REDEYE GAMING REPORT Till Tryck.Pptx
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Konfidentiellt 1 Redeye Gaming Event Schedule and participants 14:00-14:30 Introduction to the Gaming industry; Redeye presentation 14:30 – 15:00 Panel One; How to invest in Gaming Companies? • Eric Sprincorn, Fondförvaltare Swedbank • Henrik Sandell, Fondförvaltare Didner&Gerge • Per H Börjesson, VD Spiltan • Jörgen Larsson, VD Stillfront • Lars Wingefors, VD THQ 15.00-15:30 Panel Two; Winning ideas and processes in the production of gaming titles • Christofer Sundberg, Creative Director Avalanche Studios • Martin Sahlin, Creative Director Coldwood • Victor Magnusson, Lead Designer Fatshark • Stefan Ljungqvist, Goodbye Kansas • Johan Pilestedt, VD Arrowhead 15:30-16:00 Panel Three; How to run a successful gaming company? • Lars Wingefors, VD THQ • Jörgen Larsson, VD Stillfront • Sebastian Ahlskog, CFO Starbreeze • Stefan Wikstrand, CFO G5 Entertainment • Peter Levin, VD Goodbye Kansas • Rickard Blomberg, vVD Fatshark • Rui Manuel Monteiro Casais, VD Funcom Konfidentiellt 2 Introduction to the Gaming Industry Konfidentiellt 3 Size and growth Global games market per region 2016 The market is expected to continue to show robust growth in the coming years. The growth is structural and therefore less cyclical than many industries. Mobile is expected to be the strongest growing segment and China the strongest growing geographical market. Asia-Pacific has a huge population but the spend per capita and per gamer is still much lower than in the West. Expected growth and size per segment (bn SEK) Revenue per capita is: - SEK 600 in North America - SEK 370 in Europé CAGR All segments 7% - SEK 100 i Asia-Pacific CAGR Mobile 17% Data from App Annie showed that China nearly doubled the iOS App Store Games revenue vs a year earlier in Q2 2015. In two years revenues has tripled. Mobile is expected to generate nearly SEK 500 billion in 2019, thereby reaching the same revenue as for console and PC combined. Hence, total market is expected to reach revenues of around SEK 1 trillion in 2019. Konfidentiellt 4 Gaming revenues The platform owners are the Gaming revenues from publicly traded companies (SEK Billion) winners as a result of the digitalization of the industry. Tencent and NetEase dominate the Chinese market with large online platforms providing games services. Apple and Google owns the biggest mobile gaming platforms. Sony has its 10 year old Playstation Store (PSN).The company has the strongest growth of them all in H1 2016, around 35 %. Valve’s Steam generated revenues of SEK 32 bn in 2016. Mobile vs Digital vs Physical sales, Market shares The number of game titles in the on-line store increased by 75% but the revenues remained Global 37% 47% 16% flat. The number of players and revenue per game China 41% 56% 3% decreased which shows that competition has increased. South Korea 48% 47% 5% Japan 52% 28% 20% The boxed console and PC games stands for a minority of USA 29% 49% 22% the games sales in China and Germany 23% 51% 26% South Korea. The boxed industry is almost non-existing and it was totally forbidden to sell consoles until mid 2015. Mobile Digital (Console/PC) Physical (Console/PC) Konfidentiellt 5 Game genres Shooter/FPS: First Person Shooter Examples: Call of Duty, BaDlefield, Doom AcVon/Adventure: Played in third person. The games are storydriven with a focus on acKon and collecKng inventories. OMen problem solving and puzzle-elements. Examples: Zelda, GTA, Tomb Raider, Super Mario Bros RPG: Role Playing Game. Character evolves as the game progresses. Customizable characters. Most games today are AcKon RPGs. Exemples: Witcher, Final Fantasy, Skyrim, Mass Effect MMORPG: Massive MulK-player On-line RPG. Thousands of individuals play on-line simultaneously. Game environment is constantly acKve. Paid accounts and in- game purchasing. Exemples: World of WarcraM, EVE, The Elder Scrolls Online Strategy: Logical and tacKcal gameplay. MOBA: MulK-player Online BaDle Arena. Real-Kme strategy. Examples: Clash of Clans, League of Legends, DOTA, StarcraM SimulaVon: Designed to closely simulate real world acKviKes. Usually no strictly defined goals in the game. Examples: Sim City, Sims, Farming Simulator Puzzle: ObjecKve to solve or survive the puzzle. Players intelligence is primary and controller skills is secondary. Tetris invented the sub-genre Match 3 Puzzle. Examples: Tetris, Candy Crush Saga, Unravel Konfidentiellt 6 Gaming genres and sales A consolidated industry with a minority of the companies Console/PC Mobile standing for the majority of the revenues. There are a few dominant game titles within each of the segments (Console, PC and Mobile) with very high loyalty and stable revenues. Eg FIFA and Call of Duty have been the highest grossing games for several years on console. Violent games stands for over 50% of the revenues on console and PC. Over 500 new mobile games are introduced in App Store every day. However, only 40 % are newcomers on the highest grossing Top Ten- list. Revenues