The Asian Games Market: Sizing Up Opportunities

THE ASIAN GAMES MARKET SIZING UP OPPORTUNITIES C A SUAL G AME S SEC T OR REP OR T 2016

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East Meets West: In a rapidly globalizing games market, what are the opportunities for non-Asian companies in Asia and vice versa?

The Trade Balance of Public Companies In 2015, $69.6 billion of the $91.8 billion dollar global games market was generated by almost 70 public companies worldwide. Asian public companies generated $36.2 billion, of which 32%, or $11.4 billion, was generated outside of Asia. Sony and Nintendo contributed almost half of this, illustrated by the dominance of the console segment. Vice versa, 16% of the $33.4 billion generated by non-Asian public companies was generated in Asia: $5.3 billion. More than half of this, $3.0 billion, is from Google and Apple taking home 30% of app store revenues.

Game revenues generated by Asian public companies outside of Asia

Game revenues generated by non-Asian public companies in Asia

10%

17% $11.4BN 32%

64%

OF TOTAL

21% 19%

$5.3BN 16% OF TOTAL

69%

PC Games Source: Newzoo Global Games Market Report Premium

Console Games

Mobile Games

In 2016, Japan, Korea, China & Greater SEA Will Total $45Bn Game Revenues

$99.6Bn

Global Games Market Revenues Per Sub Region | 2016e

Global game revenues in 2016

W-EU $17.3Bn +4.4%

NAM $25.4Bn +4.1%

E-EU $3.0Bn +7.3%

MEA $3.2Bn +26.2%

CHINA $24.4BN +15.1%

REST Apac $0.8Bn +53.5%

45% Of the global games market revenues come from key Asian Markets

SOUTH KOREA $4.0Bn +2.3%

JAPAN $12.4Bn +1.2%

SEA $3.7BN +26.4%

OCEANIA $1.3Bn +2.1%

LATAM $4.1Bn +20.1%

Source: Newzoo Global Games Market Report Premium

2016e Game Revenues by Segment | Japan, Korea, China & Greater SEA

11% 2%6% Casual Webgames

10%

PC/MMO

TOTAL REVENUES

$45BN

Smartphone Tablet TV/Console

36%

Handheld Console Source: Newzoo Global Games Market Report Premium

35%

Smartphone takes the highest share of revenues in the key Asian markets in 2016 with 36%, or $16.0 billion. This is just ahead of PC/MMO games, which will generate $15.4 billion this year. The individual markets vary wildly when it comes to the most lucrative segments. In Japan for example, over 50% of revenues come from console games. Combined with the other key markets, the share taken by console games drops to below 15%. In SEA, more than half of all revenues come from mobile gaming.

S I Z I N G U P A S I A N O P P O R T U N I T Y | CA S UA L G A M E S A S S O C I AT I O N   3

This Year, 11 Asian Countries Generate 55% of Global Mobile Game Revenues Key KPIs | Global vs. China, Japan, Korea & Greater SEA | 2016e

CHINA, JAPAN, KOREA & GREATER SEA POPULATION

VS

29%

35%

0.9 Bn GAMES REVENUES $44.6 Bn MOBILE GAME REVENUES $20.4 Bn

ONLINE POPULATION 3.4 Bn

1.2 Bn GAMERS

POPULATION 7.4 Bn

2.2 Bn ONLINE POPULATION

THE WORLD AS A WHOLE IN 2016

40%

45%

55%

GAMERS 2.1 Bn GAMES REVENUES $99.6 Bn MOBILE GAME REVENUES $36.9 Bn

Source: Newzoo Global Games Market Report Premium

2016e Global Mobile Game Revenues Globally, the key Asian markets will account for an impressive 55% of all mobile game revenues in 2016. The rest of APAC will generate 3% of global revenues, the majority of which will come from India. The remaining regions will take 42% of all revenues or $15.3 billion. The US alone will generate $6.7 billion this year and is the largest Western market.

