Presentation given by Alina Soltys at GamesBeat - September 2014 Provides overview of strong Gaming M&A market along with discussion on trends affecting new areas of growth.

1. San
Francisco
2014
Alina
Soltys
Senior
Analyst
@CorumGroup
GamesBeat:
San
Francisco
2014

2. @2C
Corum
–
Sell
Side
Advisory
Firm
§ Established
in
1985.
§ Focused
on
transacFons
in
technology
products
and
services
businesses.
§ Professional
staff
drawn
from
senior
posiFons
at
technology
companies.
§ 300+
M&A
transacFons.
Over
$7
billion
in
transacFon
value.
§ 25+
year
relaFonships
with
global
soSware
companies.
§ Most
extensive
database
in
the
industry
(approx.
$25
million
invested).
§ Integrated
global
operaFons;
transacFons
in
21
countries.
§ EducaFonal
Leader,
creator
of
the
world’s
most
aended
tech
M&A
conference,
sponsor
of
the
World
Financial
Symposiums,
frequent
guest
on
CNBC,
MSNBC
and
other
industry
events.
orumGroup
GamesBeat:
San
Francisco
2014

3. @3C
Overview
Technology
M&A
Update
Gaming
M&A
Update
Driving
Trends
orumGroup
GamesBeat:
San
Francisco
2014

4. @4C
Technology
Index:
Quarterly
Subsectors:
VerFcal,
IT
Services,
Internet,
Infrastructure,
Horizontal,
and
Consumer
orumGroup
GamesBeat:
San
Francisco
2014

5. @5C
41
39
33
Top
Strategic
Acquirers:
2013
-­‐
YTD
20
18 17 17 16 15 14 14 14 14 14
orumGroup
GamesBeat:
San
Francisco
2014

6. @6C
41
39
33
Top
Strategic
Acquirers:
2013
-­‐
YTD
20
18 17 17 16 15 14 14 14 14 14
orumGroup
GamesBeat:
San
Francisco
2014

7. @7C
Top
Strategic
Acquirers:
2013
-­‐
YTD
*
orumGroup
GamesBeat:
San
Francisco
2014

8. @8C
RepresentaFve
M&A
TransacFons
Acquirer:
Facebook
Target:
Oculus
RiJ
Deal
Value:
$2
Billion
Date:
April
2014
Sold
to
Following
the
AcquisiQon
Target: Carbon Design Group
Acquirer: Oculus VR
Transaction Value: Undisclosed
Sold
to
Target: Jenkins Software (RakNet)
Acquirer: Oculus VR
Transaction Value: Undisclosed
Sold
to
orumGroup
GamesBeat:
San
Francisco
2014

9. Source:
CBInsights
@9C
Bale
of
Chinese
Giants:
Tencent
vs
Alibaba
§ Invested
$120M
into
Kabam
–
$1bn
ValuaQon
§ Just
in
2014,
spent
over
$4B
on
4
acquisiQons
§ Expanding
beyond
eCommerce
§ Invested
into
CJ
Games
-­‐
$500M
(28%),
Kakao
Talk
($63M)
&
DST
($300M)
§ 40
investments
since
2011
§ Top
Sectors:
Gaming,
social,
photo,
data
mgmt.
/
data
integraQon
orumGroup
GamesBeat:
San
Francisco
2014

10. @1C0o
Bale
of
Chinese
Giants
Chinese
internet
companies
led
by
Tencent
Alibaba
:
AcquisiQons
&
Investments
§ Invested
$120M
into
Kabam
§ Has
spent
over
$4B
on
4
acquisiQons
in
2014
§ Expanding
beyond
eCommerce
149
$17B
§ Invested
into
CJ
Games
-­‐
$500M
(28%),
Kakao
Talk
($63M)
&
DST
($300M)
§ 40
investments
since
2011
§ Gaming
top
but
also
social,
photo,
data
mgmt.
&
Value
since
2012
According
to
Bloomberg
rumGroup
GamesBeat:
San
Francisco
2014

11. @1C1o
Overview
Technology
M&A
Update
Gaming
M&A
Update
Driving
Trends
rumGroup
GamesBeat:
San
Francisco
2014

