Booming M&A Gaming Market

M&A in Gaming has hit record levels in 2013 and 2014 H1. For the first time, Corum Group has put together research M&A trending within the Gaming Ecosystem.
I gave this talk at Casual Connect SF July 2014 detailing increased appetite of Asian buyers and driving trends of innovation and interest activity across the gaming industry.

1. San$Francisco$2014$
Alina&Soltys&
Senior&Analyst&

2. 2&
Corum$–$Sell$Side$Advisory$Firm$
! Established$in$1985.$&
! Focused$on$transacAons$in$technology$products$and$services$businesses.&
! Professional$staff$drawn$from$senior$posiAons$at$technology$companies.$&
! 300+$M&A$transacAons.$$Over$$7$billion$in$transacAon$value.&
! 25+$year$relaAonships$with$global$soOware$companies.&
! Most$extensive$database$in$the$industry$(approx.$$25$million$invested).&
! Integrated$global$operaAons;$transacAons$in$21$countries.&
! EducaAonal$Leader,$creator$of$the$world’s$most$aXended$tech$M&A$
conference,$sponsor$of$the$World$Financial$Symposiums,$frequent$guest$on$
CNBC,$MSNBC$and$other$industry$events.&

3. 3&
Overview$
Technology&M&A&Update&
Gaming&M&A&Update&
Gaming&Market&
Driving&Trends&
@CorumGroup$ $$

4. 4&
Overview$
Technology&M&A&Update&
Gaming&M&A&Update&
Gaming&Market&
Driving&Trends&
@CorumGroup$ $$

5. 5&
Technology$Index:$Quarterly$
Subsectors:$VerAcal,$IT$Services,$Internet,$Infrastructure,$Horizontal,$and$Consumer$$

6. 6&
41
39
33
20
18
17 17
16
15
14 14 14 14 14
Top$Strategic$Acquirers:$2013$e$YTD$

7. 7&
41
39
33
20
18
17 17
16
15
14 14 14 14 14
Top$Strategic$Acquirers:$2013$e$YTD$

8. 8&
Top$Strategic$Acquirers:$2013$e$YTD$
*&
*&

9. 9&
RepresentaAve$M&A$TransacAons$
Acquirer:&Facebook&
Target:&Oculus&RiK&
Deal&Value:&$2&Billion&
Date:$April&2014&&
Sold&to&
Following&the&AcquisiRon&
Target: Carbon Design Group
Acquirer: Oculus VR
Transaction Value: Undisclosed
Sold&to&
Target: Jenkins Software (RakNet)
Acquirer: Oculus VR
Transaction Value: Undisclosed
Sold&to&

10. 10&
Overview$
Technology&M&A&Update&
Gaming&M&A&Update&
Gaming&Market&
Driving&Trends&
@CorumGroup$ $$

11. 11&
0&
10&
20&
30&
40&
50&
60&
70&
80&
90&
100&
$0.0&
$1.0&
$2.0&
$3.0&
$4.0&
$5.0&
$6.0&
$7.0&
$8.0&
$9.0&
$10.0&
2009&H1&2009&H2&2010&H1&2010&H2&2011&H1&2011&H2&2012&H1&2012&H2&2013&H1&2013&H2&2014&H1&
Reported$Gaming$TransacAons$
TransacRon&Value&($B)& Billion&Dollar&+& Total&Deals&
TransacAons$in$the$Gaming$Ecosystem$
Sources&include&company&filings&and&releases,&industry&databases&and&Corum&Group.&
• Both&majority&and&minority&deals&included.&
• TransacRons&relaRng&to&the&gaming&ecosystem&were&included,&not&limited&to&gaming&studios.&
• Only&announced&or&available&deal&values&included.&

12. 12&
Source:&Corum&
0&
10&
20&
30&
40&
50&
60&
70&
80&
90&
100&
$0.0&
$1.0&
$2.0&
$3.0&
$4.0&
$5.0&
$6.0&
$7.0&
$8.0&
$9.0&
$10.0&
2009&
H1&
2009&
H2&
2010&
H1&
2010&
H2&
2011&
H1&
2011&
H2&
2012&
H1&
2012&
H2&
2013&
H1&
2013&
H2&
2014&
H1&
Reported$Gaming$TransacAons$
TransacRon&Value&($B)&Billion&Dollar&+&Total&Deals&
TransacAons$in$the$Gaming$Ecosystem$
Deal$Volume$Highest$in$2$years$
Record$2013$&$H1$2014$
Excluded&Billion&$&TransacRons:&&
• H2$2013$:$$3.05B$
• H1$2014:$$$2.27B$
$0&
$20&
$40&
$60&
$80&
$100&
$120&
in$Millions$
Average$Deal$Size$Trending$
$
Average$Deal$Size:$
5$Year$Growth$:$98.9%$$42m$to$$84m$$
YoY:$57%$$$$$53.5m$to$$84m$

