Amsterdam  2015  Alina  Soltys  Associate  

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Corum  –  Sell  Side  M&A  Firm  §  Established  in  1985.    

§  Focused  on  transac@ons  in  technology  products  and  services  businesses.  

§  Professional  staff  drawn  from  senior  posi@ons  at  technology  companies.    

§  300+  M&A  transac@ons.    Over  $7  billion  in  transac@on  value.  

§  25+  year  rela@onships  with  global  soNware  companies.  

§  Most  extensive  database  in  the  industry  (approx.  $25  million  invested).  

§  Integrated  global  opera@ons;  transac@ons  in  21  countries.  

§  Educa@onal  Leader,  creator  of  the  world’s  most  aWended  tech  M&A  conference,  sponsor  of  the  World  Financial  Symposiums,  frequent  guest  on  CNBC,  MSNBC  and  other  industry  events.  

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Overview  

Gaming  M&A  Update  

Asian  Market  

Driving  Trends  

@CorumGroup      

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Overview  

Gaming  M&A  Update  

Asian  Market  

Driving  Trends  

@CorumGroup      

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Gaming  Valua@ons:  Public  Peer  Group  

Dec-­‐13   Jan-­‐14   Feb-­‐14   Mar-­‐14   Apr-­‐14  May-­‐14   Jun-­‐14   Jul-­‐14   Aug-­‐14   Sep-­‐14   Oct-­‐14   Nov-­‐14   Dec-­‐14  EV/EBITDA   8.57   7.73   8.04   7.51   7.08   6.84   7.94   7.94   9.16   9.33   9.92   9.63   9.75  EV/S   2.24   2.07   2.14   2.42   2.18   2.18   2.47   2.3   2.58   2.29   2.14   2.26   2.3  

0.0x  

0.5x  

1.0x  

1.5x  

2.0x  

2.5x  

3.0x  

0.0x  

1.0x  

2.0x  

3.0x  

4.0x  

5.0x  

6.0x  

7.0x  

8.0x  

9.0x  

10.0x  

PPG  includes  Glu  Mobile,  Gree,  King,  NetEase,  Perfect  World,  Zynga,  plus  others  

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37

22 19 18

14 14 13 12 10 10 9 9 9

Top Strategic Acquirers: 2014

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37

22 19 18

14 14 13 12 10 10 9 9 9

Top Strategic Acquirers: 2014

M&A  drives  Strategy  

Down  from  39  Transac@ons  in  2013  

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37

22 19 18

14 14 13 12 10 10 9 9 9

Top Strategic Acquirers: 2014

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Top  Strategic  Gaming  Acquirers:  2014  

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Oculus:  Growth  Through  M&A  Acquirer:  Facebook  Target:  Oculus  RiQ  Deal  Value:  $2  Billion  Date:  April  2014    

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Following  the  AcquisiVon  

Target: Carbon Design Group Acquirer: Oculus VR Transaction Value: Undisclosed

Target: Jenkins Software (RakNet) Acquirer: Oculus VR Transaction Value: Undisclosed

Target: Nimble  VR Acquirer: Oculus VR Transaction Value: Undisclosed

Target: 13th  Lab  AB  Acquirer: Oculus VR Transaction Value: Undisclosed

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0  

20  

40  

60  

80  

100  

120  

140  

160  

$0.0  

$5.0  

$10.0  

$15.0  

$20.0  

$25.0  

2009  H1   2009  H2   2010  H1   2010  H2   2011  H1   2011  H2   2012  H1   2012  H2   2013  H1   2013  H2   2014  H1   2014  H2  

Deal  Counts  

Dollar  V

alue

 in  Billions  

TransacVon  Value  ($B)   Billion  Dollar  +   Total  Deals  

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  Transac@ons  

TransacVon  Value  ($B)   Billion  Dollar  +   Total  Deals  

Transac@ons  in  the  Gaming  Ecosystem  

Sources  include  company  filings  and  releases,  industry  databases  and  Corum  Group.  •  Both  majority  and  minority  deals  included.  •  TransacVons  relaVng  to  the  gaming  ecosystem  were  included,  not  limited  to  gaming  studios.  •  Only  announced  or  available  deal  values  included.  

