaming in the United States

U.S. Online PC Gaming Subscribers and Purchased Digital Game Downloads The market for online PC gaming continues (in Millions) Online PC Gamers Subscriptions Digital Game Downloads to advance, with more than 190 million Americans, or approximately 60% of the 250 237 212 population, forecasted to play some kind of 200 200 182 188188 192 online PC game by 2014. 174 178 163 173 152 155 143 150 135 132 131 118 101 105 Core business models include premium 100 90 77 84 monthly subscriptions mainly associated 62 49 49 with virtual worlds and Massively 50 39 27 Multiplayer Online Games (“MMOs”), paid 13 19 digital downloads, and advertising and 0 micro-transactions (i.e., sub-$5 virtual item 2005A 2006A 2007A 2008A 2009A 2010E 2011E 2012E 2013E 2014E purchases). U.S. Online PC Gaming Revenue

($ in Millions) Advertising/sponsorship and microtransaction (items, etc.) Digital game downloads (i.e., purchased full Premium full game and add-on download game and add-on downloads) are expected Premium MMO and casual subscription

to grow the fastest, reaching 237 million $10,000 $9,492 downloads in 2014, a 36.9% compounded $8,482 $8,000 $7,365 2,698 annual growth rate from the 49 million in 2,275 2009. $6,021 1,873 $6,000 2,583 $4,451 1,500 2,474 2,274 $4,000 $3,314 $3,431 1,136 $2,599 1,935 $1,919 1,069 1,042 1,348 U.S. online PC gaming revenue is expected 816 $2,000 $1,237 930 910 3,733 4,211 575 693 3,218 to reach $9.5 billion in 2014, a CAGR of 380 486 1,968 2,585 266 859 1,090 1,315 1,479 22.6% from 2009. $0 591 2005A 2006A 2007A 2008A 2009A 2010E 2011E 2012E 2013E 2014E

Source: IDC, March 2010

38 Studios: Rhode Island Economic Development Corp. 11 Rise of MMOs in the United States

Strong Growth in Massively Multiplayer Online Games is Expected to Continue

U.S. Premium MMO and Casual Subscriptions

(in Millions)

49 50

41 40 The number of paid monthly subscriptions 32 (including MMOs and casual gaming 30 subscriptions) has historically grown at a 25 CAGR of 27% and is projected to grow 20 18

rapidly at a CAGR of 29%, from about 18 11 12 10 million in 2010 to nearly 49 million by 10 7 5 2014. 0 2005A 2006A 2007A 2008A 2009A 2010E 2011E 2012E 2013E 2014E

U.S. Premium MMO and Casual Subscription Revenue ($ in Millions) $5,000 $4,211 Revenue from MMO and casual $4,000 $3,733 subscriptions is projected to double, $3,218

increasing from $2.0 billion in 2010 to $4.2 $3,000 $2,585 billion in 2014. $1,968 $2,000 $1,479 $1,315 $1,090 $859 $1,000 $591

$0 2005A 2006A 2007A 2008A 2009A 2010E 2011E 2012E 2013E 2014E Source: IDC, March 2010

38 Studios: Rhode Island Economic Development Corp. 12 Wells Fargo Analytical Framework

. Large, growing addressable markets

. Substantial progress on game development

. Past track record of success

. Experienced production managers and staff

. On track with schedule

. Disciplined development process

. Electronic Arts validation

. Opportunity for Intellectual Property-based product line extensions

. Complete, experienced executive management team

. Ability to hire and retain talented, creative professionals

. Corporate culture

. Pay, benefits and working environment

38 Studios: Rhode Island Economic Development Corp. 13 Disclaimer

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