13. 13&
Asian$Dominance$Increased,$Focused$Regionally$
Source:$Corum$
$1.53B$for$51%$
$330M$for$40%$
$1.4B$for$6%$
Global$TransacAons$
Top$7$of$10$Deals$Top$9$of$10$Deals$
(2013)&(2012)&
ChangYou$will$invest$
$600M$in$mobile$game$
developers$
South$Korean$GameVil$sets$$150M+$for$
M&A$/$investment.$Acquires$Com2uS$&$
Nine$Wheels$plus$other$partners.$
$200m$–$AcquisiAon
$200m$–$MarkeAng
$200m$ee$Rev$Share$

14. 14
Top Asian Gaming Acquirers
Source:&CapitalIQ,&Last&2&years&
10&
10
4 4
3 3
2 2
1 1 1
50%+
Growth
50%+
Growth
235%&
Growth&

15. 15&
Overview$
Technology&M&A&Update&
Gaming&M&A&Update&
Gaming&Market&
Driving&Trends&
@CorumGroup$ $$

16. 16&
BRICS$Growing$Up$
BRIC$outpacing$Downloads$and$Revenues$by$2.7x$compared$to$US$&$Asian$Markets$$
Brazil$and$Russia$are$growing$rapidly!&

17. 17&
BRICS$Growing$Up$e$Brazil$and$Russia$$
BRIC$outpacing$download$and$rev.$growth$[2.7x$Rev$Growth]$
Source:&PwC&
Russia$
$460M$$
in&2011&
$1.5B$$
in&2014E&
LaAn$$
America&
$1.4B$$
in&2013&&
$1.8B$$
in&2016E&&

18. 18&
BRICS$Growing$Up$e$Brazil$and$Russia$$
BRIC$outpacing$download$and$rev.$growth$[2.7x$Rev$Growth]$
Source:&PwC&
Online$Gaming$
2
nd
$largest$in$
Europe$
Hits$Top$5$for$iOS$and$
Google$Play$in$2013$
Mobile$penetraAon$
&$long$commutes$
drive$further$growth$
Brazil$gaming$
market$5
th
$
largest$in$the$
world$
Consoles$
prohibiAvely$
expensive,$push$
users$to$FTP$on$
Mobile$&$PC$
Russia$
$460M$$
in&2011&
$1.5B$$
in&2014E&
LaAn$$
America&
$1.4B$$
in&2013&&
$1.8B$$
in&2016E&&

19. 19&
Overview$
Technology&M&A&Update&
Gaming&M&A&Update&
Gaming&Market&
Driving&Trends&
@CorumGroup$ $$

20. 20&
Messaging$Is$DisrupAve$
WeChat$
Upgrade$
adds$games,$
emoAcons$&$
mobile$
payment$
system&
Line$filed$
to$go$$
public$in$
Tokyo$
Feeling$the$Pinch,$$
March$Year$end$e10%$
3&mo.&aKer&releasing&Kakao&Games,&
monthly&revenue&soared&9x$to$$35M$
396$
Million$+$
Players$
MoneAzing$
similar$to$

21. 21&
Messaging$Apps$Driving$AdopAon$
Rank$
2013$
Game$
1& }AJC· for$Kakao$
2& Million&Arthur&
3& C?C?2013$for$Kakao$
4& Wind$Runner$for$Kakao$
5& Devil$Maker$for$Kakao$
6& Puzzle&&&Dragon&
7&  X‹ ? ???&
8& Everytown$for$Kakao$
9& Clash&of&Clans&
10& Hello$Hero$for$Kakao$
Korea$
Top$iOS$Games$
Rank$
2013$
Game$ Publisher$
1&Puzzle&&&Dragons$ GungHo&Online!
2&LINE$Bubble!$ LINE!
3&Pokopang$ LINE!
4&LINE$POP$ LINE!
5&LINE$WIND$runner$ LINE!
6&LINE$HIDDEN$CATCH$ LINE!
7&LINE$JELLY$ LINE!
8&Princess&Punt&Sweets$ GungHo&Online!
9&LINE$PLAY$ LINE!
10&Temple&Run&2$ Imangi!
Japan$
iOS$&$Google$Play$Downloads$
+& +& =&
950M+$
Users$

