eSports: Quite Possibly the Next Big Thing in Media/Entertainment

Relatively unknown outside of video game circles, eSports is one of the fastest

growing segments of entertainment and media, set to jump from a few hundred million

dollars this year to roughly $1 billion in 2018. We see significant opportunity for monetization

in tournaments, advertising/sponsorship, broadcasting, fantasy/wagering. In this deep-dive

industry primer, we provide a broad overview of eSports, with the primary beneficiaries, in

our view, being key game publishers (e.g. ATVI, EA, TTWO), hardware platforms (MSFT,

SNE) and online streaming sites (AMZN, GOOG).

The biggest media and sports growth opportunity you’ve never heard of. We believe

that eSports is on the cusp of reaching mainstream adoption, reaching 200 million active

participants as early as next year, with popular video game titles such as Call of Duty

launching with expanded eSports functionality, and with game publishers committing

significant resources to build out eSports infrastructure. As one gauge of the burgeoning

opportunities in eSports, we note that venture funding of eSports companies over the past

18 months (approximately $175 million) exceeds all prior funding to-date. While game

developers/publishers such as Activision, EA, Take Two and UbiSoft are natural

beneficiaries of the eSports trend, we note there are also significant opportunities for online

streaming platforms (Amazon, Google), platform holders (Microsoft, Sony) and high-end

PC/component manufacturers.

eSports combines some of the best of sports and media. From a social and competitive

perspective, eSports shares much in common with traditional sports: social interaction,

competition, thrill of victory, interest in spectating/watching others, learning how to play and

fantasy. Importantly, we also see multiple potential incremental revenue streams coming

from eSports, including: online and in-person tournaments, advertising, sponsorship,

broadcast rights, royalties/rev. shares, fantasy leagues and wagering.

Moving from engagement tool to monetization tool. eSports is still primarily a tool to help

engage and retain core gamers. However, we expect this to change quickly, with publishers

focusing as much on incremental revenue opportunities and increasing ARPU. Importantly,

video games are one of the only forms of media that is generating higher rates of

monetization with online disruption, rather than declining rates (e.g. print, cinema, music,

video).

Potential to drive P/E multiple expansion. While investors remain largely focused on the

pace of growth in the console cycle, we believe this misses two key growth opportunities in

1) back-end online monetization; and 2) eSports. We believe that significant growth in either

or both of these areas would drive earnings multiples in the sector another leg higher.

INDUSTRY UPDATE

Prices as of 10/01/2015

Ticker PriceMkt Cap

(mil)Rating Risk

ATVI $31.46 $23,595 O A

EA $66.49 $21,077 O A

TTWO $29.39 $3,209 N A

Baird covered companies

October 2, 2015 Baird Equity ResearchTechnology & Services

Interactive EntertainmenteSports: Potentially the Next Big Thing in Media & Entertainment

Colin Sebastian

[email protected]

415.364.3350

Benjamin C. Gaither, CFA

[email protected]

415.364.3318

Andrew Lee

[email protected]

415.364.3344

[Please refer to Appendix- Important Disclosuresand Analyst Certification]

Details

What in the World is eSports?In this deep dive industry primer, we provide a broad overview of eSports, a fast-growing phenomenon

that has its roots in core gaming circles, but importantly, is starting to gain traction among mainstream

gamers. In short, eSports adds many of the features and content found in traditional sports to the video

game sphere, and is the gaming equivalent of organized and professional sports leagues. In fact, from a

social and competitive perspective, eSports shares much in common with traditional sports: social

interaction, competition, thrill of victory, interest in spectating/watching others, learning how to play, etc.

