1 Interactive Games: global perspectives & local insights Matthew Liebmann pwc

PricewaterhouseCoopers 2 Today’s agenda 1.The global interactive games industry: The good, the bad and the undeniable

3 Part 1 The global interactive games industry: pwc

PricewaterhouseCoopers 4 Global Interactive Games  Key drivers of global industry growth will be: -next generation consoles -mobile phone handset upgrades -broadband penetration -changing attitudes leading to broader customer demographics Total Revenue 2004A$37.9 bill 2008A$85.8 bill CAGR20.3%

PricewaterhouseCoopers 5 Regional performance and market share

PricewaterhouseCoopers 6 Console Games  Next-gen consoles will boost industry growth, but consoles will lose share to wireless and online revenue streams.  Multifunctional consoles will be a blessing and a curse for developers and publishers.  Consoles appeal to the masses, boosting mass retailers’ share of total sales. Total Revenue 2004A$25.5 bill 2008A$35.8 bill CAGR7.8%

PricewaterhouseCoopers 7 PC Games  PC games revenue peaked in 1999, and have declined ever since.  Share of total games revenue will fall from 16% in 2004 to 6% in 2008, as both units and average prices fall.  As consoles become more advanced and accessible, PCs will lose their appeal. Total Revenue 2004A$6.1 bill 2008A$5.0 bill CAGR-3.1%

PricewaterhouseCoopers 8 Online Gaming  Online gaming has raised the average age of gamers, and expanded demographic reach.  43% of frequent gamers have already played online.  Online gaming provides one of broadband’s first true killer applications.  Online gaming extends the life of games, creating additional revenue streams. Total Revenue 2004A$3.8 bill 2008A$23.9 bill CAGR59.9%

PricewaterhouseCoopers 9  Between , the number of global online game subscribers will grow from 20 mill to 142 mill (65% CAGR).  Average monthly online revenue per subscriber will fall between  Canada currently has the highest penetration of online gamers amongst broadband subscribers (26%) but by 2008, Asia-Pac will dominate (49%). Online Gaming

PricewaterhouseCoopers 10  Asia-Pacific and EMEA exceed the US due to more than twice as many mobile phones and more progressed 3G licenses.  Over time, average monthly spend will decline. Total Revenue 2004A$2.5 bill 2008A$21.0 bill CAGR87.6% Wireless Gaming

PricewaterhouseCoopers 11  Growth will be driven by: -upgraded infrastructure -handset upgrades -recognisable brands and titles.  Wireless games tap into the ‘handset personalisation’ phenomenon. Wireless Gaming

12 Part 2 The good, the bad and the undeniable pwc

PricewaterhouseCoopers 13 Online gaming is the first legitimate ‘killer app’ for broadband Gamers are demonstrating a willingness to stay with you later in life Interactive games have proven to be entertainment for all occasions The Good

PricewaterhouseCoopers 14 The Good New ways to deliver content enables you to meet your clients for the first time Improved margins can be achieved by eliminating distribution elements Advertising: a new revenue frontier

PricewaterhouseCoopers 15 x One wallet but myriad choices x PCs and consoles have more and more uses x Mass retailers’ power is on the rise around the world The Bad

PricewaterhouseCoopers 16 x Misperceptions about the industry are holding back some support x Piracy: what’s yours is everyone’s x Hollywood is here, and it’s not all good The Bad

PricewaterhouseCoopers 17 ! You must use your power for good, not evil! ! You will never be in complete control again – accept it and embrace the future ! Just because you embrace the future, doesn’t mean you should promote it The Undeniable

PricewaterhouseCoopers 18 The Undeniable ! More release windows = more money. ! Be quick, or you will be the dead The Undeniable

19 Key messages  Focus on gamers and encourage them to stay for life  Continue working as an industry to communicate your legitimacy  Identify what makes you unique and work it into your strategy  Offset margin pressures by maximising efficiencies  Embrace new technology and ride the wave to the future Key messages

20 Interactive Games: global perspectives & local insights Matthew Liebmann pwc