22. 22&
Candy$Crush$Saga$uniAng$with$WeChat$
Key$Markets$Exposed$to$Candy$Crush$through$WeChat$
Top$20$in$
US$
Top$80$in$
China$

23. 23&
M&A$Making$Huge$Impact$in$OTT$
Acquirer:&Facebook&
Target:&WhatsApp&
Deal&Value:&$19&Billion&
Latest$User$Counts:$465M$
Sold&to&
Acquirer:&Alibaba&
Target:&Tango&
Deal&Value:&$215M&
Received&
funding&
Acquirer:&Rakuten&
Target:&Viber&
Deal&Value:&$900M&
Latest$User$Counts:$100M$
Sold&to&
&
&
Dedicated&Gaming&Fund&
$25M$

24. 24&
Social$and$Real$Money$Casino$Companies$
21%$
11%$
9%$
7%$
6%$
5%$
Rest$of$
Market**$
41%$
Social$Casino$Game$Market$Share$e$2Q14$
SOCIAL$ONLY$
MOBILE$ONLY$
Real&Money:&&
Legal:&UK&
Limited&States:&Delaware,&Nevada,&
New&Jersey&
$2.7B$$
Social&Casino&&
Gaming&Market&
46%$
20%$
on&Mobile&&&
Growing&
of&Top&100&Publishers&
have&at&least&one&social&
casino&game&
Source:$App$Annie,$Eilers$Research$

25. 25&
illion$Dollar$ConsolidaAon$Spree$
Acquirer:&Amaya&Gaming&&&
Target:&RaRonal&Group&Ltd.&&
Deal&Value:&$4.9B&
Deal$MulAple:&3.5x*&Revenue$
Date:&June&2014 &&
Sold$
to$
Acquirer:&Aristocrat&Technologies&&
Target:&Video&Gaming&Technologies&&
Deal&Value:&$1.3B&
Deal$MulAple:&5.5x&Revenue&
Date:&July&2014 &&
Sold$
to$
Acquirer:&GTECH &&
Target:&IGT&
Deal&Value:&$6.4B&(cash&plus&debt)&
Deal$MulAple:$3.0x&Revenue$
Date:&July&2014 &&
Sold$
to$

26. 26&
Games$as$a$Service$
Source:&Wandoujia.&April&–November&2013&&
Top$$100M
+$Games$
90%$
FTP$
ConAnuously$delivering$new$value$to$Gamers&
• Players&pay&as&they&go&&&what&they&use&&m&“FTP”&Service$Concept$$
• StarRng&with&trailer&thru&game&play,&online&presence,&
community,&etc.&
All$Encompassing$
• Strong&analyRcal&soluRons&and&strategies&
• Keep&the&users&coming&back&
MoneAzaAon$is$Key$

27. 27&
Consoles$adopAng$FTP$Model$
$30M+$
in$
MicrotransacAons$
“Consoleetainment”$
Source:$SuperData$
$2B$$$$2.5B$$
Revenue&Growth&(YoY)&
$295M$$$$$352M$$
in&2012& &in&2013&
Worldwide&Console&Spend&
MicrotransacRons&

28. 28&
Security$Concerns$Heightening$$
Especially&relevant&to&ouqits&
with&payment&systems&
97%$$
of$all$mobile$
malware*$
*Predominately!in!
Middle!East!&!Asia!
Global$TransacAons$
RoMaster$
Mobile$Is$Here:$$
Record&amounts&of&internet&traffic&

29. 29&
AXracAve$Traits$of$Companies$
Industry$Traits$of$AXracAve$Companies$
! Highest&performers&grow&100%+&annually&while&generaRng&20m50%&EBITDA&margins&&
! Spread&across&mulRple&plaqorms&–&developed&in&unison&with&the&intent&from&beginning&
! ConRnuous,&lowmcost&development&pushes&to&game&–&maintain&player&interest&
! AnalyRcs&–&key&to&improve&and&build&upon&performance;&oKen&inmhouse&systems&&
Key$Themes$Driving$Gaming$M&A$
F2P$
Developer$
Services$
Regional$
M&A$
Past$
Growth$
Stage$
Geographic$
Strength$

30. Thank$You$
www.corumgroup.com$
Alina$Soltys$
For$copy$of$the$presentaAon:$
[email protected]$