From a monetization perspective, eSports includes hosting amateur and professional games and

tournaments (both online and offline), spectating, sponsorship and advertising, broadcasting

rights/revenue share, fantasy and wagering. While still a nascent industry, eSports viewership is already

significant, with some estimates exceeding 200 million annual watchers, and over 100 million eSports

“enthusiasts”. We note that this “enthusiast” demographic represents less than 7% of the approximately

1.7 billion global gamers, representative of what is still a large market opportunity. As an audience,

eSports viewers are highly engaged, and time spent watching eSports is expected to expand nearly

three-fold to 6.6 billion hours (~26 hours/viewer) by 2018, according to IHS.

Figure 1: eSports links video games, sports, and fantasy/wagering

October 2, 2015 | Interactive Entertainment

2Robert W. Baird & Co.

Source: R.W. Baird

Figure 2: Expect strong rise in eSports playing/viewing

0

50

100

150

200

250

300

350

400

2014A 2015E 2016E 2017E 2018E 2019E 2020E

Vie

we

rs (

Mil

lio

ns

)

Source: R.W. Baird estimates

Massive incremental revenue opportunity for video game developers and content distributors .

We believe that eSports is on the cusp of rapid user adoption and exponential growth with new revenue

streams for video game developers, publishers, and content distributors – in addition to the “prize

money” awarded to gamers themselves. Overall, we estimate that eSports is on pace to generate nearly

$300 million in revenues worldwide this year (including up to $100 million in North America and Europe),

and is set to reach $1 billion in revenues by 2018, and reach nearly $2 billion in annual revenues by

2020 (46% CAGR) – see Figure 14. We assume that the number of eSports viewers will increase more

than 20% annually over the next 4-5 years, with monetization (ARPU) more than doubling. Importantly,

we believe that our estimates could prove conservative; depending on how aggressively game

developers build eSports features into popular video games. Eventually, in our view, most new video

games will offer some features of eSports; but for now, companies that appear to be best-positioned to

capture outsized revenue streams from eSports include Activision Blizzard (Call of Duty, Hearthstone,

Starcraft), Valve (Dota 2, Counter-Strike) and Riot Games (League of Legends); while Amazon (Twitch)

and Google (YouTube) are already key viewing platforms. In addition, we note that platform holders

including Microsoft and Sony are tip-toeing into eSports with As one gauge of the burgeoning

opportunities in eSports, we note that venture funding of eSports companies over the past 18 months

(approximately $175 million) exceeds all prior funding to-date (see Figure 3).

Figure 3: eSports venture funding on the rise



$9 $10 $15

$1

$46

$18

$-

$21

$64

$35

$77

0

5

10

15

20

25

$-

$10

$20

$30

$40

$50

$60

$70

$80

$90

Mill

ion

s

Funding (Left) Deals (Right)

Source: CB Insights

Brief History of eSportsThe genesis of popularized eSports lies in Korea, and specifically the years following the Asian financial

crisis of 1997. During this time period, the South Korean government overhauled the country’s

telecommunications and internet infrastructure, creating an environment where Internet cafés, rather

than basketball courts, became the most popular hangouts for large numbers of young people. At the

same time, popular games such as Starcraft and Counter-Strike embraced organized game-play,

offering both online and in-person tournaments. Eventually, Korea also became the first major region to

offer regularly televised eSports via dedicated TV channels (e.g. OnGameNet and MBCGame). More

importantly, this also marked one of the first successful attempts to monetize eSport content via a

mainstream distribution channel. According to the Korea eSports Association, OnGameNet and

MBCGame generated $200 million in eSports revenues in 2007.