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Source:  Corum  

Transac@ons  in  the  Gaming  Ecosystem  

Deal  Volume  Highest  Since  2009  

2  Record  Seing  Years  

Excluded  Billion  $  TransacVons:    

•  H1  2014  :  $3.35B  

•  H2  2014:    $7.85B  

Average  Deal  Size:  5  Year  Growth:  170%  $43m  to  $115m    YoY:  21%        $95m  to  $115m  

$0  $20  $40  $60  $80  

$100  $120  $140  

2009  H1  

2009  H2  

2010  H1  

2010  H2  

2011  H1  

2011  H2  

2012  H1  

2012  H2  

2013  H1  

2013  H2  

2014  H1  

2014  H2  

in  M

illions  

Average  Deal  Size  Trending    

0  

20  

40  

60  

80  

100  

120  

140  

160  

$0.0  

$5.0  

$10.0  

$15.0  

$20.0  

$25.0  

Deal  Counts  $  Value  in  Billions  

Reported  Gaming  Transac@ons  

TransacVon  Value  ($B)   Billion  Dollar  +  

Total  Deals  

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Top  Gaming  Transac@ons  2014  

$885M  

$527M  

$941M  

$2.5BN  

$3.0BN  

$970M  

$960M  

$2.0BN  

$1.9BN  

$472M  

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Overview  

Gaming  M&A  Update  

Asian  Market  

Driving  Trends  

@CorumGroup      

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Early  lead  by  Asian  Firms,    Recent  Pickup  of  US  Firms  

Source:  Corum  

Top  9  of  10  Deals  (2013)  

Top  4  of  10  Deals  (2014)  

Top  7  of  10  Deals  (2012)  

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Chinese  Take-­‐Privates  

Price  Arbitrage.  Founder  does  not  believe  shares  are  adequately  valued  by  Wall  Street  as  Chinese  gaming  shares  should  be.    

$1BN,  January  2015  

President  Ji  Xuefeng  said  at  the  end  of  each  quarter,  huge  operaVng  pressure  leads  to  short-­‐sighted  strategy.  Problem  in  Product  Planning.  

$3BN,  March  2014  

$1.9BN,  January  2014  

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Top Asian Gaming Acquirers

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4   4  

3   3   3   3  

86%  GROWTH  

60%  GROWTH  

50%  GROWTH  

TransacVons  over  last  2  years  Revenue  Growth  from  2013  to  2014e  

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BaWle  of  Chinese  Giants  :  Tencent  vs  Alibaba  

Expanding  beyond  eCommerce  

Spending  @me  partnering  with  studios  to  become  a  

publisher  Data  Source:  CapitalIQ  

$300M  $500M  

$63M   $120M   $280M  

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Ac@vity  Since  2013  for  Tencent  &  Alibaba  

                         

88  

$21B  

AcquisiVons  &  Investments  

Total  Value    

Data  Compiled  by  The  Corum  Group  

20  

73  

6.6  

March   April   June   August   September   December  

AMOUNT  RA

ISED

,  $M  

IPO  Dominated  by  Asia  

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Overview  

Gaming  M&A  Update  

Asian  Market  

Driving  Trends  

@CorumGroup      

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Drama@c  Changes  in  AdTech  

One  of  largest,  most  important  

mobile  marke@ng  plaporms  

Differen@a@on  with  iTunes  Connect  

Analy@cs  &  aWribu@on  tools  Source:  Luma  Partners  

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Further  Consolida@on  in  AdTech    

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21%  

11%  

9%  

8%  7%  5%  

Rest  of  Market**  

39%  

Social  Casino  Game  Market  Share  -­‐  3Q14  

MOBILE  ONLY  

SOCIAL  ONLY  

Social  and  Real  Money  Casino  Companies  

Real  Money:    

