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Entertainment: Software

January 4, 2017

Michael Pachter Nick McKay Alicia Reese (213) 688-4474 (213) 688-4343 (212) 938-9927 [email protected] [email protected] [email protected]

January 2017 Industry Monthly

• In December, none of our covered companies reported quarterly results. • The Wedbush Video Game Index was down 5% for the month of December driven by a challenging month for Nintendo shares, which declined 12% following a weaker-than-expected debut for Super Mario Run . Nintendo shares began to trade off in the days ahead of launch, and the decline deepened as chart data suggested that the company had made a mistake by capping spending on the game at $9.99. Ubisoft shares were up 3% for the month as speculation around a potential acquisition by holder Vivendi outweighed weaker-than-expected debuts for November video game release Watch Dogs 2 and December movie release Assassin’s Creed . The Russell 2000 and S&P 500 were up 3% and 2%, respectively, driven by the perception that the President-elect will have a pro-business approach that will include de-regulation and tax cuts. • According to NPD, November U.S. console/handheld software sales were $772 million, down 22% year-over-year and below our estimate of $788 million. The decline was driven in large part by digital mix shift, increased discounting of new releases this year, bundling, and fierce competition for wallet share in the consumer electronics space, including from a slew of new video game hardware. A trio of new releases, Activision Blizzard’s : Infinite Warfare (PS4, XB1, PC) and Nintendo’s Pokémon Moon (3DS) and Pokémon Sun (3DS), were among the month’s more popular titles. Other strong sellers included a quartet of October releases (’ The Elder Scrolls V: Skyrim Special Edition , EA’s Battlefield 1 and 2 , and Microsoft’s Gears of War 4 ), a quartet of sports titles (EA’s FIFA 17 and Madden NFL 17 and Take-Two’s NBA 2K17 and WWE 2K17 ), and hardware bundle pack-ins led by Sony’s Uncharted 4: A Thief’s End . • November next-gen hardware unit sales were below our expectations on a combined basis. There were 1,112,000 PS4 units sold including PS4 Pros versus our 1,200,000 unit estimate, 1,007,000 units sold versus our 1,100,000 unit estimate, and 53,000 U units sold versus our 62,000 unit estimate. PS4 was the most popular console for the first time in five months driven by discounting and the November 10 release of the PS4 Pro, which sold well above our expectations. • Key December headlines: o 12/3-4 – Sony held the third annual PlayStation Experience at the Anaheim Convention Center. Notable game reveals included Capcom’s Marvel vs. Capcom Infinite and Sony’s Knack 2 , The Last of Us Part II , and Uncharted: The Lost Legacy . o 12/7 – Sony announced PS4 worldwide hardware sell-through of over 50 million units as of December 6. o 12/7 – Zynga launched the mobile free-to-play game Dawn of Titans from developer NaturalMotion. o 12/8 – NPD released the November 2016 U.S. console/handheld sales data, with HW and SW dollars below our expectations. o 12/15 – Nintendo released mobile game Super Mario Run for iOS devices. The game is free-to-start with a one-time payment of $9.99 required for full access. o 12/15 – Activision Blizzard announced that based on revenue from physical unit sales, Call of Duty: Infinite Warfare , which launched on November 4, was the #1 console video game in the U.S. year-to-date and the #1 console title for the month of November. Also, for the 8th consecutive year, the Call of Duty franchise was the #1 console video game franchise in North America based on year-to-date revenue from physical unit sales, as well as retail's #1 grossing console franchise in the U.S. o 12/16 – Riot Games and BAMTech announced a long-term partnership for professional League of Legends eSports content

without disclosing financial terms. The partnership is rumored to be a seven-year, $300 million licensing deal, with BAMTech paying for the guaranteed amount through the delivery of ads, and Riot Games entitled to a portion of the profits. • Key events in January: o 1/5-8 – The CES 2017 consumer electronics trade show will be held in Las Vegas. Wedbush Securities will host management access meetings with certain covered and non-covered companies. Contact your sales person for additional information. o 1/12 – The Nintendo Switch Presentation 2017 in Tokyo begins at 8pm PT. Details will include the launch date (expected in March), pricing, and the lineup of games in development. The event will be livestreamed. o 1/12 – NPD to release the December 2016 U.S. console/handheld software and hardware sales data. o 1/13 – GameStop to report 2016 holiday sales results for the 9-week period ending December 31. o 1/31 – Nintendo to report Q3:17 results. o 1/31 – to report Q3:17 results.

