Taking on the Big Guys of Social CasinoNovember 2016

DAVID

v. GOLIATH

Niko Vuori

Formerly Zynga Poker GMniko@rocketgames.com

Co-Founder & COO of Rocket Games

A (VERY) LITTLE BIT ABOUT ME

Our team

INTRODUCTION TO ROCKET GAMES

Rocket Games

Founded July 2013 by team of (mainly) Zynga Poker alums

Bootstrapped company from cashflow (no outside investment)

Launched first slots title in Sep 2013

Unity-based, mobile-focused

We launch early, launch often – iterate & learn with multiple (51 and counting) products in market

Profitable since Jan 2014

Grew 6x in 2015, now top-15 social casino company globally

Acquired by Penn National Gaming July 2016 for up to $170M

TOP 15 SOCIAL CASINO OPERATORS

Source: Eilers & Krejcik Gaming

Tier 1: $50-75M/qtr Tier 2: $25-30M/qtr Tier 3: $12-15M/qtr

CIE: $220M/qtr

Top 15 account for ~80% of total social casino revenues

6X GROWTH YEAR-ON-YEAR

Source: Eilers & Krejcik Gaming

Industry avg ~15% growth

MANY GOLIATHS, HUGE BARRIERS TO GROWTH

Slotomania, House of Fun, Bingo Blitz, WSOP

Hit It Rich, Zynga Poker, Wizard of Oz, Willy Wonka

Doubledown Casino

Jackpot Party, Gold Fish Casino, Quick Hit, Hot Shot

Years of content, real-life IP, customer relationships, early-mover advantage…

HOW CAN YOU GROW IN SUCH A CROWDED MARKET?

~1 in 3 titles in top 50 grossing are casino games

1. Goliaths go slow

Move fastTrust in data

Iterate

2. Goliaths play defense

Don’t fight head onOutflank

Find the blind spots

3. Goliaths are myopic

Where’s the puck going?Underserved audiencesSpot opportunities early

USE GOLIATHS’ SIZE TO YOUR ADVANTAGE

1. MOVE FAST & ITERATE

WE’VE LAUNCHED 51 TITLES IN 3 YEARS – HERE ARE SOME OF THEM

Sep 2013

Feb 2014

Mar 2014

May 2014

Jul 2014

Aug 2014

Oct 2014

Dec 2014

Feb 2015

Apr 2015

Mar 2015

May 2015

Jun 2015

Jul 2015

Oct 2015 Dec 2015

51 titles, 4.5 stars, 150k reviews

MOVING FAST DOES NOT MEAN SACRIFICING QUALITY

A quality product that players will love is what drives us

4¢ARPU

6¢ARPU

15¢ARPU

September 2013

May 2014

May 2015

August 2014

10¢ARPU

CONTINUAL IMPROVEMENT WITH EACH RELEASE

Lots and lots of A/B testing – we are data-informed but not data-driven

2. FIGHT ON THE FLANKS

AVOID HEAD-ON BATTLES

Real-life slots IP, full integrated casino

Powerful licensed brand

Real-time, synchronous social play

Real-life Las Vegas comps, MGM tie-in

Don’t pick fights you can’t win – find an alternative battleground

“We are reinforcing that Coca-Cola is for everybody,” [Coca-Cola CMO Marcos] de Quinto said. “Coca-Cola is one brand

with different variants, all of which share the same values and visual iconography. People want their Coca-Cola in different ways, but whichever one they want, they want a Coca-Cola

brand with great taste and refreshment.”

Source: Coca-Cola

THE COCA-COLA STRATEGY

THE COCA-COLA STRATEGY

There is no one-size-fits-all. And when you can move fast & be nimble, you can effectively serve customers who are looking

for slightly different variants & flavors

DIFFERENT FLAVORS APPEAL TO DIFFERENT CUSTOMERS

Asian theme

Integrated casino “lite”

Younger audience on Tango messaging platform

Instead of picking head-on battles by trying to build all the bells and whistles incumbents offer, we’ve tried to go after

smaller, more self-contained experiences each offering something slightly different to customers

Tight economy

Public domain Alice in Wonderland IP

Male theme

“SHELF SPACE” IN APP STORES LIMITED, MAKE THE MOST OF IT

Two-thirds of app discovery is through app store search – the more product you have on the shelf, the more likely the customer is to choose your app versus a competitor’s

CUSTOMERS NEED TO PICK UP YOUR PRODUCT

How many of these were paid for?

APP STORE PRESENCE & OPTIMIZATION IS CRITICAL

Why pay exorbitant CPIs for your customers when you can acquire them for free?

3. SPOT OPPORTUNITIES EARLY

THE STATE OF NORTH AMERICAN LAND-BASED SLOTS JUNE 2015

Mechanical Reel slots represent almost a third of North American land-based slots in terms of install base and are

played by 17M players annuallySource: Eilers & Krejcik Research

Mobile slots dominated by video slots offerings with virtually no mechanical reel slots in the app stores

THE STATE OF MOBILE SLOTS JUNE 2015

Source: App Annie, Rocket Games estimate

July 2015

IN JULY 2015, VIVA SLOTS VEGAS LAUNCHES…

Viva Slots Vegas

Very early to market on mobile with a quality 3-reel mechanical slots offering

Mechanical reel slots as a genre represents almost a third of land-based machines in North America – but was heavily under-indexed in social/mobile until summer 2015

Immediately upon launch, KPIs for Viva were an order of magnitude better than anything we’d done prior

After 2 years and ~30 slots SKUs, we’d finally struck a real nerve with an underserved customer – the classic slots player

Our KPIs unlocked paid user acquisition as a channel, further accelerating growth

Classic slots

~$500million

HOW BIG CAN CLASSIC BECOME?

Source: SuperData Research, Eilers & Krejcik Research

Concentrated in North America

Assuming classic slots in social casino (a ~$2bn market in North America) achieves similar penetration as in land-based casino (25-30%), opportunity estimated at ~$500M

UNDERSERVED AUDIENCES REPRESENT UNMET DEMAND

After building a solid, profitable business in video slots, our entry into classic mechanical reel slots takes Rocket to the

next level

1. Goliaths go slow

Move fastTrust in data

Iterate

2. Goliaths play defense

Don’t fight head onOutflank

Find the blind spots

3. Goliaths are myopic

Where’s the puck going?Underserved audiencesSpot opportunities early

RECAP: USE GOLIATHS’ SIZE TO YOUR ADVANTAGE

THANKS!