The global and Philippine market for game development. (c. 2006)

1. ELECTRONIC GAMINGELECTRONIC GAMING
MARKET SITUATIONMARKET SITUATION
FOR 2005FOR 2005--20062006
Computer and Video GamingComputer and Video Gaming
Cesar S. TolentinoCesar S. Tolentino
Research Analyst, XMG Asia PacificResearch Analyst, XMG Asia Pacific
December 23, 2006December 23, 2006

2. World MarketWorld Market
The world market is estimated to be worth $27
Billion in 2005 and is growing at an average annual
rate of 7.7%
Source: Rocsearch, 2005
20.7
22.6
25.0
27.0
28.9 30.0
0.0
10.0
20.0
30.0
40.0
2002 2003 2004 2005 2006 2007
REVENUES(inUS$Billions

3. Share of US MarketShare of US Market
U.S.
30%
Rest of the
World
70%
The US market accounts for at least 30% of the
world market in 2005
Source: Rocsearch, 2005

4. Growth in US MarketGrowth in US Market
The US market is growing at an average annual
rate of 3.7%
Source: NPD, 2005

5. Size of US Gaming MarketSize of US Gaming Market
In the US, the Gaming market is bigger than the
market for Movie and for DVD products in 2005
27.0
9.0
23.4
0.0
10.0
20.0
30.0
Gaming Movie DVD Sales and Rentals
ENTERTAINMENT CATEGORY
REVENUES(inUS$Billions
Source: Plunkett, 2006

6. Signs of More GrowthSigns of More Growth
The US market continues to sell more game units,
at an average annual growth rate of 6.2%
Source: NPD, 2005

7. Where is Growth Coming FromWhere is Growth Coming From
Growth is in consoles, it accounts for an average of
82.3% of all gaming units sold
Source: NPD, 2005

8. Where is Growth Coming FromWhere is Growth Coming From
And this is why sales is greater for console game
content, accounting for an average 85.7% of all
sales. Source: NPD, 2005

9. Significant StatisticsSignificant Statistics
Teens are a large crowd but the general age group
is bigger still
Source: NPD, 2005

10. Significant StatisticsSignificant Statistics
Strategy and Family-oriented games make up
almost half of the demand for Computer Games
Source: NPD, 2005

11. Top 10 Computer Games (2005)Top 10 Computer Games (2005)
1. The Sims 2 T
2. Doom 3 M
3. World of Warcraft T
4. Half-Life 2 M
5. The Sims 2 Special Edition T
6. The Sims Deluxe T
7. Battlefield Vietnam T
8. Call of Duty T
9. Roller Coaster Tycoon 3 E
10. Zoo Tycoon: Complete Collection E
Source: NPD, 2005

12. Significant StatisticsSignificant Statistics
Action and Sports games make up almost half of
the demand for Video Games
Source: NPD, 2005

13. Top 10 Video Games (2005)Top 10 Video Games (2005)
1. Grand Theft Auto: San Andres (PS2) M
2. Halo 2 (XBX) M
3. Madden NFL 2005 (PS2) E
4. ESPN NFL 2K5 (PS2) E
5. Need for Speed: Underground 2 (PS2) E
6. Pokemon Fire Red (GBA) E
7. NBA Live 2005 (PS2) E
8. Spider-Man 2 (PS2) T
9. Halo (XBX) M
10. ESPN NFL 2K5 (XBX) E
Source: NPD, 2005

14. Significant StatisticsSignificant Statistics
Puzzle games make up more than half of the
demand for Online Games
Source: NPD, 2005

15. Significant TrendsSignificant Trends
• Big name developers continue to dominate the market
• Big budget games based on hot movies will continue (ex., Lord
of the Rings)
• Developers will continue to develop for platforms that might
not even see the light of day (ex., games developed for the
much delayed Play Station 3)
• The industry will continue to be driven by a generation that
grew up on video games, even if they are ageing already
• Connectivity to the internet and mobility will push the envelope
for game design
• The video game industry will continue to be recession-proof.
The cost to develop content is still lower than in movies
• With hardware development starting to be costly and trouble-
ridden, the future will focus on content development
Source: Rocsearch, 2006

16. Driving ForcesDriving Forces
• Technological change – More powerful hardware at
lower costs
• Product innovation – Growing competition among a
growing number of developers means more innovative
products
• Changes in growth rates – In spite of cyclical patterns
in the US market, long term growth appears good
• Change in platform – The growing share of consoles
means the future of the desktop might be threatened
• Change in demographics – More female gamers are
playing, even among adults
Source: Rocsearch, 2006

17. Top 3 Game Developers (2005)Top 3 Game Developers (2005)
1. Electronic Arts Madden NFL
2. Nintendo Super Mario Brothers
3. Activision Call of Duty
Source: Game Developer Magazine, 2006

18. Philippine Game DevelopersPhilippine Game Developers
OpportunitiesOpportunities
OutsourcingOutsourcing
-- ArtArt
-- LocalizationLocalization
Serious Games ( corporate training,Serious Games ( corporate training,
skill based training, higher level of eskill based training, higher level of e--
learning )learning )
AdvergamingAdvergaming
Cultural GamesCultural Games

19. Art OutsourcingArt Outsourcing
Due to high expense of nextDue to high expense of next gengen
console games ( $20m to develop ),console games ( $20m to develop ),
developers outsource to expeditedevelopers outsource to expedite
development and reduce costsdevelopment and reduce costs
Game Art outsourcing has differentGame Art outsourcing has different
skill set that animation outsourcingskill set that animation outsourcing
Lower cost of art development inLower cost of art development in
Asia encourages outsourcing byAsia encourages outsourcing by
US/Japan game developersUS/Japan game developers

20. LocalizationLocalization
Not all games are made initially inNot all games are made initially in
EnglishEnglish
-- JapaneseJapanese
-- KoreanKorean
-- ChineseChinese
Translating this games to English andTranslating this games to English and
vice versa is part of gamevice versa is part of game
development and is a sustainabledevelopment and is a sustainable
businessbusiness

21. Serious GamesSerious Games
Biggest Potential in the next fewBiggest Potential in the next few
years, higher Level of eLearningyears, higher Level of eLearning
Games are used by Military due toGames are used by Military due to
simulations, same technique can besimulations, same technique can be
used for simulating experience andused for simulating experience and
increase technical skills familiarityincrease technical skills familiarity
Example: Brain Training Games byExample: Brain Training Games by
Nintendo sold 6 million copies inNintendo sold 6 million copies in
JapanJapan

22. AdvergamingAdvergaming
As any media, games can be usedAs any media, games can be used
for advertisementsfor advertisements
Targeted audience: Game players (Targeted audience: Game players (
have access to PC, generally teenhave access to PC, generally teen
males )males )
Example: Burger King in the USExample: Burger King in the US
developed 3 XBOX 360 Games thatdeveloped 3 XBOX 360 Games that
consumers can buy, released thisconsumers can buy, released this
yearyear

23. Cultural GamesCultural Games
Some Games are meant for a specificSome Games are meant for a specific
target culture, not mainstream buttarget culture, not mainstream but
can be a hitcan be a hit
In the US, there are lots of civil warIn the US, there are lots of civil war
games and exploration gamesgames and exploration games
developeddeveloped
Example: Deer Hunter, a game forExample: Deer Hunter, a game for
deer hunters, has been so successfuldeer hunters, has been so successful
in the US ( DH 1 and 2 combinedin the US ( DH 1 and 2 combined
sold 2.3 million copies )sold 2.3 million copies )

24. Thank YouThank You