Wedbush Securities does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors Entertainment:Software should consider this report as only a single factor in making their investment decision. Please see page 9 of this report for analyst certification and important disclosure information .

RISKS TO THE ATTAINMENT OF OUR PRICE TARGET AND RATING

Risks to the attainment of our price targets and ratings for the companies that we cover in this sector include changes to game release timing, greater-than-expected deterioration of the average selling price of hardware and software, the effects of competition from other forms of entertainment and games designed for smart devices, changing macroeconomic factors, and lower-than-expected consumer demand for video game hardware and software.

INVESTMENT UPDATE

Now that 2016 is in the books, we expect investors to focus on this year’s results and guidance. Activision had a weak fourth quarter, as its flagship Call of Duty game received lackluster reviews while direct competitors Battlefield 1 and Titanfall 2 scored 10 points higher in their average review scores. November physical sell-through of Call of Duty was down close to 50% year-over-year, and while some portion of the decline is attributable to a shift to full game downloads, it is clear that the game is performing worse than the prior year’s version. We think that Activision will limp to its guidance for the quarter, which is $0.09 below our current estimate; our estimates will be under review until we see December sell-through next week, as it is possible that sales rebounded that month. Regardless, it is becoming exceedingly unlikely that always conservative Activision management will guide to revenue and earnings growth in 2017. Instead, we think that the company will guide to flattish revenues (incremental contribution from King being included for a full year in 2017 compared to 10 months in 2016 offset by a lighter overall slate this year) and lower year-over-year EPS. The lower EPS guidance will likely be based upon high margin contribution from Overwatch in 2016 replaced by lower margin contribution from this year’s big title, Destiny 2 , which is developed by a third party and subject to higher royalty payments.

With that said, we expect 2017 EPS guidance of around $1.75 – 1.90, compared to the likely $2.03 – 2.05 figure they can deliver for 2016. It is important to keep in mind that Activision management has historically guided well below actual full year EPS results (an average of 19% below actuals over the last 10 years), and we expect investors to take lowball guidance with a grain of salt. In our view, 2017 looks a lot like 2015, when Activision earned $1.31, with three big differences: first, Activision added King, which conservatively adds $0.48 in core earnings next year, and which could account for as much as $0.72 in full year contribution; second, Activision has Destiny 2 launching (likely in September), which should account for at least $600 million in revenue and $250 million in operating profit contribution (approximately $0.25 in EPS contribution); and third, Activision expects to begin advertising in King games, which we think will add at least $0.15 in EPS contribution and may account for as much as $0.40. In other words, our bottom up build of EPS for 2017 comes to a minimum of $2.19 and a possible $2.68. As such, we don’t expect a material adverse reaction to what is now widely expected conservative EPS guidance.

EA has a high class problem created by the phenomenal performance of Battlefield 1 . That game will likely exceed company guidance by 4 – 5 million units, and creates a difficult comparison next year (EA’s fiscal year ends in March). We expect the company to delay the launch of Andromeda (currently scheduled for March) into April, giving it approximately 3 million units of offset to the upside from Battlefield 1 , and believe EA is well positioned to exceed its $3.65 EPS guidance for FY:17 by $0.15 or so. Next year, the company has Mass Effect (6 million total for the full year), catalog and DLC/microtransactions from Battlefield and Titanfall (contribution of at least 5 million units equivalent compared to this year’s catalog), a new IP (assumed to generate 3 – 6 million units) and a revival of (estimated 3 million units). This totals 17 – 20 million units, more than offsetting the expected 9 million from Titanfall in FY:17. EA also has a new Star Wars title in FY:18, some expected growth from its mobile and Ultimate Team offerings, and perhaps another title as yet to be announced. We expect the company to guide to at least 5% revenue growth and at least 10% EPS growth, which should take guidance comfortably in line with expectations.

