The document summarizes meetings held by an analyst in India to assess the video game industry. It finds that India has strong potential to become a $1.5-2 billion gaming market, similar to China, as broadband and mobile penetration increases. Currently, piracy is common, but online/free-to-play models and popular franchises from Activision and Electronic Arts could succeed. The industry growth depends on expanding internet access over the next 12-18 months.

1. July 23, 2010
Industry Report
Think Entertainment: Gaming Reason for Report:
Games: Takeaways From Meetings In India Industry Update
Atul Bagga
THINK SUMMARY: 415-249-6362, abagga@thinkequity.com
Over the last few days, we met with Zapak, the largest games company in
India (according to the company's CEO), a couple games start ups and VCs in
the media space, and spoke to a few games retailers in India. We are
encouraged with an apparent strong video games culture amongst the youth
and youngsters in India and believe that India could emerge as another games
powerhouse (similar to China) over the next few years with a potential $1.5-2.0
billion market opportunity. We believe that the inflection point could come over
the next 12-18 months, with expected strong growth in broadband penetration
on the back of a recent award of wireless broadband spectrum by the
government to the private sector. Similarly, with about 600 million subscribers
and upcoming rollout of 3G, mobile games could emerge as another
meaningful potential opportunity. We believe that Activision and Electronic Arts
may have play in the Indian markets given the popularity of their franchises in
India and their aggressive plans for online.
KEY POINTS:
• With a population of 1.2 billion (roughly 250 million middle-class population
according to the World Bank), we believe India is an attractive market for
consumer products. Games culture seems to have grown significantly over
the last few years with a considerable media expansion that led to an
increased exposure to the Western culture. In our conversations with the
retailers and some of the users, it seems that the children and youth are very
familiar with the top franchises (such as Call of Duty, Need for Speed, FIFA,
Grand Theft Auto, Smackdown vs. Raw) and latest titles. Using China as a
benchmark, we estimate that India has the potential to emerge as a $1.5-2.0
billion market for video games.
• Penetration of consoles seems miniscule, given the high price point of
consoles ($350-400 for an Xbox 360 Arcade or Wii versus $150-199 in the
U.S.) and the video games ($55-66 for video games) that may be out of
reach for a large majority of the population (average per-capita income in
India is at $1,030, per IMF). Pirated games for PC (selling at $1-4 per title)
seem extremely popular, according to our conversation with retailers, gaming
companies, and VCs, which makes us believe that, like China, the online and
free-to-play model could be the credible way to monetize the users in India.
Our conversation with Zapak (the largest games company in India, according
to the company's CEO), suggests that users are willing to spend for the
virtual goods, and ARPPU at $20 seems in the range of that of international
markets.
• With only 81 million Internet users (per Internet World Stats) and roughly five
million broadband users (according to International Telecommunication
Union), the market for online games could be limited. However, in June 2010,
the Indian government auctioned the licenses for wireless broadband
spectrum, and with some aggressive private investment planned (from
groups such as Reliance Industries, QUALCOMM, Bharti, and Aircel), we
would expect to see meaningful growth in broadband penetration over the
next 12-18 months, which we believe could be an inflection point for online
games in India.
Please see analyst certification (Reg. AC) and other important disclosures on pages 3-5 of this report.

2. July 23, 2010
Industry Report
• Similarly, mobile could be another significant opportunity with over 600 million mobile users (according to Telecom
Regulatory Authority of India) and with the recent auctioning of 3G licenses and planned investment by the private sector
in 3G.
• While it may be too early to comment on the potential beneficiaries, we believe that companies with an aggressive plan for
the online, free-to-play might have an interesting play in the Indian markets. Furthermore, India might be an easier market
than China in terms of regulatory stand point and could have more direct upside for the global publishers. With awareness
of top franchises (Call of Duty, Need for Speed, FIFA) and aggressive plans for the online, ATVI (planning online version
of Call of Duty for emerging markets, Starcraft 2 and popularity of World Of Warcraft), and ERTS (Online version of Need
for Speed, Tiger Woods, Battlefield Heroes) could have some play in the India markets, in our opinion.