Figure 4: eSports competitive landscape



Source: R.W. Baird

Current State of the MarketToday, eSports are dominated by two primary categories of games: Multiplayer-online battle arenas

(MOBAs) and first-person shooters (FPS). League of Legends (Riot Games) is the most popular eSports

game in the world as measured by game-play, and reported that over 27 million people watched the

2014 LoL World Championship, which is more than the 2015 NBA Finals (19.9 million) and 2014 World

Series (15.8 million). Dota 2, another popular MOBA, recently hosted The International tournament,

which boasted a prize pool of over $18 million, including $6.6 million awarded to the first-place team. For

the most part, popular eSports games today are “free-to-play” and “free-to-watch”. As Figure 5 and 6

show below, eSports prize pools have grown exponentially in the last five years, and live attendance is

an increasingly popular pastime. More importantly, we note an increasing trend within developer circles

to bring eSport tournaments in-house (i.e., Riot, Valve, Activision), and correspondingly adding new

revenue streams through entry fees as well as valuable ad and sponsorship revenues. Longer-term, we

expect additional monetization through broadcast/viewing royalties, subscription revenue shares, fantasy

and wagering.

Figure 5: Rise of global tournaments driving larger prize pools



Source: eSports Earnings

Figure 6: League of Legends World Championship live attendance growth (2011-2014)

Source: Riot Games

eSports is a key marketing and user retention tool. While eSports viewership continues to grow at an

impressive rate, we note that most eSports ventures may not yet be reaching profitability on a

stand-alone basis, with much of the direct monetization potential likely to stem from new platform

initiatives. As such, eSports is still primarily a marketing, engagement, and retention tool, helping to

increase the longevity of games. Beginning next year, we expect this to change, with publishers focusing

as much on incremental revenue opportunities as they do user retention.

Figure 7: eSports: An increasingly well-known phenomenon



0

10

20

30

40

50

60

70

80

90

100

2012 2013 2014 2015

Google Searches for "eSports"

League of Legends Championship 32M unique viewers League of Legends Championship

27M unique viewers

Source: Google Trends

Advertising and Sponsorships may be key to monetization. Overall, eSports viewers are young,

more educated, and better off financially than the population as a whole (Figure 8). According to MLG,

22% of eSport "enthusiasts" are considered "big spenders", in comparison to 8% of all gamers. We note

there remains significant opportunity for advertising in the eSports market, with most games providing

valuable access to an increasingly elusive young adult demographic (more specifically, 18-35 year-olds),

which are almost twice as likely to be “cord cutters” than the general population. According to Experian

Marketing, 13.5% of people in the 18-34 demographic have broadband, but no pay TV, in comparison to

approximately 7% of the U.S. population. George Woo, Intel’s Event Marketing Manager, has stated that

eSports enthusiasts are “web-savvy people who…do not watch TV, use ad block in their web browser,

and consume their entertainment almost entirely on-demand.” In response, Intel created the Intel

Extreme Masters, one of the premier gaming tournaments in the world, and Intel has stated that IEM

“has proven more than worth the spend.”

Figure 8: eSports viewers are a valuable advertising demographic



0%

10%

20%

30%

40%

50%

60%

Full-time Job High Income Bracket

E-sports Viewer Total Population

Source: Newzoo

Video streaming bringing eSports into the “mainstream”. In our view, the on-demand nature of

streaming platforms such as Twitch and YouTube Gaming are key drivers of eSports growth.

Live-streaming enabled major tournaments to reach the general public, and significantly extended reach

beyond live (in-person) events. Over time, we expect advertising dollars to follow as eSports hits key

inflection points in viewership. According to SuperData Research, gaming-related video content is

already a $3.8 billion industry, with the vast majority of revenues generated by advertising ($2.9 billion).

In 2014, Twitch (acquired by Amazon) recorded 100 million unique viewers per month (66% increase

from 60 million in 2013). Additionally, engagement is particularly impressive, with the average Twitch

viewer logging over 2.5 hours per day on the platform. However, we note that streaming platforms are

particularly regional, with Twitch being the most popular in North America and Europe, while Afreeca

and Douyu are the most popular in Asia. In the U.S., YouTube is the only major competitor to Twitch for

gaming video content; however, monetization remains low, as it is primarily on-demand, rather than live.

Nevertheless, we note there is potential for YouTube to usurp Twitch in the long-run as a destination for

gaming content, as YouTube gaming channels already generate over 3.5 billion views per month.