Take-Two is viewed by most investors as a Red Dead Redemption 2 story, and with good cause. The last version of the game sold through 12 million in the year of its release, and this version should benefit from the solid success of 2013’s Grand Theft Auto V (from Rockstar, the same developer making RDR2 ) and the popularity of the HBO television series, Westworld . Most Rockstar games get review scores at or around the 90 , and we expect the same for RDR2 . When Take-Two guides for FY:18 in May, we expect modest EPS growth and we expect investors to look through guidance in anticipation of the launch of RDR2 later in the year. While we are maintaining our NEUTRAL rating on limited visibility into Take-Two’s long-term release schedule, we acknowledge that the sentiment around the stock is positive and likely to remain so for the balance of 2017.

GameStop has rebounded from its lows following its November preannouncement, and with good cause. Guidance for the January quarter is realistic and achievable, the company’s carrier store sales are likely to grow materially this year, and contribution from collectibles and the carrier business should allow for revenue and earnings growth next year. In summary, things aren’t nearly as bad for GameStop as its preannouncement suggested, and we think that GameStop shares are positioned to rebound further following its earnings, expected in March. In the meantime, the company will report holiday sales next week, which may prove to be mildly disappointing, but we expect EPS to come in for the quarter at the high end of the guidance range, and we expect FY:17 EPS to reflect modest growth due to contribution from GameStop’s new businesses.

We think it is appropriate for investors to remain long each of the video game publishers, including Ubisoft, which has relatively leveraging releases coming in the next two months. Ubisoft was the big loser at holiday, as its major release, Watchdogs 2 , was the last in a strong lineup of holiday releases. However, we expect Ubisoft shares to rally later in the March quarter, as we think that its sales will recover and its guidance for next year will be solid.

Entertainment: Software | 2

EQUITY PERFORMANCE

Exhibit 1: Monthly Video Game Stock Performance

Ubisoft 3%

Russell 2000 3%

GameStop 2%

S&P 500 2%

Take-Two 0%

Electronic Arts (1%)

Activision Blizzard (1%)

Wedbush V.G.I. (F/X Constant) (3%)

Wedbush V.G.I. (5%)

Nintendo (12%)

(15%) (10%) (5%) 0% 5%

Sources: ThomsonOne and Wedbush Securities estimates. Note: As of December 30, 2016. Excludes Glu Mobile, Turtle Beach, and Zynga. “Wedbush V.G.I.” is the Wedbush Video Game Index. “F/X Constant” means no year-over-year change to foreign exchange rates used for Nintendo (yen) or Ubisoft (euro).

The Wedbush Video Game Index, our market cap-weighted index of console/handheld video game companies, was down 5% for the month of December driven by a challenging month for Nintendo shares, which declined 12% following a weaker-than-expected debut for Super Mario Run on iOS devices. Nintendo shares began to trade off in the days ahead of the December 15 launch, and the decline deepened as chart data from AppAnnie and other tracking services suggested that the company had in fact made a mistake by capping spending on the game at $9.99, as we had long suspected. Ubisoft shares were up 3% for the month as speculation around a potential acquisition by holder Vivendi outweighed weaker-than-expected debuts for November video game release Watch Dogs 2 and December movie release Assassin’s Creed . The Russell 2000 and S&P 500 were up 3% and 2%, respectively, driven by the perception that the President-elect will have a pro-business approach that will include de-regulation and tax cuts. On a constant F/X basis, our Index was down 3%. Excluding Nintendo, it was down only 1%.

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FINANCIAL NEWS

In December, none of our covered companies reported quarterly results.

VIDEO GAME BEST SELLER LISTS

Exhibit 2: Video Game Best Seller Lists

Sources: GameStop.com, Walmart.com, and .com . Note: As of December 19, 2016. Excludes full game downloads, and console, hardware, and multiple video game (featuring different SKUs) bundles.