Legal:  UK  

Limited  States:  Delaware,  Nevada,  New  Jersey  

$2.7B    SOC IA L   CA S INO    

GAM ING  MARKET  

MOB I L E   SHARE  54%  

16%  

0.5%  

MOB I L E  G ROWTH  Q /Q  

F A C E BOOK  G ROWTH  Q /Q  

Source:  App  Annie,  Eilers  Research  

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Consolida@on  of  the  Middle  Market  Acquirer:  Churchill  Downs  Target  :  Big  Fish  Deal  Value:  $885M  Date:  Nov  2014    

Acquirer:  Imperus  Technologies  Corp.  Target  :  Diwip  Ltd.  Deal  Value:  $100M  Deal  Mul@ple:  1.8x  Revenue  Date:  Oct  2014    

Acquirer:  Caesars  InteracVve  (PlayVka)  Target  :  Pacific  InteracVve  Deal  Value:  $90M  Date:  Feb  2014    

Acquirer:  Bally  Technologies  Inc.  Target  :  Dragonplay  Ltd.  Deal  Value:  $90M  Deal  Mul@ple:  5.1x  EBITDA  Date:  June  2014    

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Acquirer:  GSN  Games  Target  :  Bash  Gaming  Deal  Value:  $165M  Date:  Feb  2014    

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Sports  &  Gaming  

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Billion  Dollar  Consolida@on  Spree  

Acquirer:  Aristocrat  Technologies    Target:  Video  Gaming  Technologies    Deal  Value:  $1.3B  Deal  Mul@ple:  5.5x  Revenue  Date:  July  2014    

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Acquirer:  GTECH    Target:  IGT  Deal  Value:  $6.4B  (cash  plus  debt)  Deal  Mul@ple:  3.0x  Revenue  Date:  July  2014    

Acquirer:  ScienVfic  Games    Target:  Bally  Technologies  Deal  Value:  $3.3B  Deal  Mul@ple:  3.7x  Revenue    Date:  July  2014    

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Acquirer:  Global  Cash  Access    Target  :  MulVmedia  Games  Deal  Value:  $1.2B  Deal  Mul@ple:  5.5x  Revenue  Date:  Sept  2014    

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Games  as  a  Service  Con$nuously  delivering  value  to  Gamers  

• Players  pay  as  they  go  &  what  they  use    -­‐  “F2P”  Service  Concept    

• StarVng  with  trailer  thru  game  play,  online  presence,  community,  etc.  All  Encompassing  

• Strong  analyVcal  soluVons  and  strategies  • Keep  the  users  coming  back  Mone@za@on  is  Key  

• Focused  soluVon  providers  helping  every  step  of  the  way  from  product  development  to  a/b  tesVng  to  analyVc  compilaVon    Specializa@on  Economy  

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Consoles  adop@ng  F2P  

30-­‐40%  DLC  Market  

Share    

Source:  SuperData  

WORLDWIDE  CONSOLE  SPEND  

$2.4B  

FULL  GAME  

MICRO  TRANSACTIONS  

$0.8B   $1.6B    “CONSOLE-­‐TAINMENT”  

?  

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eSports  becoming  mainstream  entertainment  

6  OF  TOP  10  CHANNELS  ARE  GAMES    (music  is  other)  

ONLY  37%    of  people  who  watch    GAMING  VIDEOS  ON  YOUTUBE  consider  themselves    

“GAMERS”  

Source:  IHS  Inc.  May  2014  

3.7B    2014  

6.7B  2018  

Global  eSports  Consump@on  Forecast  

[Hours]  

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Predic@ons  Mobile  Costs  leading  to  diversified  user  acquisiVon  channels    

Licensed  Content  

More  DLC  with  internet  connected  Consoles  &  introducVon  of  new  types  and  “Season  Passes”  

Crea@on  for  wider  gaming  audience  

Thank  You  www.corumgroup.com  

Alina  Soltys  For  copy  of  the  presenta@on:  alina@corumgroup.com