Cloud Gaming:new revenue stream

for publishers and developers

10/27/2016

Jean-Denis VIGATO Head of Cloud Gaming

Anne-Laure CAFFIN Head of Cloud Gaming

Olivier AVAROCEO

Loïck TANGUYVP Business

Development Asia

Ivan LEBEAU CEO

Armand CLAUDELProduct Manager SmartTV

Nathalie LAMRIProduct Strategy & Marketing Director

Mustapha TOUMISmartTV Content Manager

Summary

1. Ecosystem2. Publishers/Developers: Challenges & Opportunities3. Market Overview 4. Cloud Gamer Profile5. Conclusion

1- Cloud Gaming Ecosystem

PUBLISHERS & DEVELOPERS

DISTRIBUTORS

IPTV PROVIDERS

MEDIA PLAYER/OTT MANUFACTURERS

SMART TV MANUFACTURERS

CONTENT PROVIDERS

CLOUD GAMING SERVICE PROVIDERS

TECHNO PLATFORMS

GAM

ERS

“Abandon all hope, ye who enter here !”The Nines Circles of Hell of Cloud Gaming

1. Is it technically feasible ? (Latency, bit rate, …)2. Is it financially viable ? (CPU/GPU/BW costs)3. Is there an audience for it ? 4. Can we build a catalogue for this audience ?5. How can they access the games (Controller)6. What business model for the ecosystems ? 7. How do you make it global ? 8. What distribution / acquisition cost ? 9. How do you retain customers ?

2- Publishers/Developers: Challenges & Opportunities

Opportunities • Publishing

– Revival for Back Catalogues : less obsolescence on the consumers targets– Titles are long standing sellers : 2 to 3 years– Accept to go for demo or trial versions – Kids/casual gamers are less and less assigned by major PC/Consoles digital platforms

• Kids titles = opportunities • Casual gaming – Now only MOBILE but can be assigned via family/female/kids cloud gaming TV packages

• New business models and extra money for Publishers– “Subscription based” or packages Business model work good – Quid for advertisement royalties in the future ??? Not started yet ? – Access to Specific Telco’s billing helps a lot : SFR/Orange direct invoicing– Provide easier access to “emerging” markets where consoles sales are week Russia/China/Africa/LATAM

• Marketing opportunities for IP’s – Having a strong franchise is a + on TV cloud gaming – Integrate in your plans those new formats (ISP’s, OTT, Smart TV) help the overall of IP brand awareness but negotiate

marketing activities with your partners– No piracy !!!

Challenges • Publishing :

– IP and source codes ownerships issues • Most of the time cloud gaming adaptations are not included in contracts with IP owners . Its’ New formats for IP owners, so they ask for more money • Don’t forget to include those formats in your contracts as you do with STEAM or PSN

– Developers and publishers are reluctant to provide source codes to non trusted or new business platforms

• Technical issues– Two major main formats can be adapted : Androids and PC - depends on technical specificities for each platforms

• But choose consoles lead formats titles to avoid difficulties for PAD adaptations

– Backward engineering is sometime difficult for Back catalogues • Teams are working on other projects … • Old sources codes with external engine not upgraded : Ie… UNITY 2 to Unity 5

– SDK integrations is not so simple - to cloud gaming industry => Stop to say “it’s a 5 mn job”• For multi formats publishers (consoles/Mobile/PC) we have now zillions of SDK to integrate (platforms + billings) !!!!

• Marketing challenges– For new releases and AAA titles : Publisher are reluctant to say OK

• Price positioning for consoles is around 50 to 70 euros …

– Difficulties to understand where goes our titles worldwide • Beta/Master Candidate tests in end users conditions are difficult • We don‘t have clear understandings on worldwide coverage and release plans .

3- Market Overview

ISP: Orange & SFR

SFR + Orange: pioneer & veterans in cloud gaming• SFR + Orange: A success story

– A Cloud Gaming platform and business running for 6 years (SFR: Oct 2010 / Orange: Oct 2012)– 9M French households with IPTV providing WIZTIVI’s cloud gaming platform– Each & every month >70K gamers paying 10 or 15€ - still growing!– A new partnership with WIZTIVI Gaming and new countries to open…

• Games: – We already distribute 270 games /40 publishers : Anuman, SEGA, Ubisoft, Warner Bros., Disney, Konami,

Gameloft, EA, Activision, Focus, Playrix, Mumbo Jumbo… and many others !– Thanks to a multiple porting solution and a full dedicated and skilled team– We’re looking for:

• Premium publishers, small publishers & independant studios…• All games, from gamer games to casual games, from new games to back catalog games…

• Telcos assets:– Back catalog games monetization and windowing release – A fully integrated and secured customers billing system– Customers close relationship & powerful marketing tools– Providing the hardware (Cloud gaming dedicated servers & STB) + a High Bandwidth managed network with

prioritized network flow– No piracy

OTT: EMTEC

Connected TV:The war for the living-room is just beginning…

Cloud Gaming – OTT

Over 100 Million Streaming Media Players sold in the world*.

