social gaming overview: too big to ignore

OUTLINE Contents Overview @MARKSILVA Dynamics @KIMJAMES NEXON+Asia @TIMECHANGE International Trends @KIMKYAW Toyota Pwns Social Gaming Appendix #SOCIALGAMINGCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved 4680

OVERVIEW TOO BIG TO IGNORE 50000000 Top Social Game apps earn the reach of TVs top- rated shows, the 37500000 Dancing With he Stars engagement of an addictive game and the ol 25000000 American Id popular culture impact of CityVille FarmVille Rock and Hollywood TX HodeEm 12500000 NCIS stature. NCAA Frontier Ville Sources: 1) Nielsen TV Ratings: 3/28/11 2) AllFacebook.com 0Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved TV Social Gaming

OVERVIEW ITS THAT BIG Facebook-Like Growth and Scale Over half of Facebooks 500 million users play Social Games Every other check-in for Facebook is for Social Gaming Source: AllFacebook.com August 2010Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW BIGGER THAN GAMING Social Gaming is tracking Facebooks ongoing growth eclipsing the reach and engagement of most media Social Games eclipse classic, console-based games in audience by over 10-timesCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW ITS THAT BIG Bigger Than... The Population of England on any day and the US any month Email--Social Gaming passed email in 2010 to become 2nd leading activity online with >10% time use Any other Social Network Source: AllFacebook.com August 2010Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW BIGGER THAN SHREK? I would like to be [Zynga CEO] Mark Pincus. He has nailed the next killer app, the next compelling thing thats going to happen in media. Jeffrey Katzenberg CEO, DreamworksCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW BIGGEST & BEST EVER Zynga is the most-profitable, fastest-growing, and has the happiest customers of any company that Kleiner Perkins has invested in. John Doerr VC, Kleiner Perkins Caufield & Byers Investors in Amazon, Google, IntuitCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW PLAYERS AND WORLDS Snapshot of leading players in Social Gaming 268,386,159 36,367,080 18, 763, 314 MAU MAU MAU Monthly Active Users Monthly Active Users Monthly Active Users 58,370,803 5,753,580 2,147,100 DAU DAU DAU Daily Active Users Daily Active Users Daily Active Users Source: http://www.appdata.com/leaderboard/developersCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW Zynga leads Social Games with the #1 blockbuster hit, CityVille, and a most of the top-20 Social Games As a network Zynga engages 250+ million players/month We see Zynga making Social Games a network unto itselfCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW EA/Playfish is a leading developer engaging 35+ million players a month Developing Social Gaming versions of popular EA titles We see Playfish bringing more of its Gaming DNA and cross-device integration into its aproachCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW Playdom is a leading player in Social Gaming engaging 18+ million players each month Cable TV-size audiences for Social Gaming With Disney acquision , we see a publishing/media model emerging for Playdom and expect Disney Network IP for the platformCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

