Gaming strategies for TV operators Updated presentation

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 1

Gaming strategies for TV operators Take 2

Is there an opportunity for gaming on TV or nott?

March 2014 - update of 2013 presentation

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 2

2000 2004 2007 2010 2015

Freemium Apstore Game maker Operator

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Still some portal efforts alive

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2014 updates

• Social TV apps, part of the interactive future of TV, are dead. What does that say about gaming on TV?

• With over 150 M active gamers in Europe, over 50% of game is time spent online1

• Gaming on TV really does require “lean forward”• Gaming part of the overall interactivity strategy

including loyalty programs e.g. collecting points• Casino gaming moving to Android and iOS, but the

smart TV market still too much of a jungle– Betting is a regulatory issue

1: ProSieben.Sat.1

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Casual gaming on STBs

• Casual games that can be supported on todays TV platforms require massive subscriber bases to generate any revenue, otherwise they’re just “me-too”.

• French IPTV market is unique– Native STB games are still alive but barely kicking– Games come ready loaded and in Operator’s Apstore– Continued lack of public figures on profitability means it

cant’ be great, but new games are still coming out

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 6

What is cloud gaming?

• Real gaming requires dedicated hardware not yet in TVs• Here it’s in the Cloud, streaming video to a thin client.• Requires low latency networks!• Some history

– Demo by G-Cluster in 2000 (commercial launch by SFR in 2010, and Orange in 2012), now descending from the pinnacle of Hype Into trough of disillusionment?

– OnLive (announced 2009, launched 2010, almost went under in 2012, now limping back)

– Gaikai integrated into PS4– New platforms still being launched, dedicated Chinese platform …

• Technology is here although a major new improvement is still expected with Nvidia’s Kepler architecture.

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 7

The up-side of cloud Gaming

• Well marketed free trials are a common way of recruiting players into a pay services– learn from the mobile space.

• Cloud gaming subs also consume on demand and subscription content

• Cloud gaming is well suited for A-B testing• TTM: Cloud gamers get immediate access to new

games• Porting games can be a nightmare, Cloud Gaming’s a

dream

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The down side of cloud Gaming

• The key to commercial success is elusive, although some claim to have found it…

• Streaming games is not suited to the prevalent Freemium model where 90-95% of players never pay anything (see next slide)

• Need to providing CPE to improve ARPU significantly• Subs behave the same with Cloud Gaming and SVoD

in terms of churn / stickiness :o(• The success of PS4 and XO shows that living room

consoles still haven’t given up the fight

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Cloud Gaming on an IPTV platform with a few million subs

0 k

10 k

20 k

30 k

40 k

50 k

0 k

2 k

4 k

6 k

8 k

10 k

12 k

14 k

Premium packsMid-range packsEntry level packsTotal transactions

100+ games

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 10

Why freemium isn’t Cloud-compatible

• For an operator with 1M subs, say 10% are gamers 100k

• Within 3 years, expect a max 10% of gamers to pay 10k

• If Delta ARPU from gaming is say 5€ per month, operator gets 30% of 10k * 5€ * 12 per year Less than €200K per year per million subs

• Scalability is key: smaller operators will find it hard to support the 90-95% of gamers that don’t pay anything.

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[tbb\*] thebrainbehindManagement Consultants

Onlive Home Screen

This is the start screen for the service. This is where you come when you login.

Best Practise Example: Onlive, USAScreenshots

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 12

[tbb\*] thebrainbehindManagement Consultants

Onlive Marketplace

Find games to play by genre, release data etc. or just search

Best Practise Example: Onlive, USAScreenshots

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 13

[tbb\*] thebrainbehindManagement Consultants

Onlive Game Details

Get all the details of the games before you pay for them

Best Practise Example: Onlive, USAScreenshots

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 14

[tbb\*] thebrainbehindManagement Consultants

Onlive Arena

Watch, rate and trash-talk anyone playing in the Onlive system

Best Practise Example: Onlive, USAScreenshots

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 15

[tbb\*] thebrainbehindManagement Consultants

Onlive Brag Clips

Watch 10 second clips of cool happenings from other peoples game play

Best Practise Example: Onlive, USAScreenshots

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 16

[tbb\*] thebrainbehindManagement Consultants

Onlive Multiview

Keep an eye on your friends playing other games while you play

Best Practise Example: Onlive, USAScreenshots

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 17

So where is the room to innovate for OTT Gaming?

Big gaming companies (EA, Activision, Valve, … ) are bent on technology innovation for greater realism requiring more and more power but not innovating in gameplay.

Innovation in gameplay has come from smaller games like Angry Birds or Farmville.

New game paradigms with big screen / companion screen interaction can be invented for OTT TV.

Since 2007 the Internet has become integral part of gaming, this must be factored into TV company’s gaming plans.

Nintendo & Microsoft proved: still room for innovating input A space is opening with retail devices and the big TV screen.

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 18

Where can TV operators innovate?

Innovation in game play

Innovation in technology (power)

Co

st o

f b

uild

ing

gam

e

M$

K$

Time

TV games can reinvent their own interaction

based on multiscreen & quality media

assets, play-along seems easy target.

Sophistication of latest

phones is pushing dev

costs beyond €1M !

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 19

OTT opportunities are increasing but I’m not holding my breath

• Technical challenges:– Play-along titles must scale at peak to millions of active users– Direct return channel every transaction must be handled in

real-time (harder than SMS).– Big Data is involved and access to scalable server farms will be

an advantage:• Best for either huge TV operators with massive data centers• Or operators having started a transition to the cloud

• Smartphones and tablets will become controllers• Gaming could make the TV screen dumb again.• Beyond iOS & Android, window closing for other OTT PFs

Gaming strategy for operators London March 2013 & 2014 Benjamin Schwarz bs@ctoic.net - 20

Thank you for listening

Now lets talk!

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