12. Sources
include
company
filings
and
releases,
industry
databases
and
Corum
Group.
• Both
• TransacQons
@1C2o
100
90
80
70
60
50
40
30
20
10
0
$10.0
$9.0
$8.0
$7.0
$6.0
$5.0
$4.0
$3.0
$2.0
$1.0
$0.0
TransacFons
in
the
Gaming
Ecosystem
Reported
Gaming
TransacFons
TransacQon
Value
($B)
Billion
Dollar
+
Total
Deals
2009
H1
2009
H2
2010
H1
2010
H2
2011
H1
2011
H2
2012
H1
2012
H2
2013
H1
2013
H2
2014
H1
majority
and
minority
deals
included.
relaQng
to
the
gaming
ecosystem
were
included,
not
limited
to
gaming
studios.
• Only
announced
or
available
deal
values
included.
rumGroup
GamesBeat:
San
Francisco
2014

13. $10.0
$8.0
$6.0
$4.0
$2.0
$0.0
TransacFons
in
the
Gaming
Ecosystem
Reported
Gaming
TransacFons
TransacQon
Value
($B)
Billion
Dollar
+
Total
Deals
2009
H1
2009
H2
2010
H1
2010
H2
2011
H1
2011
H2
2012
H1
2012
H2
2013
H1
2013
H2
2014
H1
Average
Deal
Size:
5
Year
Growth
:
98.9%
$42m
to
$84m
YoY:
57%
$53.5m
to
$84m
Source:
Corum
@1C3o
100
90
80
70
60
50
40
30
20
10
0
Deal
Volume
Highest
in
2
years
Record
2013
&
H1
2014
Excluded
Billion
$
TransacQons:
• H2
2013
:
$3.05B
• H1
2014:
$2.27B
$150
$100
$50
$0
Average
Deal
Size
Trending
2009
H1
2009
H2
2010
H1
2010
H2
2011
H1
2011
H2
2012
H1
2012
H2
2013
H1
2013
H2
2014
H1
in
Millions
rumGroup
GamesBeat:
San
Francisco
2014

14. Asian
Dominance
Increased,
Focused
Regionally
Top
7
of
10
Deals
South
Korean
GameVil
sets
$150M+
for
M&A
/
investment.
Acquires
Com2uS
&
Nine
Wheels
plus
other
partners.
Source:
Corum
@1C4o
Global
TransacFons
$1.53B
for
51%
$330M
for
40%
$1.4B
for
6%
Top
9
of
10
Deals
(2012)
(2013)
ChangYou
will
invest
$600M
in
mobile
game
developers
$200M
–
AcquisiFon
$200M
–
MarkeFng
$200M
–
Rev
Share
rumGroup
GamesBeat:
San
Francisco
2014

15. @1C5o
Stranger than Usual
Reverse
Take-­‐Overs
by
tradi)onal
companies
entering
gaming
space
Umbrella
company
spends
$600M
buying
YouZu
Glass
company
buys
MMORPG
developer
WuShen
for
$150M
Chinese
ConstrucFon
company
spends
$960M
on
FunPlus
rumGroup
GamesBeat:
San
Francisco
2014

16. @1C6o
Cross-­‐PollinaFon
between
Industries
Changyou:
51%
stake
in
MoboTap
for
$91M
Creator
of
Dolphin
Web
Browser
Amazon:
Acquired
Twitch
for
$970m
Partnership
between
Xiaomi
&
Ouya:
Bringing
new
channel
Qtles
for
Xiaomi’s
MiBox
&
MiTV
devices
rumGroup
GamesBeat:
San
Francisco
2014

17. @1C7o
Overview
Technology
M&A
Update
Gaming
M&A
Update
Driving
Trends
rumGroup
GamesBeat:
San
Francisco
2014

18. @1C8o
Messaging
DominaFon
+
$25M
Dedicated
Gaming
Fund
+
=
1B+
Users
10%
Stake
$100M
IPO
Raise
Expected
$100M
Fund
managed
through
Line
Ventures
rumGroup
GamesBeat:
San
Francisco
2014