OVERVIEW As you can imagine in a space that has grown meteorically in the past 24-months, many other players exist and more entering each month We can expect to see indie developers produce hits and have a key role in the spaceCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS MORE THAN FUN & GAMES Social Networks create a rich-get-richer dynamic where early and fast movers dominate as their footprint grows Zynga grew aggressively through user and developer acquisition In addition to great games, Zynga learned how to optimize its transactions and network effect Applying this dynamic, Zynga built FrontierVille to the #2 World in under 30 days then CityVille to 100m users in under 8 weeks Zyngas rapid ascension and distribution creates significant barriers to replicationCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS NOT FOR AMATEURS Pace of innovation and optimization is continual-- too fast to attempt replicating or DIY Strong agency recommendation: Collaborate over DIYCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS ENTERING THESE WORLDS Advertising is less than 10% of revenues and Social Games monetize only 1-5% of users Beyond endemic placements (ingredients in FarmVille or CPG brands in Cafe World, for instance) look to aligning values and audience Seek fit and utility, not just reach and demographicsCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS SOCIAL GAMERS KEY VALUES Games are a way to amplify fun had with friends Social Gaming is more about getting together with friends than the game itselfCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS LEVELS OF COMMITMENT Br a n Br a n N ew Mult Build i 1 2 3 4 5 de de -C Ga a Game h d Ga m d V ir t u me M ns ann ion tio el es ec s Interac t al Integra G o od hanicCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS Br a n LEVELS OF COMMITMENT 1 de d V ir t u s al G o od 1. Branded Virtual Goods The lowest level is a branded virtual good or service. Just put your name on it. This can be thought of like a media buy. Doesnt really affect game play in a branded way, but not to be discounted. The right good for the right brand can be very effective. Time frame: weeks to monthsCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS Br a n LEVELS OF COMMITMENT 2 de d Ga m ns tio e Interac 2. Branded Interactions - Existing Game Mechanics Involves creating custom branded items that give customized rewards within existing game mechanics that can reflect brand values. For instance, specific brand-centric power-ups or rewards that can affect characters, earn further game rewards or be gifted to others. Time frame: three to four monthsCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS BING + ZYNGA Microsoft launched Bing with great fanfare in traditional media, online and in FarmVille. Users clicked from Bing logos to like the search engine in Facebook. Results: Bing acquired 425,000 new fans, a 360% jump in less than one day. 70% of them visited Bing in the following month.Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS PUBLIC ENEMY WARS Universal dropped John Depp/Dillinger into Mafia Wars with killer results Gaming mechanic: task achievement earned points, energy, status Results: Nearly 1 billion impressions 54mm loot interactions 44mm jobs completed 19 million unique players STRONG DVD salesCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS GOOD MONEY By offering custom virtual goods that improved the performance of crops Zynga raised over $1.5 million dollars for Haiti in the first month and $3 million overall.Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS N ew LEVELS OF COMMITMENT 3 Ga me M ec s hanic 3. Branded Interactions - New Game Mechanics This is a large custom build. Not just a product or a power-up, but something like a large, branded build out (a bar in a restaurant or a kitchen area with specific game play) or even as large as an independent venue (caf, shop, etc.) Time frame: three to four months At this level, services like tracking and analytics may become part of the package.Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS GATORADE + EA SPORTS Gatorade wanted to reach highly engaged, difficult to target young athletic male audience to drive product sales. They integrated their product in authentic ways across multiple EA Sports titles. 24% volume increase in purchases within user group Positive ROI of $3 earned-$1 spent Product penetration increased 9% among Gatorade Bath Cheat Code new consumers of the brand.Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS Mult LEVELS OF COMMITMENT 4 i -C h anne t ion l Integra 4. Multi-Channel Integrated Campaign Involves tying multiple channels (including online and offline) together into an immersive, well-branded campaign. Involves a high-degree of planning and requires significantly longer lead time and coordinated involvement by multiple parties. Big Idea thinking combined with specialists needed for retail components, sweeps, and any 360 production and execution. Time frame: four months to eight monthsCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

DYNAMICS ZYNGA + 7-11 Consumers earned virtual gifts for buying anything program related. Buy. Specially marked items from 7-Eleven. Earn. Codes for exclusive virtual gifts. Play. Get a leg up on your friends. How it Performed: Impacted nearly every KPI in retail: Daypart Frequency Demographic diversification Basket mix FavorabilityCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

[ What is Online Gaming?] Synchronous/Concurrent Play with other users through the internet Access through PC or Mobile Devices Immersive Content provided as a service than product.Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

[ Global Game Market Size ] Global Game Market Global Online Game Market 14.7% 144,149 132,609 125,425 115,702 117,372 100,754 2007 2008 2009 2010(E) 2011(E) 2012(E) [Unit: million USD]Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

[ Global Online Game Market Share ] South America Asia Europe North America Japan 11% SE Asia 11% Korea 33% China 45% 2007 2008 2009 2010(E) 2011(E) 2012(E)Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

[ The Growth Trend ] Annual double digit growth 771 EBITDA Revenue 45% 5-year CAGR 52% 10-year CAGR 551 389 384.0 326 306.6 256 211 147.4 128.7 86 102.0 103.1 41 56 24 12.8 21.3 22.1 27.2 22 0.41 0.42 4.88 15.9 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010(E) [Unit: million USD]Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

