Mobile gaming could drive game industry to $100B by 2017

Mobile could drive total games software industry revenue to $100B by 2017

• Mobile/online games could grow to ~$60B revenue (23.6% CAGR 11-17F)
• Mobile/online games could take 60% games software market share by 2017

Mobile and Asia drove games M&A to $5.6B in 2013 ($7.9B including Activision-Blizzard)

• M&A value grew by 29% from 2012 to a record $5.6B
• Average M&A deal size grew 23% from 2012 to $63.8M
• Mobile dominated M&A by transaction value (67%) and volume (36%)

Asia the biggest growth driver of economic value in mobile/online games

• Asia and Europe could take >80% combined revenue share for mobile and online games
• 9 of the top 10 games M&As of 2013 had Asian buyers, up from 8 out of 10 in 2012
• Global and pan-regional M&A deals significant in 2013 – pan-regional relationships remain critical for trade exits
• 13 out of 15 games IPOs in 2011-2013 were by Chinese, Japanese or South Korean companies

Investment recovers slightly, returning to 2010 levels

• Investment value grew 16% from 2012 to $1B, but early stage investment gap remains
• Average investment deal size grew 14.8% from 2012 to $6M
• Mobile games and tech/gamification dominated investment in 2013

Games dominate mobile app usage and revenue – Over-the-Top messaging apps (“OTT”) a new disruption

• Games took 32% of 2013 mobile app usage (blended iOS/Android tablet/smartphone) – 67% of tablet usage
• Games took 72% of 2013 mobile app revenue and ~40% of mobile app downloads
• Asian OTT platforms beginning to disrupt mobile games in domestic markets – Kakao Talk, WeChat and LINE taking significant share

8th generation console cycle beginning to address decline, but questions remain

• 8th console generation (PS4, Xbox One, Wii U) beginning to address long term decline
• Questions about potential new installed bases, transition from 7th generation and mobile cannibalization