1. Social Games – We’re Just Getting Started Trip HawkinsFounder and CEO, Digital Chocolate

2. Digital ChocolateThe Next Big ThingIn Video Games

3. Outline DC Snapshot Digital Disruption Galore The Next Big Thing Why 2011 Predictions Confidential 3

4. DC Snapshot The Pixar of Mobile Nearing 100 million App downloads Fastest Growing on Facebook 5 Studios on 3 Continents Confidential 4

5. Millionaire City 5

11. Virtual Goods on Facebook 30 Day MAU Number of Number of Company DAU(M) 2010 Trend VG Games Games Growing Digital Chocolate 4 +6 11 6 Zynga 43 -18 11 1 EA 7 -3 8 1 Playdom 4 -5 13 1 Crowdstar 4 -8 6 1 -34 (source: AppData.com, 11/21/2010) Confidential 11

12. Disruption Galore ThenNow Hardcore guy Everyone $50 Free with Virtual Goods Wal-Mart Digital PlayStation Anything with a screen Play with yourself Play with everyone 100M devices Billions of devices U.S.A. World Sony, EA Up for grabs Confidential 12

13. New Market Explosion Total PC browser users trending towards 2 billion Facebook trending from 600M members to 1 billion Tipping point as 2 billion Western mobile phones “Get Smart” within 2-3 years How long before 1 billion tablets? The browser begins to invade 2 billion color TVs $7 billion in Virtual Goods in China in 2009 DeNA and Gree both doing over $1 billion in Japan Nexon just did $570 million in Korea Zynga close to topping $1 billion Confidential 13

14. The Next Big Thing Has 7 Parts Social Games Virtual Goods Free to Play Cross-Platform Interoperable Cloud-Based Cross-Region Confidential 14

15. Why Social Games? Beyond subsistence, our biggest needs are social Social capital has declined so we’re very needy (Bowling Alone) Historically, social media monetize 10x better than other media Games are “conversation starters” that enable social play We all have an inner gamer (sports, Vegas, cards, trivia, play) Everyone now has access to a “game platform” Everyone has a mobile, “social computer” Everyone is joining social networks or using a network browser Even hardcore console gamers have gone social (Guitar Hero, Wii) Social games are completely disrupting games and media sectors Billions of people will be playing social games Confidential 15

16. Why Virtual Goods? By far the most efficient business model for monetization Allows perfect capture of spending appetite from $1 to $10,000 Stronger potential for emotional meaning and retention “Investment” principles encourage unparalleled spending Works on any platform and with any payment system Was already $7 billion in China in 2009 Proven now in exery country in the world Like SMS texting, has global potential greater than $100 billion Confidential 16

17. Why Free to Play? Everyone is easily able to try it Players want to introduce their friends to the “free benefit” Viral funnel becomes enormous Competition for social status spurs engagement Free players convert and spend money to progress faster Whales get to impress their friends Everyone can keep playing and the cycle continues Confidential 17

18. Why Cross-Platform? Social games are growing everywhere, but on different platforms Japan is mobile China requires a PC “heavy client” install Korea is PC/mobile hybrid U.S. is inside Facebook.com on PC Germany is browser-based male vertical Kids browser-based vertical came from Canada (Club Penguin) Platforms are proliferating “Point platform” hegemony is dying Device populations are burgeoning Everyone can play anywhere, anytime Confidential 18

19. Why Interoperable? Everyone can play together Everyone can find friends to play with Because a single player now roams across multiple devices Everyone knows how because it is uniform and consistent Everyone can help their friends learn and succeed All social media have exploded in size once they became interoperable Fantasy Sports is mass market “existence proof” Confidential 19

20. Why Cloud-Based? Because the browser is going to win Cost-efficient and elegant Easy to update versions Customers can play from machines they don’t own Customers can always get to their stuff Confidential 20

21. Why Cross-Region? Global industry and marketplace Global rollouts of platforms like Facebook, Apple, Android Scale cost advantages Major regional competitors are ready to cross regions Customers enjoy playing and meeting global players Confidential 21

22. Predictions for 2011 Facebook becomes a game platform Growth returns to Facebook game ecosystem Rival social game platforms emerge Bazillions of social devices are sold Mobile struggles to become a social network Interoperable games become relevant NanoStars demonstrate an even better form of virtual goods monetization Confidential 22

23. The NanoStars Platform Confidential 23

24. NerdBurger /Brotherhood 136 Tech (Black) | Human-Male ✔ +4 to all your cards that are 8 or less. 24

26. Robin Hood /Foreign Trade Wild (Green) | Human-Male 96 ✔ Swap one of your cards with one opponent face-up card. 26

27. Octomaid /Crazy Eights Tech (Black) | Female 61 ✔ ✔ All cards become Eights.Knock restricted. 27

28. Jim/Cult 28 Spirit (White) | Male ✔ Kill all your own cards. 28

29. The Next Big Thing is: Social Games Virtual Goods Free to Play Cross-Platform Interoperable Cloud-Based Cross-Region Confidential 29