Mobile Gaming 2012 CASUAL GAMES SECTOR REPORT What Are Mobile Games?

Mobile Gaming 2012 CASUAL GAMES SECTOR REPORT What are mobile games?

Games that run on a mobile device such as a mobile phone, smartphone or What makes mobile games special? 1. Mobile games can integrate GPS, camera, microphone, position tablet computer. sensors and video. 2. Mobile devices are always on Devices such as iPhone, and always within arms reach. 3. Potential audience is enormous with nearly one mobile device Playbook, Galaxy Tab, per person. Windows Phone and Android devices. Keep in mind smartphone penetration Smartphones don’t rule the world… Global 15% MOBILE yet. As smartphone penetration feature phone penetration GAMES increases, so will the potential Global 85% audience for high value games. smartphone penetration China (urban) 35%

smartphone penetration U.S. 31%

smartphone penetration Russia 25%

smartphone penetration India (urban) 23%

smartphone penetration Turkey 14%

source: ourmobileplanet.com

Device Fragmentation Lots of different phones, means varying gaming capabilities, operating systems, processing power, screen sizes and graphics. IPHONE 4S XIAOMI M1 3.5” screen 4” screen OS: iOS 5 OS: Andriod OS 2.3

KINDLE FIRE 7” screen OS: Andriod OS 2.3

SAMSUNG WAVE Y NOKIA 3.2” screen 3.2” screen OS: Bada 2.0 OS OS: Symbian Belle iOS dominates mobile gaming Revenue by smartphone OS but Android will claim the top iOS 50% spot in the near future as Android 30% developers embrace Android and others 20% Google continues to iron out its payment process.

Mobile Gaming Report 2012 CASUAL GAMES ASSOCIATION The Players

mobile social games - avg. player mobile games - avg. player

Female Male ages 25-34 ages 25-34 USA eCPM = $12.92 USA eCPM = $7.80 eCPM source Flurry eCPM source Flurry

mobile gaming audience - size and projections (millions) Russia

Brazil 250

U.S. 200

150

100

0 2011 2012e 2013e 2014e 2015e MOBILE Revenue Models % of Market Rev enue Models GAMES % of Market 2012E 2013E 2014E 2015E 2012E 2013E 2014E 2015E Freemium 55.0% 59.0% 63.0%Freemium 62.0% 55.0% 59.0% 63.0% 62.0% The Payers Ad Supported Games 6.0% 10.0%Ad Suppor13.0% 14.0%ted Games 6.0% 10.0% 13.0% 14.0% DLC 37.0% 27.0% 19.0% 17.0%DLC 37.0% 27.0% 19.0% 17.0% Other (ex. Subscription) 2.0%O ther4.0% (ex. Subscription)5.0% 7.0% 2.0% 4.0% 5.0% 7.0% How Mobile Games areTOTAL 100.0% Monetized 100.0% TOT100.0%AL 100.0% 100.0%100.0% 100.0% 100.0%

Revenue Models: 2012ERevenue Modelsrevenue % of Market models Rev2012Eenue 2013E Models % of % market of Market 2013E 2014E 2014E2015E 2015E 2012E 2013E 2014E 2015E 2012E 2013E 2014E 2015E 1. Ad supported. Freemium 55.0% 59.0% 63.0%Freemium 62.0% 55.0% 59.0% 63.0% 62.0% Example: Angry Birds on Ad Supported Games 6.0% 10.0%2012eAd Suppor 13.0%ted 14.0% Games 6.0% 10.0% 13.0% 2014e14.0% DLC 37.0% 27.0% 19.0% 17.0%DLC 37.0% 27.0% 19.0% 17.0% Android devices. Other (ex. Subscription)2% 2.0%Other 4.0% (ex. Subscription)5.0% 7.0% 2.0% 4.0% 5.0% 7.0%5% Reported $1 to 6 million per TOTAL 100.0% 100.0% TOTAL100.0% 100.0% 100.0%100.0% 100.0% 100.0% month in revenue. 19% 37% 55% 63% 2. Microtransactions 13% & Virtual Goods. 2012E 2012E 2013E 2013E2014E 2014E 2015E 2015E Example: Tiny Tower. 6% Reported $3 million in first year from in-app purchases of ingame 2013e 2015e currency. 4% 7%

3. Paid download. 27% 17% 59% Example: Fruit Ninja in Apple 14% 62% App Store for 99¢. 10% Reported 200,000 sales in first month of release.

