Future of Video Games

September 2008

Shana Fishersf@iac.com

Senior Vice President, Mergers & Acquisitions, StrategyIAC/InterActiveCorp

Confidential – For Discussion Purposes Only

The Online Video Gaming Market

3

• InstantAction is defining the $2B online core games market– InstantAction is completely focused on moving video games to the

Web– Online core games is a sub-segment of the $34B video game market

Global Online Core Games Revenues

Source: “Online Game Market”, DFC June 2007 Note: Projection adjusted for IAC estimate of MMOG and

casual revenue

$0

$10

$20

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$ in

bill

ion

2006 2007 2008 2009 2010 2011

Global Video Games Revenues

Source: “Video Game Advertising”, eMarketer April 2007

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bill

ion

2006 2007 2008 2009 2010 2011 2012

Confidential – For Discussion Purposes Only

Market Size

$4BCompetitors

Distribution

Online$150 / year

Software$60 / game

Competitors

Market Size

Distribution

$7B

Customer Cost of Ownership

Hardware$400

Software$60 / game

Online$50 / year

Console PC

Market Size

$11B

Distribution

Competitors

Market Size

$3BCompetitors

Distribution

Competitors

Market Size

$200M

Distribution

Confidential – For Discussion Purposes Only

Traditional Games are Costly and Slow to Develop

5

Retail: $17.00

Royalty: $7.00

COGS: $3.50

Trade Marketing: $2.00

Freight: $1.50

2-3 Years of Dev Time

Gamers pay $31 per game to get their games from distributors

$31 var.

cost / unit

$3M Mrktin

g

$15M Dev

650k units to

breakeven

Only 8% of console titles reached 650k

units (breakeven on avg investment)

Non-Hits

Confidential – For Discussion Purposes Only

New Gaming Category

6

Low cost and rapid

development

Entirely online

distribution

High engagemen

t

Free for basic access

Trad

ition

al V

ideo

Gam

es Costly and slow to develop

Off-line distribution

Expensive for users

High engagement

Confidential – For Discussion Purposes Only

Introducing InstantAction• The first web-based video game platform

• Funding and developing original IP

• Multi-player games

• Console-quality delivered in the browser & full-screen • Built for global audience

Confidential – For Discussion Purposes Only

Current user stats :6 months since open beta began• ~ 700k registered users• ~30 minutes average time on site

Target demographic:• Global audience of hardcore gamers • Age range: 13-34

Beta Launched Late Spring ‘08

Over 127 Countries

Site Traction

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Total Game Time

Total Gamers

Confidential – For Discussion Purposes Only

Legions Trailer & Site Demo

http://www.instantaction.com