Entertainment: Software | 4

U.S. RETAIL SALES OF VIDEO GAME SOFTWARE AND HARDWARE (NPD)

• According to NPD, November U.S. console/handheld software sales were $772 million, down 22% year-over-year and below our estimate of $788 million. The decline was driven in large part by digital mix shift, increased discounting of new releases this year, bundling, and fierce competition for wallet share in the consumer electronics space, including from a slew of new video game hardware devices. A trio of new releases, including Activision Blizzard’s Call of Duty: Infinite Warfare (PS4, XB1, PC) and Nintendo’s Pokémon Moon (3DS) and Pokémon Sun (3DS), were among the month’s more popular titles. Other strong sellers included a quartet of October releases (Bethesda Softworks’ The Elder Scrolls V: Skyrim Special Edition , EA’s Battlefield 1 and Titanfall 2 , and Microsoft’s Gears of War 4 ), a quartet of sports titles (EA’s FIFA 17 and Madden NFL 17 and Take-Two’s NBA 2K17 and WWE 2K17 ), and hardware bundle pack-ins led by Sony’s Uncharted 4: A Thief’s End . We believe that the publishers did themselves and investors a disservice by releasing so many high-profile titles in roughly a one month window. The early performances of October release Titanfall 2 and new release Ubisoft’s Watch Dogs 2 (PS4, XB1, PC), which sold well below our launch month expectations, relative to those of their predecessors highlighted this phenomenon. • Call of Duty: Infinite Warfare led sales but sold below our expectations, although the Legacy Edition, which includes Modern Warfare Remastered at an MSRP of $80, performed well. Sales were down significantly from launch month sales for its predecessor, likely due to fiercer competition, digital mix shift, worldwide sales mix shift, and minimal bundle sales. We estimate that digital full game downloads accounted for roughly 40% of total demand. We saw a higher ASP for the newest Call of Duty than we have seen historically due to the compelling value propositions of the Legacy Edition and the Digital Deluxe Edition at $100 (includes Modern Warfare Remastered and a season pass). Among the month’s other high-profile new releases, Pokémon Moon and Pokémon Sun sold above our expectations, while Bethesda Softworks’ 2 (PS4, XB1, PC) and Ubisoft’s Watch Dogs 2 both sold well below our expectations. Among the October releases, Battlefield 1 , The Elder Scrolls V: Skyrim Special Edition , and Titanfall 2 all sold above our expectations. • Activision Blizzard and Nintendo sold slightly above our expectations, with EA and Take-Two slightly below, and Ubisoft well below due primarily to a much weaker-than-expected debut for Watch Dogs 2 .

Exhibit 3: Video Game Software Sales Growth

By publisher ($ millions) NPD Wedbush NPD Wedbush YoY (Act.) YoY (Est.) MoM (Act.) MoM (Est.) % change % change % change % change Activision Blizzard (35%) (38%) 1086% 1033% Electronic Arts (26%) (24%) 12% 16% Nintendo 152% 140% 615% 581% Take Two Interactive 15% 26% (14%) (5%) Ubisoft Entertainment 19% 62% 689% 971% Five Covered Publishers (10%) (8%) 143% 147% Overall Industry (22%) (21%) 106% 110%

Sources: The NPD Group/Retail Track and Wedbush Securities estimates .

• November next-gen hardware unit sales were below our expectations on a combined basis. There were 1,112,000 PS4 units sold including PS4 Pros versus our 1,200,000 unit estimate, 1,007,000 Xbox One units sold versus our 1,100,000 unit estimate, and 53,000 Wii U units sold versus our 62,000 unit estimate. The PS4 was the most popular console for the first time in five months, driven by discounting and the November 10 release of the PS4 Pro, which sold well above our expectations. Uncharted 4: A Thief’s End led bundle sales for the PS4 driven by a $50 discount over Black Friday at many retailers, but sold below our expectations. Bundle sales for Activision Blizzard’s Call of Duty: Black Ops III were below our expectations. Xbox One bundle sales for Battlefield 1 were above our expectations, with Gears of War 4 and well below. Xbox One bundles were $50 off over Black Friday at many retailers. Nintendo’s NES Classic Edition, which launched on November 11 at an MSRP of $59.99, sold well above our expectations. Sony’s PlayStation VR, which launched on October 13, was not included in the data for the second consecutive month. Sony previously disclosed that PlayStation VR pre-order sales were in the “many hundreds of thousands.” • Combined hardware and software dollar sales were down y-o-y for the tenth time this year.

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TOP PLATFORMS

Exhibit 4: Top Platforms

Source: The NPD Group/Retail Track.