4. Subscription. Microtransactions & Virtual Goods Example: Gameloft Subscription. Ad Supported In the U.S., $7/month for two Paid Download games per month, in the U.K., Other (ex. subscription) £.99/week for one game per week.

5. Hybrids. Between 3.5% and 10% of a Example: Infinity Blade. Paymium: paid download and Mobile Free-to-Play game audience microtransactions. In Apple App will convert to paying users. Store for $5.99 and players can make in-app purchases such as a Most users spend between Bag of 150K Gold Coins for $4.99. $8 and $15 per month. Reported revenue of $23 million within first year of release.

Mobile Gaming Report 2012 CASUAL GAMES ASSOCIATION Notable Content Providers EA Mobile www.eamobile.com EA has been very vocal about their aggressive Rovio mobile gaming strategy. And their www.rovio.com aggressiveness is paying off. They recently Rovio’s success with Angry Birds is phenomenal. reported that mobile gaming revenues are up They continue to release new Angry Birds 19% from 2010 to 2011. installments and now their game comes pre- installed on the Nokia C7 and LG Optimus. But it looks like it’s time to diversify. Rovio states Gameloft that a new non-Angry Birds game will be www.gameloft.com released in 2012. Gameloft primarily develops for mobile platforms. They recently reported a 18% YoY sales increase (2010 to 2011). Currently, Nexon Gameloft is developing games for GREE, as the www.nexon.net mobile gaming network moves west. Nexon is also gearing up for the mobile gaming battle. They recently merged with Nexon Mobile in order to streamline operations and bought a Zynga 20% stake in a mobile gaming company. Nexon company.zynga.com/games/mobile-games plans to launch more than 10 smartphone Industry insiders speculate that mobile is games this year. Zynga’s weak spot since Facebook doesn’t dominate and competitors are already gaining market share. As of January, Zynga reached 15 NOTABLE PLATFORMS million daily active mobile gamers and have GREE plans to roll out more mobile than Facebook gree-corp.com games this year. To help with that effort, they DeNA (ngmoco) acquired four mobile gaming companies. dena.jp/intl and blog.ngmoco.com Right now there is an intense race to become the top mobile gaming platform. DeNA and GREE are two of the biggest contenders. Both companies originated in Japan and have upwards of 30 million subscribers to their mobile gaming networks. They also both opened global offices in North America and Singapore. $3.5 Revenues - Worldwide $3.0

$2.5

Revenues $2.0 Revenues - Worldwide 2010E 2011 2012E 2013E 2014E 2015E $1.5 TOTAL $1.83 $2.72 $4.55 $5.54 $6.62 $7.50 SOCIALMOBILE Revenues - By Region $1.0 GAMES ($, billions) 2010E 2011 2012E 2013E 2014E 2015E Revenue Asia $1.01 $1.47 $2.27 $2.66 $2.98 $3.23 $0.5 Europe $0.27 $0.41 $0.63 $0.89 $1.13 $1.31 North America $0.49 $0.76 $1.16 $1.72 $2.12 $2.48 0.0 Latin America $0.04 $0.05 $0.10 $0.17 $0.22 $0.30 Asia Europe North America Latin America Rest of the World Rest of World $0.02 $0.03 $0.05 $0.09 $0.13 $0.19 revenues by individual market (billions) TOTAL $1.83 $2.72 $4.55 $5.54 $6.62 $7.50