[ Successful Campaigns=Investments] Trail and Error= Time and Effort Online Games : Real Time, Interactive Platform Invest time and money to define: Value of Items Metrics, Online, Mobile, Offline, UXCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Norwest Venture Partners Overview: Inception in 1961 Funded more than 400 companies Managing >$3.7B in venture capital Current fund of $1.2B raised in 12/09 Global VC firm based in Palo Alto, CA investing in US, India, China, Israel Consistently ranked in top quartile of venture capital firms Gaming/Gamification-related Investments:Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Global Trends Overview: The Social Gaming Warfront and Landgrab has Expanded Beyond the US Players Battling for Distribution Power, New Revenue Streams, Talent Acquisition Mobile is the New Hope for Social Gaming New Publishing Models Emerging Across Regions Facebook Global Growth vs. Incumbent Networks New Genres Emerging Beyond Copycat x-Ville GamesCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Global Battleground Snapshot Japan: (New Revenue Streams) Small market (DAUs), high ARPU Players used to freemium + MTX model, and paying via mobile) 80% mobile (Flash-supported on legacy phones = no app builds needed) 3 different networks: DeNA, GREE, Mixi opening app platforms and expanding into US, China, etcCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Global Battleground Snapshot China: (Talent Acquisition; Distribution and Revenues Still Challenging) Large market (DAUs), low ARPU Familiarity with freemium + MTX via MMO games + virtual goods on QQ Primarily online play; smartphone apps still on the come 1 dominant network (Tencent QQ), 3 challengers (Kaixin001, RenRen, 51) not fully open platforms yet, poor revenue splits Lower cost labor pool MMO companies and Tencent entering US for IP andCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Global Battleground Snapshot Korea: Traditionally a hardcore/midcore gaming market: MMO RPGs, client downloads NHN, Nexon aggressively expanding overseas Best-suited for midcore if free to play MMO companies go browser-based and leverage social networks for publishingCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Global Battleground Snapshot Brazil: VERY social player base: Orkut is dominant network, with Facebook growing quickly Payment methods remain challenging, but on the rise with healthy ARPU Native players like Mentez and Vostu looking to dominate distribution before Zynga and others can enter via FacebookCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Global Battleground Snapshot Russia: Kontakti is incumbent social network leader Importer Publishers like i-Jet often critical for market entry Tricky region to operate inCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Global Battleground Snapshot India: Still nascent big potential for mobile social gaming as grey market Android smartphones gain adoptionCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Mobile Social Gaming: The Shiny New Toy Ngmoco brought the social gaming model to mobile, and created > $400M of value in barely 2 years attracting a string of copycats and bandwagon jumpers, desperate to get off of Facebook and away from battling Zynga iOS App Store is a wide-open playing field since the 3 Pillars of Facebook social gaming dont apply: iOS App Store is extremely noisy though, giving rise to: Android is Next Big Thingif In App Purchases work Tablets may enable whole new genres of mobile social gamesCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE New Publishing Models Across Regions: Some US publishers like Zynga going direct by hiring or acquiring teams to launch localized versions of their games into Japan, Europe, etc. Others using localization partners to publish and operate their games overseas: Mentez, 6waves, i-Jet, etc. Publishing partner needed if regional social networks, payment methods, and player tastes are significantly different Overseas publishers like Tencent also trying to do the same in the US market, but have failed to compete with Facebook (trying mobile now instead DeNA/ngmoco) Approaches: - Local team building original IP - Copy and localize (the rip-off strategy) - License and localize - Co-develop and rev share Lessons learned: owning IP is important; access to source code for true localization is criticalCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

SECTION TITLE Whats Next? If Facebook dominates more of the global online social gaming market, will import/export publishers go away? Will dominant mobile social gaming networks arise in the US, giving challenge to Facebook? Asian free2play game companies are poised to bring midcore gaming to social platforms an area thats hard for Zynga to copy and compete in? The end of Social Gaming 1.0 is nearing what are the next big genres after copycat Farm/City/Pet/ Fish games? (Midcore? ARG? Truly social games? Casual MMO RPG? Social RTS? Youth Edutainment?)lCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

Objectives & Strategies Objectives Build awareness of the new Prius Family portfolio Increase brand favorability and purchase consideration Strategies Leverage the entire gaming eco system Engage consumers: enhance experiences, encourage positive action, and add value Foster social interaction and viral sharing on YouTube, Facebook etc. Prius Target: Eco ModernistsCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

Why Gaming for Prius? Gaming fits with the Prius mindset as it provides an outlet for creativity and sharing Gamers are auto influencers and decision makers 48% of gamers provide frequent advice about automotives Strong in-game branding experiences lead to: Increased awareness Purchase intent Positive lift in perceptionCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