Entertainment: Software | 6

VIDEO GAME RELEASE SCHEDULE

Exhibit 5: Last Month’s Key Video Game Releases

Game Title Publisher Date Platform Steep Ubisoft 12/2/16 PS4 Steep Ubisoft 12/2/16 XB1 Steep Ubisoft 12/2/16 PC Super Mario Maker for Nintendo 3DS Nintendo 12/2/16 3DS Ultimate Marvel vs. Capcom 3 - Capcom Other 12/3/16 PS4 The Last Guardian - Sony Other 12/6/16 PS4 Dead Rising 4 - Microsoft Other 12/6/16 XB1 Super Mario Run Nintendo 12/15/16 Mobile

Sources: Amazon.com, company reports, Wedbush Securities, and Wikipedia.org.

Exhibit 6: Key Upcoming Video Game Releases

Game Title Publisher Date Platform Dragon Quest VIII: Journey of the Cursed King Nintendo 1/20/17 3DS 2 - Sony Other 1/20/17 PS4 Kingdom Hearts HD 2.8 Final Chapter Prologue - Square Enix Other 1/24/17 PS4 Resident Evil 7: Biohazard - Capcom Other 1/24/17 PS4 Resident Evil 7: Biohazard - Capcom Other 1/24/17 XB1 Resident Evil 7: Biohazard - Capcom Other 1/24/17 PC Yakuza 0 - Sega Other 1/24/17 PS4 Hitman: The Full Experience - Square Enix Other 1/31/17 PS4 Hitman: The Full Experience - Square Enix Other 1/31/17 XB1 Poochy & Yoshi's Woolly World Nintendo 2/3/17 3DS Deformers - Gametrust Other 2/14/17 PS4 Deformers - Gametrust Other 2/14/17 XB1 Deformers - Gametrust Other 2/14/17 PC The Walking Dead - The Telltale Series: A New Frontier - Telltale Games Other 2/14/17 PS4 The Walking Dead - The Telltale Series: A New Frontier - Telltale Games Other 2/14/17 XB1 Ride 2 - Square Enix Other 2/14/17 PS4 Ride 2 - Square Enix Other 2/14/17 XB1 For Honor Ubisoft 2/14/17 PS4 For Honor Ubisoft 2/14/17 XB1 For Honor Ubisoft 2/14/17 PC Sniper Elite 4 - Sold Out Other 2/14/17 PS4 Sniper Elite 4 - Sold Out Other 2/14/17 XB1 Sniper Elite 4 - Sold Out Other 2/14/17 PC Halo Wars 2 - Microsoft Other 2/21/17 XB1 Halo Wars 2 - Microsoft Other 2/21/17 PC Lego Worlds - Warner Bros. Other 2/24/17 PS4 Lego Worlds - Warner Bros. Other 2/24/17 XB1 Lego Worlds - Warner Bros. Other 2/24/17 PC Horizon Zero Dawn - Sony Other 2/28/17 PS4

Note: The release dates and platforms listed above are subject to change. Sources: Amazon.com, company reports, Wedbush Securities, and Wikipedia.org.

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PROFILES FOR THE TOP UPCOMING RELEASES

Exhibit 7: Profiles For The Top Upcoming Releases

Sources: Amazon.com, company reports, GameStop.com, Wedbush Securities, and Wikipedia.org.

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Covered Companies Mentioned in this Report (priced as of the market close on January 3, 2017)

COMPANY TICKER RATING PRICE PRICE TARGET ACTIVISION BLIZZARD ATVI OUTPERFORM $36.64 $53 AMAZON AMZN OUTPERFORM $753.67 $900 ELECTRONIC ARTS EA OUTPERFORM $79.17 $95 GAMESTOP GME OUTPERFORM $25.37 $30 GLU MOBILE GLUU NEUTRAL $1.99 $2.25 NINTENDO 7974.JP NEUTRAL ¥24,540 ¥15,000 TAKE-TWO INTERACTIVE TTWO NEUTRAL $49.22 $48 TURTLE BEACH HEAR OUTPERFORM $1.30 $1.50 UBISOFT ENTERTAINMENT UBI.FP OUTPERFORM €33.55 €42.50 ZYNGA ZNGA OUTPERFORM $2.64 $4.25

Analyst Certification I, Michael Pachter, Nick McKay, Alicia Reese, certify that the views expressed in this report accurately reflect my personal opinion and that I have not and will not, directly or indirectly, receive compensation or other payments in connection with my specific recommendations or views contained in this report.