$2.5 $3.5 Revenues - Individual Markets $3.5 revenues - worldwide (billions) Revenues - Worldwide ($, billions) 2010E 2011 2012E 2013E 2014E 2015E $3.0 Revenues - Worldwide Revenues - Mobile Social $3.0 $1.83 US $0.44 $0.68 $1.04 $1.55 $1.91 $2.23 $2.5 $2.5 $2.0 $2.72 Revenues China $0.073 $0.122 $0.227 $0.277 $0.364 $0.413 $2.0 RevRevenuesenues - Wo rldwide $2.0 $7.50 Rev enues2010E - Worldwide 2011 2012E 2013E 2014E 2015E Japan $0.64 $0.95 $1.73 $1.77 $2.05 $2.25 $1.5 TOTAL2010E $1.83 2011 $2.72 2012E $4.55 2013E $5.54 2014E $6.62 2015E $7.50 $1.5 $4.55 TOT AL $1.83 $2.72 $4.55 $5.54 $6.62 $7.50 Revenues - By Region $1.0 Rev($,enues billions) - By Region2010E 2011 2012E 2013E 2014E 2015E $1.0 $6.62 $1.5 $5.54 ($,Asia billions) $1.01 2010E $1.47 2011 $2.27 2012E $2.66 2013E $2.98 2014E $3.23 2015E $0.5 AsiaEurope $1.01 $0.27 $1.47 $0.41 $2.27 $0.63 $2.66 $0.89 $2.98 $1.13 $3.23 $1.31 $0.5 EuropeNorth $0.27America $0.41 $0.63 $0.49 $0.89 $0.76 $1.13 $1.16 $1.31 $1.72 $2.12 $2.48 Revenues - Mobile Social 0.0 NorLatinth America America $0.04 $0.49 $0.05 $0.76 $0.10 $1.16 $0.17 $1.72 $0.22 $2.12 $0.30 $2.48 ($, billions) 2010 2011 2012E 2013E 2014E 0.0 Asia Europe North America Latin America Rest of the World LatinRest America of World $0.04 $0.02 $0.05 $0.03 $0.10 $0.05 $0.17 $0.09 $0.22 $0.13 $0.30 $0.19 Asia Europe North America Latin America Rest of the World RestTOT ofAL Wo $1.83rld $0.02 $2.72 $0.03 $4.55 $0.05 $5.54 $0.09 $6.62 $0.13 $7.50 $0.19 TOT AL $1.83 $2.72 $4.55 $5.54 $6.62 $7.50 $1.0 TOTAL $0.55 $1.09 $2.05 $2.77 $3.37 $2.5 revenues - mobile social (billions) $2.5 Revenues - Individual Markets Revenues - Mobile Social Rev($,enues billions) - Individual 2010E Markets 2011 2012E 2013E 2014E 2015E Revenues - Mobile Social ($,US billions) $0.44 2010E $0.68 2011 $1.04 2012E $1.55 2013E $1.91 2014E $2.23 2015E $2.0 USChina $0.44 $0.073 $0.68 $1.04 $0.122 $1.55 $1.91 $0.227 $2.23 $0.277 $0.364 $0.413 $2.0 $0.55 ChinaJapan $0.073 $0.64 $0.95 $0.122 $1.73 $1.77 $0.227 $2.05 $2.25 $0.277 $0.364 $0.413 Japan $0.64 $0.95 $1.73 $1.77 $2.05 $2.25 $0.5 $1.5 $1.09 $1.5 Revenues - Mobile Social Rev($,enues billions) - Mobile 2010 Social 2011 2012E 2013E 2014E $1.0 $3.37 ($,TOT billions)AL $0.55 2010 $1.09 2011 $2.05 2012E $2.77 2013E $3.37 2014E $1.0 $2.05 TOTAL $0.55 $1.09 $2.05 $2.77 $3.37 $0.5 0.0 $0.5 $2.77 0.0 US China Japan 0.0 US China Japan US China Japan

revenues by region (billions)

