2. Gaming at the Crossroads
Mitch Lasky
Benchmark Capital

3. Irell & Manella LLP
SERUM

5. Content vs. Distribution

6. Content innovation drives
audience expansion.

11. Distribution innovation
drives value creation.

12. Doom

13. Steam

14. 1992-2004

15. 1992 2004
Revenue $300 million $3.1 billion
Market Value ~$250 million ~$15 billion

16. The “Shiny Disc” Era

17. c. 1992
US
Territories Western Europe
Japan
SNES, Genesis
Platforms Gameboy
PC (floppy)
Nintendo, Sega
Publishers EA & “7 Dwarves”
Namco, Konami

18. 1992: One Model
Buy games at retail.

19. “Shiny Disc” Attributes
•Huge asset creation costs
•Manufacturing and platform licensing
•Recurring customer acquisition costs
•Shipping, retail, inventory management
•Piracy & IP protection

20. 2004-2009

22. What changed in 2004?

24. World of Warcraft Released

25. Half Life 2 distributed
through Steam

27. Shanda IPO

28. TenCent/QQ IPO

30. JAMDAT IPO

32. Aggregate public valuations of
non-traditional game companies
exceeded market cap of EA

33. Online Attributes
•Services requiring on-going investment
•Open platforms, more open to competition
•Distribution & customer acquisition merged
•Fluid concept of IP & ownership (UGC, etc.)
•Network effects

34. c. 2009
US, Latin America
Territories Western Europe, Eastern Europe, Russia
Japan, China, Korea, SE Asia
Xbox 360, PS3, Wii
DS, PSP, Mobile
Platforms PC-CD, Steam, MMOG
Flash, in-browser, mid-session downloads
Facebook/Myspace
1st Parties (Microsoft, Sony, Nintendo)
Activision-Blizzard, EA, Valve
THQ, Take Two, Ubisoft, Atari
Publishers Konami, Capcom, Square/Enix, DeNA
Shanda, The9, Giant, Perfect World, TenCent
NCSoft, Nexon, Neowiz
Zynga, Gaia, Linden Lab, Habbo

35. 2009: Many Models
Buy games at retail (new & used)
Subscription
“Freemium”
Ad Support/Lead Gen
Virtual Goods
Stored Value Cards

36. Five things to watch in ‘09

37. Social gaming

40. DeNA’s Mobagetown

41. Light, persistent games &
location-based gaming

42. GoCrossCampus

43. Advanced session-based gaming

44. KartRider

45. Riot Games’ “League of Legends”

46. User-Generated Content

47. Second Life

48. Little Big Planet

49. Line Rider

50. Sports 2.0

52. Six Degrees’ Action AllStars

53. Thank you ...