Disclosure information regarding historical ratings and price targets is available at http://www.wedbush.com/ResearchDisclosure/DisclosureQ316.pdf

Investment Rating System: Outperform: Expect the total return of the stock to outperform relative to the median total return of the analyst’s (or the analyst’s team) coverage universe over the next 6-12 months. Neutral: Expect the total return of the stock to perform in-line with the median total return of the analyst’s (or the analyst’s team) coverage universe over the next 6-12 months. Underperform: Expect the total return of the stock to underperform relative to the median total return of the analyst’s (or the analyst’s team) coverage universe over the next 6-12 months.

The Investment Ratings are based on the expected performance of a stock (based on anticipated total return to price target) relative to the other stocks in the analyst’s coverage universe (or the analyst’s team coverage).*

Rating Distribution Investment Banking Relationships (as of September 30, 2016) (as of September 30, 2016) Outperform:55% Outperform:16% Neutral: 42% Neutral: 2% Underperform: 3% Underperform: 0%

The Distribution of Ratings is required by FINRA rules; however, WS’ stock ratings of Outperform, Neutral, and Underperform most closely conform to Buy, Hold, and Sell, respectively. Please note, however, the definitions are not the same as WS’ stock ratings are on a relative basis.

The analysts responsible for preparing research reports do not receive compensation based on specific investment banking activity. The analysts receive compensation that is based upon various factors including WS’ total revenues, a portion of which are generated by WS’ investment banking activities.

Wedbush Equity Research Disclosures as of January 4, 2017

Company Disclosure Activision Blizzard 1 Amazon.com 1 Electronic Arts 1 GameStop 1 Glu Mobile 1 Nintendo 1 Take-Two Interactive Software 1 Turtle Beach Corp. 1 Ubisoft Entertainment Zynga 1

Research Disclosure Legend 1. WS makes a market in the securities of the subject company. 2. WS managed a public offering of securities within the last 12 months. 3. WS co-managed a public offering of securities within the last 12 months. 4. WS has received compensation for investment banking services within the last 12 months.

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5. WS provided investment banking services within the last 12 months. 6. WS is acting as financial advisor. 7. WS expects to receive compensation for investment banking services within the next 3 months. 8. WS provided non-investment banking securities-related services within the past 12 months. 9. WS has received compensation for products and services other than investment banking services within the past 12 months. 10. The research analyst, a member of the research analyst’s household, any associate of the research analyst, or any individual directly involved in the preparation of this report has a long position in the common stocks. 11. WS or one of its affiliates beneficially own 1% or more of the common equity securities. 12. The analyst maintains Contingent Value Rights that enables him/her to receive payments of cash upon the company’s meeting certain clinical and regulatory milestones.

Price Charts Wedbush disclosure price charts are updated within the first fifteen days of each new calendar quarter per FINRA regulations. Price charts for companies initiated upon in the current quarter, and rating and target price changes occurring in the current quarter, will not be displayed until the following quarter. Additional information on recommended securities is available on request.

* WS changed its rating system from (Strong Buy/Buy/Hold/Sell) to (Outperform/ Neutral/Underperform) on July 14, 2009. Please access the attached hyperlink for WS’ Coverage Universe: http://www.wedbush.com/services/cmg/equities-division/research/equity- research Applicable disclosure information is also available upon request by contacting Noeth Hing in the Research Department at (212) 938- 9925, by email to [email protected] , or the Business Conduct Department at (213) 688-8090. You may also submit a written request to the following: Business Conduct Department, 1000 Wilshire Blvd., Los Angeles, CA 90017.