$3.5 Revenues - Worldwide 2010 $3.0

2011 $2.5 2012e Revenues 2013e $2.0 Revenues - Worldwide 2014e 2010E 2011 2012E 2013E 2014E 2015E $1.5 TOTAL $1.83 $2.72 $4.55 $5.54 $6.62 $7.50 2015e Revenues - By Region $1.0 ($, billions) 2010E 2011 2012E 2013E 2014E 2015E Asia $1.01 $1.47 $2.27 $2.66 $2.98 $3.23 $0.5 Europe $0.27 $0.41 $0.63 $0.89 $1.13 $1.31 North America $0.49 $0.76 $1.16 $1.72 $2.12 $2.48 0.0 Latin America $0.04 $0.05 $0.10 $0.17 $0.22 $0.30 Asia Europe North America Latin America Rest of the World Rest of World $0.02 $0.03 $0.05 $0.09 $0.13 $0.19 TOTAL $1.83 $2.72 $4.55 $5.54 $6.62 $7.50

$2.5 Mobile Gaming Report 2012 CASUAL GAMES ASSOCIATION Revenues - Individual Markets Revenues - Mobile Social ($, billions) 2010E 2011 2012E 2013E 2014E 2015E US $0.44 $0.68 $1.04 $1.55 $1.91 $2.23 $2.0 China $0.073 $0.122 $0.227 $0.277 $0.364 $0.413 Japan $0.64 $0.95 $1.73 $1.77 $2.05 $2.25

$1.5 Revenues - Mobile Social ($, billions) 2010 2011 2012E 2013E 2014E $1.0 TOTAL $0.55 $1.09 $2.05 $2.77 $3.37

$0.5

0.0 US China Japan Key Terminology

ARPPU Average Revenue Per Paying User. FREEMIUM Offering a game, product or service free of charge (such as ARPU Average Revenue Per User. software, web services or other) while charging a premium for advanced features, functionality, or related products COST PER ACQUISITION (CPA)/ and services. CUSTOMER ACQUISITION COST Cost of acquiring leads or customers. CPA is calculated LIFETIME VALUE (LTV) by dividing the cost of a campaign by the number of new Total amount that a player will spend with a particular application installs attributable to that campaign. game during his or her lifetime with the game.

DAILY ACTIVE USERS (DAU) MICROTRANSACTIONS The number of unique users that have used an application Low value transactions at a high volume. at least once over the course of a day. MONTHLY ACTIVE USERS (MAU) DLC The number of unique users that have used an application Downloadable Content. at least once over the course of a month. eCPM SMARTPHONE Effective Cost per Thousand Impressions is a measure of Mobile phone with computer enabled features, such as data total revenue (or cost) per impression. eCPM is calculated storage, high speed internet access, media players and by dividing total earnings (or total costs) by total number e-mail capability. Smartphones also support third party of impressions. application integration.

FEATURE PHONE VIRTUAL GOODS Category between mobile phone and smartphone. These In-game items or game-related services, such as virtual devices have more features than a standard call and text currency, premium content, or a temporary subscription, capable mobile but less features than a smartphone. that enable or enhance game play. Feature phones tend to be less expensive than smartphones and have limited third party application support and integration.

ABOUT THE CASUAL GAMES ASSOCIATION For press inquiries, please email [email protected] When it comes to the health of your business, the more things that work Learn more about the mobile games together, the better. Which is why the Casual Games Association is a critical industry with the best speakers, portion of the success of your company and the industry as a whole. It networking, lectures and data to help you means that you and your team have access to cutting edge educational succeed in a crowded market at resources and are connected to thousands of other game industry May 22-24 and professionals, members of the press and service providers around the globe. Casual Connect Asia: July 24-26. Learn more at http://www.casualgamesassociation.org/ Casual Connect Seattle: