1 the power of an integrated media partner An In-Depth Analysis of the Next Generation Consoles and the Gamers Behind Them

2 IDG Entertainment Research Presentation IDC Research Worldwide Videogame Console Hardware Forecast, 2/ U.S Gamer Segmentation Study, conducted by Boston Research, 4/07

3 Source: IDC Research

U.S. Gamer Segmentation Study

5 U.S. Gamer Segmentation Study Methodology Online survey among U.S. consumers. Sample provided by e- Rewards TM. an online panel provider with more than one million members in its consumer panel. Respondents were recruited by invitation and cookies were utilized to ensure one response per respondent. Screening criteria included: age 13 years or older; game 1 or more hours per week (on PC, console, handheld or mobile device). Conducted between 3/15/07 and 4/01/07. A total of 600 individuals completed the survey: –240 teens ages adults ages 18 or older The results from this study were weighted to be representative of the teen and adult U.S. population of gamers. At the 95% confidence level the margin of error for a sample size of 600 is +/- 4 percentage points.

6 Five Key Gamer Segments Core Gamers Status Gamers Social Gamers Active Gamers Casual Gamers Source: US Gamer Segmentation Study As a form of entertainment, I prefer gaming over watching TV. I want to spend more time gaming. As a form of entertainment, I prefer gaming over going to the movies. I am proud of gaming skills. I enjoy being the first to try a new game. I discuss my gaming experiences with other people at school or work. Gaming is a social experience. Gaming provides links to people I care about. Gaming is a great group activity. I like games where movements are reflected in the game. I like games that get me out of my chair. I use gaming as an physical release. I use gaming as an emotional release. Gaming allows me to play different roles. I prefer going out to dinner than gaming. I don’t need to be the first to try a new game.

7 Segment Breakout Avg $ spent Core Gamers$ Status Gamers$ Social Gamers$98.50 Active Gamers$ Casual Gamers$82.20

8 Who are the Next Gen system owners? Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 Age Next Gen Owners

9 Who are the Next Gen system owners? Race Next Gen Owners Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07

10 What other systems do they own? Systems currently owned Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 Next Gen Owners

11 Next Gen Owners Primary Value Proposition for Next Gen system Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07

12 How often do they game with friends? Percentage of time spent gaming with a friend Next Gen Owners Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07

13 Next Gen Owners What type of games do Next Gen system owners play? Genre of games played Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07

14 Next Gen Owners & Shoppers Why did/will Next Gen system owners/shoppers buy their systems? Primary factors that influence purchase of PS3 Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07

15 Next Gen Owners & Shoppers Why did/will Next Gen system owners/shoppers buy their systems? Primary factors that influence purchase of Xbox 360 Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07

16 Next Gen Owners & Shoppers Why did/will Next Gen system owners/shoppers buy their systems? Primary factors that influence purchase of Wii Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07

17 What other systems do they own? Systems currently owned Next Gen Shoppers Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07

18  The dynamics of this console generation are very different from those of past cycles because Microsoft, Sony, and Nintendo have clearly differentiated hardware and strategies.  PS3 and Wii are polar opposites  PS3 built for the long term, targeted at hardcore enthusiast gamer and future proofed with high-performance specifications.  PS3 designed for the gamer, but delivers ahead of the curve to early adopters  Despite the PS3’s high retail price, but the hard core gamers who will purchase the console first are not price sensitive.  For the early adopter, the price is a bargain  Wii is targeting a new audience while maintaining the fan base  Wii’s technology less impressive Strategies: PS3 vs. Wii Source: IDC Research Worldwide Videogame Console Hardware Forecast, 2/07

19  Of the three consoles, the Wii is in the best position for the front half of this hardware cycle  Nintendo appeals to a broader market as well as its fans at launch  Sony and Microsoft must target their established fan bases for the quick ramp-up  Xbox 360 has the potential to increase market share by continuing to publish first-party software and promote online experience  In late 2008 and 2009, Wii and Xbox 360 will approach peak shipments  Their new next-gen console announcements in 2010, release date 2011  PS3 will have a longer life cycle, shipments peaking in 2011  PS3 could surpass Wii and Xbox 360 in 2012  Sony’s best replacement strategy for the PS4, announce it in 2011, launch in 2013 Next-Gen Console Forecast Source: IDC Research Worldwide Videogame Console Hardware Forecast, 2/07

20  Handheld games continue to diversify the games industry  Sony’s PSP is the first non-Nintendo handheld to achieve a respectable installed base  Sony has expanded the market by bringing its core 18 – 34 yr old male demographic to handheld gaming  PSP may now be competing with the PS2 for time share among the same demographic  PSP’s multimedia functionality is a draw, but also a time-share issue  DS is cutting a wider demographic, skewing more female than previous handhelds  DS Lite is a fashion accessory with its iPod-style makeover Handheld Games Forecast Source: IDC Research Worldwide Videogame Console Hardware Forecast, 2/07

21 Videogame Software Shipments by Platform, Source: IDC Research Worldwide Videogame Console Hardware Forecast, 2/07

22 Videogame hardware and software revenue to grow 31.4% to a total of $38.85 billion in 2007 Factors contributing to growth: Wii’s penetration into markets beyond the traditional hardcore and enthusiast gamers Increasing the total accessible industry market Uptake of PS3 Further penetration of the Xbox 360 Industry Revenue Projections Source: IDC Research Worldwide Videogame Console Hardware Forecast, 2/07

23 Conclusions  Wii will remain strong through this cycle due to:  Increasing consumption by hardcore and enthusiast gamers  Nintendo’s console and handheld success in growing the total accessible market with lapsed and new gamers  Manufacturers’ efforts to expand into markets outside North America and Japan  Multiplatform titles should be developed as discretely as possible to take advantage of the differences in control, processing performance and user preferences specific to each console.  Stronger performance by the DS in the handheld sector due to lower development costs and the large installed base including new gamers.  Xbox Live remains the best user experience for online consoles.  Sony must quickly deliver titles that prove the PS3 is an evolutionary step forward not available on competing platforms.  Like Nintendo and Microsoft, Sony’s first party titles are likely the only console exclusives that will serve to differentiate the platform Source: IDC Research Worldwide Videogame Console Hardware Forecast, 2/07

24 Looking Ahead There will be a decrease in high end titles targeted at the hardcore market due to the rising costs of development and evolving publisher strategy backing mass market titles with relatively lower development costs. The result will be a positive for hardcore gamers: there will be fewer mediocre hardcore titles and better differentiation. Publishers with the foresight to invest in developing core and enthusiast titles for the PS3 and the Xbox 360 will reap high returns in the midterm as the installed bases for these consoles build to double-digit regional penetration. Online features and, preferably, business models for console titles should be addressed in the initial design and development phase. Aftermarket paid downloadable content, subscription and advertising fees should be designed to maximize profit per title and to lengthen titles' lifecycles.