YouTube draws 72% of gaming video content viewers, while Twitch generates 43% of gaming video

content revenue, according to SuperData Research (Figure 10).

Figure 9: Twitch concurrent viewership continues to rise

Source: TwitchApps



Figure 10: Gaming video content revenue by platforms

36%

43%

6%

2% 5%

YouTube Twitch ESL Azubu MLG

Source: SuperData Research

Imagining the Future of eSportsNew broadcast networks and fantasy sports increase engagement and monetization. With Turner

Broadcasting and video game developer Valve recently announcing a Counter-Strike Sports league to

be aired on TBS, we expect a further push of eSports content into mainstream broadcast media. For

example, there would be significant benefits to traditional cable and satellite companies in gaining

relevance and viewership among younger demographics by becoming the aggregators and distributors

of eSports content. We view this in parallel with the content also moving “over the top”. As mentioned

above, cable broadcasting of Starcraft in Korea generated $200 million in 2007 alone, and given the

increasing accessibility of eSports and the growing audience of highly engaged “enthusiasts,” eSports

programming monetization potential has increased materially. We also see potential for content (IP)

owners (e.g. video game publishers) to control their own distribution channels. According to Newzoo,

40% of all eSports viewers do not play any of the top eSports franchises, which draws a favorable

parallel to traditional sports and indicates eSports possesses significant commercial potential as a

“spectator sport.” We also note a growing interest in fantasy eSports. For comparison, the U.S. fantasy

sports market has over 56.8 million participants and is valued at roughly $20 billion annually, according

to the Fantasy Sports Trade Association. In our view, fantasy eSports has the potential to expand

eSports monetization meaningfully through additional marketing and increased user engagement, as

evidenced by Riot Games’ launch of an in-house fantasy League of Legends platform.

Figure 11: Number of fantasy sports players



Sources: FSTA, R.W. Baird

Daily Fantasy eSports is also beginning to gain meaningful traction, as evidenced by Fanduel’s

acquisition of AlphaDraft, a leading DFeS platform, and Draftking’s launch of an in-house DFeS platform.

According to Eiler’s Research, daily fantasy eSport sites will collect approximately $20 million in entry

fees from 600,000 active users in 2015. Drawing parallels to traditional sports, we believe DFeS has the

potential to materially expand monetization, as shown in Figure 12 below, the average player now

spends approximately $257 annual on daily fantasy sports (vs. $5 in 2012), which is also more than

$162 annual spend on traditional fantasy sports.

Figure 12: Number of fantasy sports players

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

2012 2015

Materials Daily Fantasy Sports Traditional Fantasy Sports

Source: FSTA



Revenue opportunity and biggest winners. In order to frame the revenue opportunity, we attempted

to estimate the revenue per fan each sport generates. We combined the revenues generated from

various professional sports leagues (>$50M revenue) with the estimated global fans for the respective

sport. Naturally, major sport leagues are monetizing significantly better than the nascent eSports market,

predominantly due to cable/broadcasting deals (Figure 13). According to Newzoo, the average eSports

“enthusiast” currently generates ~$2.

Figure 13: Revenue per fan of various sports ($ in Millions)

Sport Revenue* Fans (Ms) Revenue/ Fan

Football $11,335 400 $28

Basketball $5,077 400 $13

Baseball $10,315 500 $21

NASCAR $3,100 75 $41

eSports $192 101 $2

Sources: R.W. Baird, Company reports, Deloitte, Newzoo, Topend Sports

Off the heels of a strong 2015, we see meaningful opportunity for fan monetization to increase in 2016

due to an increasing number of catalysts. In terms of sizing the eSports opportunity, we assume that

growth will be driven by an increasing number of games that are eSports enabled, and a corresponding

increase in players and viewers; for example, the recently announced Call of Duty World League and

Turner’s Counter-Strike cable program. In addition, we expect a variety of new ways of monetizing

eSports, including more events, in-game content, advertising, sponsorships, fantasy and wagering.