OTHER DISCLOSURES RESEARCH DEPT. * (212) 938-9925 * www.wedbush.com EQUITY TRADING Los Angeles (213) 688-4470 / (800) 421-0178 * EQUITY SALES Los Angeles (800) 444-8076 CORPORATE HEADQUARTERS (213) 688-8000 The information herein is based on sources that we consider reliable, but its accuracy is not guaranteed. The information contained herein is not a representation by this corporation, nor is any recommendation made herein based on any privileged information. This information is not intended to be nor should it be relied upon as a complete record or analysis; neither is it an offer nor a solicitation of an offer to sell or buy any security mentioned herein. This firm, Wedbush Securities, its officers, employees, and members of their families, or any one or more of them, and its discretionary and advisory accounts, may have a position in any security discussed herein or in related securities and may make, from time to time, purchases or sales thereof in the open market or otherwise. The information and expressions of opinion contained herein are subject to change without further notice. The herein mentioned securities may be sold to or bought from customers on a principal basis by this firm. Additional information with respect to the information contained herein may be obtained upon request.

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EQUITY RESEARCH DEPARTMENT

DIRECTOR OF RESEARCH Gil B. Luria (213) 688-4501

RETAIL AND CONSUMER TECHNOLOGY, INTERNET AND MEDIA HEALTHCARE

Building Supplies/Materials Business Services/IT Services Biotechnology/Biopharmaceuticals Environmental Services Moshe Katri (212) 938-9947 David M. Nierengarten, Ph.D. (415) 274-6862 Al Kaschalk (213) 688-4539 Dilip Joseph (415) 273-7308 Consumer Entertainment Products Robert Driscoll, Ph.D. (415) 274-6863 Food and Beverage Nick McKay (213) 688-4343 Colin Radke, CFA (213) 688-6624 Michael Pachter (213) 688-4474 Heather Behanna, Ph.D. (415) 274-6874 Alicia Reese (212) 938-9927 Footwear and Apparel Emerging Pharmaceuticals Christopher Svezia (212) 938-9922 Enterprise Software Liana Moussatos, Ph.D. (415) 263-6626 Steve Koenig (415) 274-6801 Kelechi Chikere, Ph.D. (415) 273-7304 Homebuilders Jay McCanless (212) 833-1381 Entertainment: Retail/Entertainment: Software Medical Devices Michael Pachter (213) 688-4474 Tao Levy (212) 938-9948 Leisure Nick McKay (213) 688-4343 Na Sun (212) 938-9953 James Hardiman, CFA CPA (212) 833-1362 Alicia Reese (212) 938-9927 Sean Wagner (212) 833-1363 Internet: eCommerce FINANCIAL INSTITUTIONS Restaurants Aaron Turner (213) 688-4429 Nick Setyan (213) 688-4519 Amir Chaudhri (213) 688-4538 Real Estate Finance and Financial Infrastructure Colin Radke, CFA (213) 688-6624 Jason Weaver, CFA (212) 833-1383 Internet: Media and Gaming Specialty Retail: Hardlines Internet: Social Media, Advertising and Technology Regional Banks/Texas Banks Seth Basham, CFA (212) 938-9954 Michael Pachter (213) 688-4474 Peter J. Winter (212) 938-9942 Nathan Friedman (212) 938-9955 Nick McKay (213) 688-4343 David J. Chiaverini, CFA (212) 938-9934 Alicia Reese (212) 938-9927 Specialty Retail: Softlines Specialty Finance Morry Brown, CFA (213) 688-4311 Media Henry J. Coffey Jr., CFA (212) 833-1382 Taryn Kuida (213) 688-4505 James Dix, CFA (213) 688-4315 Aria Ertefaie (212) 938-9958

Movies and Entertainment Michael Pachter (213) 688-4474 Alicia Reese (212) 938-9927 Nick McKay (213) 688-4343

Payments Gil B. Luria (213) 688-4501 Aaron Turner (213) 688-4429 Amir Chaudhri (213) 688-4538

EQUITY SALES EQUITY TRADING Los Angeles (213) 688-4470 / (800) 444-8076 Los Angeles (213) 688-4470 / (800) 421-0178 San Francisco (415) 274-6800 San Francisco (415) 274-6811 New York (212) 938-9931 New York (212) 938-9923 Boston (617) 832-3700 Boston (617) 832-3700 Minneapolis (213) 688-6671 Milwaukee (213) 688-4475 Chicago (213) 688-4418 CORPORATE HEADQUARTERS 1000 Wilshire Blvd., Los Angeles, CA 90017-2465 Tel: (213) 688-8000 www.wedbush.com