4

42%

TOTAL REVENUES

$36.9Bn

55%

3%

Key Asian Markets

Rest of APAC

Rest of APAC

Source: Newzoo Global Games Market Report Premium

China & Japan: A Snapshot

ASIAN OPPORTUNITY

China 2015 Mobile Revenues

$7.1 Bn Estimate 2015 “Western” Revenues (of revenues of top 100 iOS games) Share:

5.7%

55%

2015 App Store Share

($400M)

6%

Comparable to all games revenues in:

Poland

39%

Google Play

Other

iOS

China 2016e Game Revenues $24.4 Bn

YoY Growth 15%

Mobile Revenues $10.0Bn

Share Mobile Games 41%

Japan 2015 Mobile Revenues

$6.2 Bn

7%

Share:

2015 2015 App Store App Store Share Share

Estimate 2015 “Western” Revenues (of revenues of top 100 iOS games)

4.9%

41%

($300M)

52%

Comparable to mobile game revenues in:

Italy

Other

Google Play

iOS

Japan 2016e Game Revenues $12.4Bn

YoY Growth 1.2%

Mobile Revenues $6.5Bn

Share Mobile Games 52%

S I Z I N G U P A S I A N O P P O R T U N I T Y | CA S UA L G A M E S A S S O C I AT I O N 5

Source: Newzoo Global Games Market Report Premium

South Korea & Greater SEA: A Snapshot South Korea 2015 Mobile Revenues

5%

Estimate 2015 “Western” Revenues (of revenues of top 100 iOS games)

2015 App Store Share

$1.8 Bn Share:

14.2%

($260M)

79% 79%

Comparable to mobile game revenues in:

Brazil

16% 16%

Other

Google Play

iOS

South Korea 2016e Game Revenues $4.0Bn

YoY Growth 2.3%

Share Mobile Games 48%

Mobile Revenues $1.9Bn

Greater Southeast Asia 2015 Mobile Revenues

$1.4 Bn

Estimate 2015 “Western” Revenues (of revenues of top 100 iOS games)

21%

2015 App Store Share

Share:

~33%

25%

($470M)

Comparable to mobile game revenues in: 54%

Canada Greater Southeast Asia 2016e Game Revenues $3.7Bn 6

YoY Growth 26.4%

Other

Google Play

Mobile Revenues $2.1Bn

iOS

Share Mobile Games 56%

Source: Newzoo Global Games Market Report Premium

Asian Companies Continue Impressive Growth

ASIAN OPPORTUNITY

Top 10 Public Asian Companies by Game Revenue | 2014 vs. 2015

FY 2015 Revenue FY Revenues

2014Revenues Revenues FYFY2014

21%

YoY Growth for Tencent

$4.7Bn

YoY growth for the top 10 companies

Source: Newzoo Global Games Market Report Premium

Rising Asian Stars NetEase owns the number one and two mobile titles in China with Fantasy Westward Journey and Fantasy Westward Journey 2. Its growth is mainly driven by the success of its mobile segment. In 2015, mobile revenues accounted for 45% of NetEase’s $2.8 billion game revenues. This was only about 10% of the $1.6 billion generated in 2014.

NetEase plans to launch Fantasy Westward Journey: Warriors, Raven, and a series of new game titles based on the best-selling novels by Mr. Gu Long in the coming months.

Mixi was the fastest growing public game company in 2015. It achieved 187% growth YoY, growing to $1.5 billion game revenue in 2015. This growth is mainly due to Mixi’s popular mobile game Monster Strike, which has now been downloaded more than 30 million times.

The popular game has expanded to anime, the Nintendo 3DS, and esports with the Monster Strike Grand Prix 2016. Its success on mobile gaming has led Mixi to recently publish two new mobile titles: Black Knight Rises and Marvel Tsum Tsum.

Garena established itself in 2010 with the launch of Garena+, an online platform where people can meet, chat and play games. Since then, it has been one of the fastest growing internet companies in Southeast Asia, growing from four to 4500 employees and earning more than $300 million in annual revenues. Garena exclusively distributes games like League of Legends, Heroes of Newerth, FIFA Online 3, Point Blank and AVA in Southeast Asia, while also owning mobile hit Thunderstrike. Garena is also well known for its esports activities.

S I Z I N G U P A S I A N O P P O R T U N I T Y | CA S UA L G A M E S A S S O C I AT I O N 7

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About Newzoo Newzoo is an innovative global market research and predictive analytics firm with a primary focus on games. Newzoo provides its clients with a mix of market trends, financial analysis, revenue projections, consumer insights, data modelling solutions and predictive analytics services across all continents, screens and business models and works for the majority of top 25 public companies by game revenue.

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