*Parks Associates

Cloud Gaming – OTT

SMART TV:Samsung & LG

• 1Mo+ Smart TV sold from Jan to Aug in 2016

• Netflix has been the #1 trigger for use

• Cloud gaming now?

28''↓ 32'' 40'' 46/50'' 55'' 60/65'' 70''↑

8,289

106,396

289,205

331,858

246,633

59,912

5,599

Smart TV Screen sizes Jan 2016 (YTD August)

Samsung SmartTV experience :•Needs of SmartTV Users :

–Sample and Quick access–Multiscreen and portability–Incredible Image quality: UHD–Game without console (after VOD Streaming, TV Apps)

•Gaming concept in SmartTV Samsung :–Play console game titles without console through video streaming technology : Game fly

(The Batman Arkham City , Sleeping Dogs, Lego Marvel Super Heroes, Grid2, Hitman)PlayStation Now OR SteamLink (New)

–Download and play casual games optimised for Samsung Smart TV ex : Asphalt 8, Cars: Fast as Lightning, Just Dance…

–Quick and easy access : Clear UI, games categorised by supported controller•The largest installed base of Smart TVs in France, Europe and World•Tizen SmartTV : 40% of All Samsung SmartTV•Impact on Service during GameFlay Marketing promotion :

–X3 lgame usage•MAU (Free Game and cloud Gaming): 57% in Europe

Cloud Gaming “Premium”Gamestream

Cloud Gaming as a Premium service- Cloud Gaming Premium XP ?• Great streaming solution: Full HD 1080p + 45-60 Fps + imperceptible latency• Great content: Adapted to users + a mix of cult and recent titles

> A Premium service is a mix of very good technical conditions (techno and Network) and an cherry-picked content

- On ISP services:• A few ISP can provide this level of QOS: some foreign ISPs + 1.4M FTTH users in FR• When users are confident with the UXP (even in 720p), they spend money on

Premium packs and A la Carte titles

- On other platforms:• Gamestream’s experience in Hospitality• Opportunities on OTT for STB and SmartTV providers

4- The Cloud Gamer Profile

SFR Cloud Gaming - Platform positioning

PC

FAMILY gamer

Non portable DEVICE

Portable DEVICE

HARDCORE gamer

PS4

XBOX

NINTENDO

SFR Cloud Gaming

Smartphone & Tablet

SFR Cloud Gaming - Players profiles

MEN54%WOMEN

46%

Family with kids

60%

Childless couple

23%

Single17%

3-5 yo7% 6-

12 yo22%

>50 yo17%

26-49 yo32%

13-18 yo14%

19-25 yo8%

SFR Cloud Gaming - Most played games TOP101 2 3

4 5 6

5 8 9 10

Orange France Cloud Gaming : some statistics• 10 Millions minutes of fun per month• Average session duration = 26 minutes• Peak hours :

– 17h-21h on week days, – 10h-21h on week-ends

• Peak days : Saturday, Wednesday, Sunday and school holidays • A growing customer satisfaction : 7,8 in 2015 (vs. 7,4 in 2013)

Conclusion

The Cloud gaming market has now turned into a reality, driven by the convergence of several factors:

– High-Speed Internet (ISP)– Connected TV massive hardware installed bases (Telco STB, Smart TV and “3rd

Party” OTT)– Reliable cloud-based technology (platforms & servers)– Attractive content (game catalogue)– Viable business model:

• Low cost entry for end-consumers and adoption of subscription-based model by end-consumers

• Increasing revenue stream for publishers/developers – Streaming has changed the way people consume media (e.g. Netflix, Spotify)

The future of video games is in the cloud!

The video game industry has not yet experienced its total digital revolution vs. music and video. Game streaming is definitely a massive trend in the industry that game content providers need to embrace and see as a new opportunity to make games as easy to access as music and movies, and grow their audience.

THANK YOU!