Finally, we expect a broad increase in the number of points of distribution of eSports content, including

new media networks. While there are a number of independent “eSports” leagues and competitions

today, we believe it is very likely that at least some game publishers will decide to “in-source” or

“verticalize” eSports content, although there would be significant benefits in utilizing media distributors

(e.g. cable/satellite/OTT providers) to reach a broad (mainstream) viewer base.

Figure 14: eSports on pace to hit $1 billion in revenues by 2018

Base Case 2014A 2015E 2016E 2017E 2018E 2019E 2020E CA GR

World Population 7,266 7,349 7,433 7,515 7,597 7,678 7,758 1%

Y/Y Growth 1.2% 1.2% 1.1% 1.1% 1.1% 1.1% 1.0%

To ta l N um b er o f Gam ers 1 ,775 1,984 2,230 2,480 2 ,659 2,841 2,948 9%

% of Population 24% 27% 30% 33% 35% 37% 38%

eSpo rts v iew ers 101 139 178 223 266 313 354 23%

% of Global Gamers 5.7% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

Y/Y Growth - 38% 28% 25% 19% 18% 13%

ARPU $1.90 $2.10 $2.50 $3.00 $3.75 $4.50 $5.25

eSpo rts R evenues $192 $292 $446 $670 $997 $1,406 $1,857 46%

Y/Y Growth 52% 53% 50% 49% 41% 32%

Sources: R.W. Baird, UN, Spil Games, SuperData Research, Newzoo

Bull/Bear Scenarios:

In our bull case, we assume that eSports viewer monetization will reach ~30% of the monetization of

major sports, while our base case assumes a steadier ramp. Overall, the simple point is, even with

relatively conservative assumptions on user growth and increased monetization, it is not difficult to

foresee eSports being a $1 billion industry by 2018.

Figure 15: eSport industry Bull/Bear case



Bu ll Case 2014A 2015E 2016E 2017E 2018E 2019E 2020E CA GR

eSpo rts v iew ers 101 139 178 223 266 313 354 23%

% of Global Gamers 5.7% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

Y/Y Growth - 38% 28% 25% 19% 18% 13%

ARPU $1.90 $2.10 $4.00 $6.00 $7.00 $8.00 $8.50

eSpo rts R evenues $192 $292 $714 $1,339 $1,861 $2,500 $3,007 58%

Y/Y Growth 52% 145% 88% 39% 34% 20%

Bear Case 2014A 2015E 2016E 2017E 2018E 2019E 2020E CA GR

eSpo rts v iew ers 101 139 178 223 266 313 354 23%

% of Global Gamers 5.7% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

Y/Y Growth - 38% 28% 25% 19% 18% 13%

ARPU $1.90 $2.10 $2.50 $2.75 $3.00 $3.25 $3.50

eSpo rts R evenues $192 $292 $446 $614 $798 $1,016 $1,238 36%

Y/Y Growth 52% 53% 38% 30% 27% 22%

Sources: R.W. Baird, UN, Spil Games, SuperData Research, Newzoo

Developer support an important leg of the eSports stool. Of the leading western game publishers,

we see Activision Blizzard as best leveraged to eSports growth for a number of reasons. When you look

at the history of eSports, the top games grew out of hyper-competitive grassroots community (Halo,

Super Smash Brothers); Activision Blizzard has a number of games with a large competitive community

(Call of Duty, Starcraft, Hearthstone), and increasingly appears to be developing games with competitive

design in mind (Overwatch releasing in 2016). However, looking back historically, the real inflection point

for an eSports game growth is when developers prioritize support for tournaments (i.e., Riot Games,

Valve). For example, Super Smash Brothers has been a staple in the eSports industry since its initial

release on Nintendo 64; however, Nintendo has done very little to support matches until hosting the

Super Smash Invitational at E3 this past year. With Nintendo’s support, the Super Smash Brothers

Invitational proceeded to break the all-time concurrent viewership record for a fighting game tournament.