INVESTMENT RISKS:
Gaming continues to be a hit-or-miss-driven business, and predicting successful titles versus unsuccessful titles
is extremely difficult. The risk is especially high for the new and unproven IPs, and a company's reliance on the new IPs
and the titles in the established franchises to reach the revenue target opens it to risk of a revenue miss.
Macro headwinds and popularity of the used games and free-to-play online games. Given the current macro
headwinds, used games and free-to-play online games create higher substitute competition for video games.
The industry is dependent on the console cycle; unexpected start of the new console cycle will likely constrain the
revenue growth and affect profitability of gaming vendors.
Foreign currency exchange risk. These companies generate revenue from international operations, which exposes the
companies to foreign currency exchange risks.
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3. July 23, 2010
Industry Report
COMPANIES MENTIONED IN THIS REPORT:
Company Exchange Symbol Price Rating
Activision Blizzard, Inc. NASDAQ ATVI $11.62 Buy
Electronic Arts Inc. NASDAQ ERTS $15.59 Buy
QUALCOMM Inc. NASDAQ QCOM $39.11 Hold
Important Research Disclosures
Analyst Certification
I, Atul Bagga, hereby certify that all of the views expressed in this research report accurately reflect my personal views about the subject
securities and issuers. I also certify that no part of my compensation was, is, or will be directly or indirectly related to the specific
recommendations or views expressed in this research report.
The analyst(s) responsible for preparing this report has/have received compensation based on various factors, including the firm's total
revenues, a portion of which is generated by investment banking activities.
ThinkEquity LLC makes a market in QUALCOMM Inc., Electronic Arts Inc., and Activision Blizzard, Inc. securities; and/or associated
persons may sell to or buy from customers on a principal basis.
Rating History for: QUALCOMM Inc. (QCOM) as of 07-22-2010
01/28/10
H
56
48
40
32
24
16
Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3
2008 2009 2010
Created by BlueMatrix
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4. July 23, 2010
Industry Report
Rating History for: Electronic Arts Inc. (ERTS) as of 07-22-2010
05/27/09 07/09/09
I:H B
75
60
45
30
15
0
Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3
2008 2009 2010
Created by BlueMatrix
Rating History for: Activision Blizzard, Inc. (ATVI) as of 07-22-2010
06/15/09
I:B
21
18
15
12
9
6
Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3
2008 2009 2010
Created by BlueMatrix
Rating Definitions
Effective October 7, 2009, ThinkEquity LLC moved from a four-tier Buy/Accumulate/Source of Funds/Sell rating system to a three-tier
Buy/Hold/Sell system. The new ratings appear in our Distribution of Ratings, Firmwide chart. To request historical information, including
previously published reports or statistical information, please call: 866-288-8206, or write to: Director of Research, ThinkEquity LLC, 600
Montgomery Street, San Francisco, California, 94111.
Buy: ThinkEquity expects the stock to generate positive risk-adjusted returns of more than 10% over the next 12 months. ThinkEquity
recommends initiating or increasing exposure to the stock.
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5. July 23, 2010
Industry Report
Hold: ThinkEquity expects the stock to generate risk-adjusted returns of +/-10% over the next 12 months. ThinkEquity believes the stock
is fairly valued.
Sell: ThinkEquity expects the stock to generate negative risk-adjusted returns of more than 10% during the next 12 months. ThinkEquity
recommends decreasing exposure to the stock.
Distribution of Ratings, Firmwide
ThinkEquity LLC
IB Serv./Past 12 Mos.
Rating Count Percent Count Percent
BUY [B] 150 69.10 17 11.33
HOLD [H] 66 30.40 2 3.03
SELL [S] 1 0.50 0 0.00
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