from highest grossing games in 2016 (SEK Billion) The biggest surprises in 2016 Game Genre Revenue Game Genre Revenue were: FIFA 17 Sports 12 Game of War - Fire Age Strategy 11.6 - Pokémon with revenues over Battlefield 1 Shooter 9 Clash of Clans Strategy 11 SEK 11 billion. Call of Duty Shooter 8.5 Monster Strike Action 10 - The Division is a new Pokémon Sun/Moon Collection 6 Mobile Strike (NEW) Strategy 9.6 franchise that is setting new The Division Action 5 Clash Royale (NEW) Card Battler 7.8 records. Developed in Sweden by Massive Interactive, owned Game Genre Revenue Pokémon GO (NEW) Collection 7 by Ubisoft. League of Legends MOBA 15 Candy Crush Saga Match 3 Puzzle 6.7 - Blizzard does it again with World of Warcraft MMORPG 9 Puzzle & Dragons Puzzle 6 new franchise Overwatch. The game has potential to be a long CrossFire Shooter 8.8 Fate/Grand Order (NEW) Card Game 4.8 term revenue generator. Dungeon Fighter Online Beat 'em up 8.5 Candy Crush Soda Saga Match 3 Puzzle 3.3 Overwatch Shooter 4.5 Konfidentiellt 7 Industry value chain DEVELOPER The people that make the game Developers can be divided into three different PUBLISHER Production, marketing and promotion categories. DISTRIBUTOR The platform owner and logistics delivery RETAILER The outlet where the product is bought First-party developers CONSUMER The people that buy the game are part of a platform owner. DistribuVon format of released games Second-party developers are connected to a platform owner but is independently owned. Third party developers are platform independent. There has been a dramatic change from physical distibution to digital distribution. - Loser: Retailer - Winner: Distributor Physical distribuVon Higher revenues for publishers and in some cases developers. Distributors such as Apple and Google are minimazing risk and maximazing profits thanks to Digital distribuVon digital distribution. Konfidentiellt 8 Revenue models Full game Downloadable Content (DLC) / Expansion pack: Usually extended TradiKonal model where the customer pays for the whole game up front. story line, new game areas or objects Extra content which are distributed digitally by OMen called ”Add-ons” and DLC (Downloadable Content). Most profitable and biggest revenue the game's official publisher. driver in recent years. Extra content is generating 2x revenues in comparison to the Freemium/F2P traditional model of ”Full games Most common in mobile games. The player has to pay money to save Kme or overcome sales” for EA. challenges that are to frustraKng. Microtransactions from FIFA’s Ultimate Team is a large contributor to revenues. SubscripVon-based The big publishers and distributors have started to do it ”the SpoKfy-way”. F2P (Free to Play) has been dominating the mobile industry: Nintendo tried charging players EA’s Digital Net Revenue in 2016 (SEK million) when launching Super Mario Run (55% of total net revenue) but without success. Freemium is starting to take a position in the console industry as well. Subscription-based is the new trend. EA, Sony and Microsoft have launched new subscription based services. This could be a new revenue model for mobile gaming. Possibly for the whole industry as well where the dominating giants charge subscriptions for all their games cross-plattform. Konfidentiellt 9 The Nordic Gaming Universe The Nordic Gaming market is diverse with leading companies from all countries. Sweden and Finland stand out with the largest regional industries. The Swedish companies have a diverse presence in the industry with both mobile only developers like King, sandbox maker Mojang and AAA studios like DICE and MASSIVE. In Finland, mobile game developers are dominating with giants like SUPERCELL and Rovio. The largest Danish developer, IO Interactive, has produced the widely popular Hitman series. Unity is the developer of the Unity 3D game engine. In Norway, the MMORPG maker Funcom stands out and in Iceland, the creator of EVE Online, CCP, is a large player. Konfidentiellt 10 The Swedish market The Swedish Game developer N.o of companies industry has grown 236 substantially over the past five 250 years. Both in terms of number of companies, employees and 200 revenues. CAGR 17% According to 150 Dataspelsbranschen, there were 106 236 registered businesses in Sweden with a focus on game 100 N.o companies development. These companies generated revenues of approximately SEK 12bn. 50 Stockholm Over the past five years, the 0 30% number of employees and 2010 2015 39% Malmö revenues has grown annually by 17% and 60%. Göteborg Skövde 4% Revenues are growing Revenue mSEK Uppsala significantly faster than the 7% 14000 Other number of employees and 11% 9% companies. The reasons are the 11 904 pronounced economies of scale 12000 in the business model and that several companies have had 10000 their commercial breakthrough in the past few years. 8000 CAGR 60% 6000 Most companies are located in the larger cities of Sweden. 4000 Skövde stands out as a pronounced Gaming hub given 2000 1 101 the small size of the town.