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Tablets and TVs
The Next Wave of Smart Growth
Introduction
• Senior Research Analyst at Robert Baird & Co.
• Baird is one of the largest private investment banks
– $1 billion revenues; 3,000 employees worldwide
• Prior experience as software developer, Internet start-up and Wall Street background at JP Morgan and Lazard
• Covered Internet and Interactive Entertainment for 11 years
• Based in San Francisco
2
Games are still the most important
form of digital media
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The Four Screens of Games
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Smartphones Still on the Rise
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0.0B
1.0B
2.0B
3.0B
4.0B
5.0B
6.0B
2010 2011 2012 2013E 2014E 2015E 2016E
Smartphone Installed Base
Source: RW Baird & Co.
Android Increasing Share
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0.0B
1.0B
2.0B
3.0B
4.0B
5.0B
6.0B
2009 2010 2011 2012 2013E 2014E 2015E 2016E
Android on the Rise
Android Smartphones Installed BaseiOS Smartphones Installed BaseOther Smartphones Installed Base
Source: RW Baird & Co.
Games are the Killer App
7
Source: IDC, AppAnnie
Key Smartphone Trends
• Android driving growth
• Larger screens
• More power and enhanced features
• More value-priced phones
• Global distribution (e.g. BRIC countries)
• Higher speed networks (e.g. 4G/LTE)(4G)
8
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In 2012, Smartphones represented only
18 percent of total global handsets in use,
but represented 92 percent of total global
handset traffic
4G LTE Heat Map
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Source: Cisco
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In 2012, 4G connections generated
19 times more traffic on average than
non-4G connections
Now Consider This…
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0.0B
0.4B
0.8B
1.2B
2010 2011 2012 2013E 2014E 2015E 2016E
Tablets Installed Base
Tablets Installed Base
Source: RW Baird & Co.
Tablet Games
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Connected tablets will generate more
traffic in 2017 than the entire global
mobile network in 2012
Core vs. Casual
• Tablets more like PCs or TVs than phones
• Tablet games more like core games
• This is a more lucrative market
• Core gamers happy to pay for quality content
• F2P or ASP models work, no tricks necessary
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Mobile Game Sales
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$0
$4,000
$8,000
$12,000
$16,000
$20,000
2012 2013 2014 2015 2016 2017
Smartphone + Tablet Game Sales
Source: RW Baird & Co.
Elephant in the (Living) Room
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Coming Wave of Connected TVs
• Web meets the TV (IPTV)
• Smart or Dumb screens
– Internet connection is important
– Content served from phone or tablet or set-top box or internal components
– Tablet can be the remote controller
• App stores (made for TV Apps)
• Advertising and content delivered to TVs over the web
• Cord cutting/OTT
17
Why You Should Care
• Media/Hardware companies battling for the living room
• Games will be weapons in the battle
– Games are “killer apps” online and on smart devices
• Broad audience (from casual to core)
• Proven gaming space (consoles)
• Premium/rich content
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Appification of TV
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>3 Hours/Day Addressable Opportunity
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Disruption in the Living Room
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Source: Gartner
$15-20B Global Market for Living Room Games
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$0
$5,000
$10,000
$15,000
$20,000
$25,000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Console software
Source: RW Baird & Co.
Conclusions
• Smartphone Market is now proven
• Tablets are Next
• Game Monetization Will Improve
• Connected TVs will represent a third wave of growth
• Cross platform franchises across Smart screens
• Global opportunities
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Eggs in One Basket
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$14.00
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80%
Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Q113
Bookings Growth Stock Price
Don’t Let this Happen to YOU!