Car Town Top 20 game on Facebook: 8MM users Leverage a large user base of auto enthusiasts to generate buzz Program description: Virtual Prius Showroom opens simultaneously with the Detroit Autoshow Users vote for the favorite plural and receive a T-Shirt Prius Family models become available for in-game purchase Collecting all four vehicles grows coins on Family Prius Tree Prius c concept available for free for those who Like the Prius pageCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

Measuring Success Prius Showroom Total visits: 13.3MM Prius Plural Unique Votes: 1.5MM (80% of Total Prius Goes Plural Votes) Prius Video Plays: 1.4MM (90% of all showroom visitors watched video) Prius is the #1 largest market share (in units) of any model in CarTown Increased from .04% to 14% Toyota Prius Facebook Fan Page Prius c Integration: 147% Growth Average Fan Retention rate of 96% (Like vs Unlike)Copyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

EA: Monopoly 2nd fastest growing app on Facebook * Launched on 1/26, over 5MM players as of 3/28 Ownership of Monopoly across all game platforms: mobile, tablet, PC, Facebook Program description: In-game integration encourages sharing and time spent with the brand Positive impact and authentic integration Custom Prius Mover Green Eco homes to gift to othersCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

Little Big Planet 2 Allows gamers to play, create and share Prius inspired content Custom Prius level built into the game Program description: Timing: 1/18/11 3/31/11 Developer made LittleBigPrius level - Animated XMB theme - Prius model featured in Central Square of HOME Prius items were given to users to create their own Prius levels for the contest Along with prizing, winner received presence in Playstation HOME , in-game and on Playstation networkCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

Measuring Success Prius LBP2 Level ranks (out of 4MM total) rank #9 for most hearted level rank #16 for most played level 81% completion rate amongst players (as of 3/3) Contest Stats: - On average 10 minutes to complete level 897 contest entries contest winner: eco adventure - 798 total plays, hearted 243 timesCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

Learning Gaming can be used to achieve various media objectives Allows for unique and innovative advertising integrations beyond the realm of traditional media Partnership opportunities require extensive lead times for asset development Social gaming can successfully grow fan base Increase brand recognition and positive association by enhancing organic in-game user experience Advertiser must provide 3D render data to partners to be able to include the vehicle in-game Audience sensitivity is higher in gaming than other mediaCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

APPENDIX GLOSSARY ARPU Exit Event Average Revenue Per User is measured as total revenue divided by the number The last actions a user performs before exiting the game. of subscribers. K Factor Churn K Factor measures the virality of your product. The turnover rate of a social games active players. Churn refers to this K Factor = (Infection Rate) * (Conversion Rate). constant loss and gain of members. An Infection Rate is how much a given user exposes the game to other players. Cohort A conversion rate is when that infection results in a new sign up. A group of subjects who have shared a particular experience during a Ex. A K Factor of 1 means every member is bringing you one additional member. particular time span. Cohorts are used for analyzing retention. Lifetime Network Value DAU The value a user provides to your network over the course of their entire Daily Active Users is the number of active users over the course of a single lifetime on the network. day. MAU DAU/MAU Monthly Active Users tracks the total number of users in a given month. Comparing Daily Active Users to Monthly Active Users shows roughly how many days per month your average user engages with your game. It is strongly Re-Engagement correlated with social gaming success. Re-engagement is how you get users who have quit playing to come back. It includes re-engaging gamers who have been signed off for an hour, a day, a Engagement month, or more. Engagement measures how long users spend playing your game. How many features do they access? Are they spending hours or seconds? How many Retention pages does the average user view? What percentage are returning visitors? Retention is how well you maintain your userbase. Entry Event Viral Rate/Virality The first action a user performs when they enter the game. Measured by K Factor, the Viral Rate/Virality shows how much your users are promoting, evangelizing and spreading your game. Source: http://bit.ly/sgglossaryCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

APPENDIX SOCIAL GAMING DYNAMICS The new Hardcore Social Gamer is a midwest mom Think friends not gamers Part of value is bringing friends together Respect the user Add valueCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved

APPENDIX SOCIALGAMING STATISTICS Social Gaming inspires a majority of daily and weekly play Gender and age change based on the world and activities While average demographic composition skews slightly male, average time and engagement skews femaleCopyright 2011 ANTHEM WORLDWIDE/SCHAWK INC. All Rights Reserved