I gave this presentation March 4, 2008 to a group of investors in San Francisco. It is a SHORT overview of the business at the time.

1. Mark DeLoura - VP Technology
March 4, 2008

6.  Then: Simple sports games.
 Now: action, adventure, fighting, platform,
shooter, role-playing, simulation, strategy,
sports, racing, flying, music-based, puzzle,
party, and massively multiplayer games.

7.  Then: Just games.
 Now:
 Core games.
 Casual games.
 Serious games.

11.  2007 Market Stats
 US Retail Sales: $18.85 billion
▪ Hardware: $7.04 billion Retail Sales
▪ Non-PC Software: $8.64 billion Hardware
▪ PC Software: $910.7 million
▪ Accessories: $2.26 billion PC
Software
Non-PC
 Box Office: $9.7 billion Software
 DVD: $23.5 billion Accessories
 Rentals: $7.5 billion
Source: NPD Group, www.npd.com

12. Global
 Global
 Wii: 21.97 million
Wii
 Xbox360: 17.27 million Xbox360
 PS3: 10.52 million PS3
U.S.
 U.S.
 Wii: 7.38 million
Wii
 Xbox360: 9.15 million Xbox360
 PS3: 3.25 million PS3
Source: NPD Group (www.npd.com) and vgchartz.com

13. Global
 Global
 NintendoDS: 67.71 million DS
 Sony PSP: 31.49 million PSP
 U.S. U.S.
 NintendoDS: 17.65 million
 Sony PSP: 10.47 million
DS
PSP
Source: NPD Group (www.npd.com) and vgchartz.com

14.  2007 Top Titles
 Halo 3 – 4.82M
 Wii Play – 4.12M
 Call of Duty 4 – 3.04M
 Guitar Hero III – 2.72M
 Super Mario Galaxy – 2.52M
 Pokemon Diamond – 2.48M
 Madden NFL 08 – 1.9M
 Guitar Hero II – 1.89M
 Assassins Creed – 1.87M
 Mario Party 8 – 1.82M
Source: Vgchartz.com

15.  World of Warcraft (Blizzard Entertainment)
 Released December 2004
 Expansion pack January 2007
▪ Fastest selling PC title of all time: 2.4M WW in 24 hours
 10 million subscribers worldwide
▪ USD 14.95/month
 2007 revenues: $1.1 billion
Source: mmogchart.com

16.  Activision / Blizzard (Vivendi) merger
 Proposed December 2007
 Activision market cap: $8.01 billion
 Vivendi Game valuation: $8.1 billion
 Electronic Arts / Take-Two acquisition
 Proposed February 2008
 Electronic Arts market cap: $15.12 billion
 Take-Two valuation: $2.0 billion
Source: www.activisionblizzard.com, www.eatake2.com

17.  Platform Manufacturers
 Publishers
 Developers
 Service Providers

18.  Nintendo
 Wii, GameBoy Advance, NintendoDS
 Sony
 PlayStation3, PSP
 Microsoft
 Xbox360
 Produces the hardware, and software
development kits
 Controls flow of software onto the platform
 Manufactures the software for a per-unit royalty

19.  Electronic
Arts, Activision, Ubisoft, THQ, Take-
Two, Sega, SCi, Square Enix, Namco
Bandai, Vivendi, Capcom, Konami, NCSoft, Di
sney, Atlus, LucasArts, Midway, ...
 Manage and fund creation of games by
developer studios
 Work with platform manufacturers
 Conduct sales, marketing

20.  Thousands of studios
 Most well-known: Epic Games, Id Software, Valve
Corporation, Blizzard Entertainment
 Invent and produce games

21.  Art providers
 Middleware tools
 Motion capture houses
 Music providers
 Testing houses
 Used to reduce costs, reduce time, manage
headcount more efficiently

22.  Developer creates game concept
 Game idea is pitched to many publishers
 A publisher funds the game through to
completion
 Publisher works with platform manufacturer
to produce
 Publisher conducts sales, marketing
 Finished product distributed to retailers
 Developer receives royalties... Hopefully!

23.  Handhelds cheapest
 DS: $250K - $500K
 PSP: $500K - $1.5M
 Consoles more expensive
 Wii: $4M - $8M
 Xbox360/PS3: $8M - $15M
 PC variable depending on quality, genre
 Casual: $100k-$500K
 High-end AAA: $8M - $15M
 MMO: $50M+
 Multi-platform development
 License costs

24.  PS3/Xbox360/PC AAA title, North America +
Europe (EFIGS)
 Development: $20M
 Marketing: $10M
 Title MSRP $50, to retailers at $35
 Platform manufacturing and royalty: $10
 = $25/unit to publisher
 $30M outlay, $25/unit requires 1.2M unit sell-through

25.  Each advance in technology increases development
costs
 PS1: $2M - $5M
 PS2: $5M - $10M
 PS3: $8M - $15M
 With each new generation, must sell more copies per
game, or sell for a higher price
 Multi-platform, multi-territory titles
 More outsourcing
 Less innovation

26.  Mark DeLoura
 mdeloura@satori.org
 www.satori.org