19. @1C9o
Candy
Crush
Saga
uniFng
with
WeChat
Top
20
in
US
Top
80
in
China
Key
Markets
Exposed
to
Candy
Crush
through
WeChat
rumGroup
GamesBeat:
San
Francisco
2014

20. Worldwide
Console
Spend
$2B
$2.5B
MicrotransacQons
$295M
$352M
in
2012
in
2013
Source:
SuperData
@2C0o
Consoles
adopFng
FTP
Model
Revenue
Growth
(YoY)
$30M+
in
MicrotransacFons
“Console-­‐tainment”
rumGroup
GamesBeat:
San
Francisco
2014

21. @2C1o
Security
Concerns
Heightening
Especially
relevant
to
oumits
with
payment
systems
Mobile
Is
Here:
Record
amounts
of
internet
traffic
97%
of
all
mobile
malware*
*Predominately
in
Middle
East
&
Asia
Global
TransacFons
RoMaster
rumGroup
GamesBeat:
San
Francisco
2014

22. @2C2o
AracFve
Traits
of
Companies
Industry
Traits
of
AracFve
Companies
§ Highest
performers
grow
100%+
annually
while
generaQng
20-­‐50%
EBITDA
margins
§ Spread
across
mulQple
plamorms
–
developed
in
unison
with
the
intent
from
beginning
§ ConQnuous,
low-­‐cost
development
pushes
to
game
–
maintain
player
interest
§ AnalyQcs
–
key
to
improve
and
build
upon
performance;
oJen
in-­‐house
systems
Key
Themes
Driving
Gaming
M&A
F2P
Infrastructure
Unique
IP
Proven
MoneFzaFon
Geographic
Strength
rumGroup
GamesBeat:
San
Francisco
2014

23. Thank
You
www.corumgroup.com
Alina
Soltys
For
copy
of
the
presentaFon:
alina@corumgroup.com
@CorumGroup
GamesBeat:
San
Francisco
2014

24. @2C4o
Top Asian Gaming Acquirers
10
10
50%+
Growth
4 4
50%+
Growth
235%
Growth
3 3
2 2
1 1 1
rumGroup
GamesBeat:
San
Francisco
2014

25. @2C5o
Billion
Dollar
ConsolidaFon
Spree
Acquirer:
Global
Cash
Access
Target
:
MulQmedia
Games
Deal
Value:
$1.2B
Deal
MulFple:
5.5x
Revenue
Date:
Sept
2014
Acquirer:
Aristocrat
Technologies
Target:
Video
Gaming
Technologies
Deal
Value:
$1.3B
Deal
MulFple:
5.5x
Revenue
Date:
July
2014
Sold
to
Sold
to
Acquirer:
ScienQfic
Games
Target:
Bally
Technologies
Deal
Value:
$3.3B
Deal
MulFple:
3.7x
Revenue
Date:
July
2014
Acquirer:
GTECH
Target:
IGT
Deal
Value:
$6.4B
(cash
plus
debt)
Deal
MulFple:
3.0x
Revenue
Date:
July
2014
Sold
to
Sold
to
rumGroup
GamesBeat:
San
Francisco
2014

26. Source:
App
Annie,
Eilers
Research
@2C6o
Social
and
Real
Money
Casino
Companies
Social
Casino
Game
Market
Share
-­‐
2Q14
21%
11%
9%
Rest
of
Market**
41%
5%
6%
7%
SOCIAL
ONLY
MOBILE
ONLY
$2.7B
Social
Casino
Gaming
Market
46%
20%
on
Mobile
&
Growing
of
Top
100
Publishers
have
at
least
one
social
casino
game
rumGroup
GamesBeat:
San
Francisco
2014

27. ConFnuously
delivering
new
value
to
Gamers
Service
Concept
All
Encompassing
MoneFzaFon
is
Key
Top
$100M+
Games
Source:
Wandoujia.
April
–November
2013
@2C7o
Games
as
a
Service
• Players
pay
as
they
go
&
what
they
use
-­‐
“FTP”
• StarQng
with
trailer
thru
game
play,
online
presence,
community,
etc.
• Strong
analyQcal
soluQons
and
strategies
• Keep
the
users
coming
back
90%
FTP
rumGroup
GamesBeat:
San
Francisco
2014