In the age of OTT, where content usage isn't taking off for everyone, can gaming come to the rescue of your OTT strategy?

1. Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 1
Gaming strategies for TV
operators Take 2
Is there an opportunity for gaming on TV or
nott?
March 2014 - update of 2013 presentation

2. Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 2
2000 2004 2007 2010 2015
Freemium Apstore Game maker Operator

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Still some portal efforts alive

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2014 updates
• Social TV apps, part of the interactive future of
TV, are dead. What does that say about gaming on
TV?
• With over 150 M active gamers in Europe, over 50%
of game is time spent online1
• Gaming on TV really does require “lean forward”
• Gaming part of the overall interactivity strategy
including loyalty programs e.g. collecting points
• Casino gaming moving to Android and iOS, but the
smart TV market still too much of a jungle
– Betting is a regulatory issue
1: ProSieben.Sat.1

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Casual gaming on STBs
• Casual games that can be supported on todays TV
platforms require massive subscriber bases to
generate any revenue, otherwise they’re just “me-
too”.
• French IPTV market is unique
– Native STB games are still alive but barely kicking
– Games come ready loaded and in Operator’s Apstore
– Continued lack of public figures on profitability means it
cant’ be great, but new games are still coming out

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What is cloud gaming?
• Real gaming requires dedicated hardware not yet in TVs
• Here it’s in the Cloud, streaming video to a thin client.
• Requires low latency networks!
• Some history
– Demo by G-Cluster in 2000 (commercial launch by SFR in 2010, and
Orange in 2012), now descending from the pinnacle of Hype  Into
trough of disillusionment?
– OnLive (announced 2009, launched 2010, almost went under in
2012, now limping back)
– Gaikai integrated into PS4
– New platforms still being launched, dedicated Chinese platform …
• Technology is here although a major new improvement is still
expected with Nvidia’s Kepler architecture.

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The up-side of cloud Gaming
• Well marketed free trials are a common way of
recruiting players into a pay services
– learn from the mobile space.
• Cloud gaming subs also consume on demand and
subscription content
• Cloud gaming is well suited for A-B testing
• TTM: Cloud gamers get immediate access to new
games
• Porting games can be a nightmare, Cloud Gaming’s a
dream

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The down side of cloud Gaming
• The key to commercial success is elusive, although
some claim to have found it…
• Streaming games is not suited to the prevalent
Freemium model where 90-95% of players never pay
anything (see next slide)
• Need to providing CPE to improve ARPU significantly
• Subs behave the same with Cloud Gaming and SVoD
in terms of churn / stickiness :o(
• The success of PS4 and XO shows that living room
consoles still haven’t given up the fight

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Cloud Gaming on an IPTV
platform with a few million subs
0 k
2 k
4 k
6 k
8 k
10 k
12 k
14 k
0 k
10 k
20 k
30 k
40 k
50 k
Premium packs
Mid-range packs
Entry level packs
Total transactions
100+ games

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Why freemium isn’t Cloud-
compatible
• For an operator with 1M subs, say 10% are gamers
 100k
• Within 3 years, expect a max 10% of gamers to pay
 10k
• If Delta ARPU from gaming is say 5€ per
month, operator gets 30% of 10k * 5€ * 12 per year
 Less than €200K per year per million subs
• Scalability is key: smaller operators will find it hard to support
the 90-95% of gamers that don’t pay anything.

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[tbb*] thebrainbehind
Management Consultants
Onlive Home Screen
This is the start screen for the service. This is where you come when you login.
Best Practise Example: Onlive, USA
Screenshots

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[tbb*] thebrainbehind
Management Consultants
Onlive Marketplace
Find games to play by genre, release data etc. or just search
Best Practise Example: Onlive, USA
Screenshots

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[tbb*] thebrainbehind
Management Consultants
Onlive Game Details
Get all the details of the games before you pay for them
Best Practise Example: Onlive, USA
Screenshots

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[tbb*] thebrainbehind
Management Consultants
Onlive Arena
Watch, rate and trash-talk anyone playing in the Onlive system
Best Practise Example: Onlive, USA
Screenshots

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[tbb*] thebrainbehind
Management Consultants
Onlive Brag Clips
Watch 10 second clips of cool happenings from other peoples game play
Best Practise Example: Onlive, USA
Screenshots

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[tbb*] thebrainbehind
Management Consultants
Onlive Multiview
Keep an eye on your friends playing other games while you play
Best Practise Example: Onlive, USA
Screenshots

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So where is the room to innovate
for OTT Gaming?
 Big gaming companies (EA, Activision, Valve, … ) are bent on
technology innovation for greater realism requiring more and
more power but not innovating in gameplay.
 Innovation in gameplay has come from smaller games like
Angry Birds or Farmville.
 New game paradigms with big screen / companion screen
interaction can be invented for OTT TV.
 Since 2007 the Internet has become integral part of
gaming, this must be factored into TV company’s gaming
plans.
 Nintendo & Microsoft proved: still room for innovating input
 A space is opening with retail devices and the big TV screen.

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Where can TV operators
innovate?
Costofbuildinggame
Time

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OTT opportunities are increasing
but I’m not holding my breath
• Technical challenges:
– Play-along titles must scale at peak to millions of active users
– Direct return channel  every transaction must be handled in
real-time (harder than SMS).
– Big Data is involved and access to scalable server farms will be
an advantage:
• Best for either huge TV operators with massive data centers
• Or operators having started a transition to the cloud
• Smartphones and tablets will become controllers
• Gaming could make the TV screen dumb again.
• Beyond iOS & Android, window closing for other OTT PFs

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Thank you for listening
Now lets talk!

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