As such, we believe that Activision’s future prospects in eSports are very positive, as the company

appears to be a few steps ahead of other publishers in eSport investments, as illustrated by the

company’s yearly world championships at Blizzcon, as well as the company’s previously mentioned Call

of Duty League. We also believe that Electronic Arts will eventually launch greater eSports features

within a number of its core franchises, even after ceasing support for EA Sports Arena last year.

Figure 16: Layers of eSports Monetization

78%

4%

7%

7% 5%

Broadcasting,

Advertising,

Sponsorships

Tickets

Fantasy

eSports/Wagering

Merchandise

Other Tournaments

Sources: R.W. Baird, SuperData Research



Appendix - Important Disclosures and Analyst Certification

Covered Companies Mentioned

All stock prices below are the October 1, 2015 closing price.

Activision Blizzard, Inc. (ATVI - $31.46 - Outperform)Electronic Arts, Inc. (EA - $66.49 - Outperform)Take-Two Interactive Software, Inc. (TTWO - $29.39 - Neutral)(See recent research reports for more information)

Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q30

8

16

24

32

40

2013 2014 2015 2016

08/02/13O:$19

02/07/14O:$22

08/06/14O:$26

05/07/15O:$27

08/05/15O:$30

09/22/15O:$36

Rating and Price Target History for: Activision Blizzard, Inc. (ATVI) as of 10-02-2015

Created by BlueMatrix

Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q30

20

40

60

80

2013 2014 2015 2016

04/03/13N:$19

07/24/13N:$25

03/13/14N:$33

05/07/14O:$37

07/23/14O:$43

10/29/14O:$45

01/28/15O:$56

05/06/15O:$75

07/28/15O:$80

Rating and Price Target History for: Electronic Arts, Inc. (EA) as of 10-02-2015




Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q30

8

16

24

32

40

2013 2014 2015 2016

02/06/13N:$13

05/14/13N:$17

07/31/13N:$19

05/14/14N:$20

08/06/14N:$21

10/30/14N:$25

02/04/15N:$34

05/19/15N:$33

Rating and Price Target History for: Take-Two Interactive Software, Inc. (TTWO) as of 10-02-2015


1 Robert W. Baird & Co. Incorporated makes a market in the securities of ATVI, EA and TTWO.

10 Robert W. Baird & Co. Incorporated and/or its affiliates have been compensated by Electronic Arts, Inc. for non-investmentbanking-securities related services in the past 12 months.

Robert W. Baird & Co. Incorporated and/or its affiliates expect to receive or intend to seek investment banking related compensationfrom the company or companies mentioned in this report within the next three months.Robert W. Baird & Co. Incorporated may not be licensed to execute transactions in all foreign listed securities directly. Transactions inforeign listed securities may be prohibited for residents of the United States. Please contact a Baird representative for more information.Investment Ratings: Outperform (O) - Expected to outperform on a total return, risk-adjusted basis the broader U.S. equity marketover the next 12 months. Neutral (N) - Expected to perform in line with the broader U.S. equity market over the next 12 months.Underperform (U) - Expected to underperform on a total return, risk-adjusted basis the broader U.S. equity market over the next 12months.Risk Ratings: L - Lower Risk - Higher-quality companies for investors seeking capital appreciation or income with an emphasis onsafety. Company characteristics may include: stable earnings, conservative balance sheets, and an established history of revenue andearnings. A - Average Risk - Growth situations for investors seeking capital appreciation with an emphasis on safety. Companycharacteristics may include: moderate volatility, modest balance-sheet leverage, and stable patterns of revenue and earnings. H -Higher Risk - Higher-growth situations appropriate for investors seeking capital appreciation with the acceptance of risk. Companycharacteristics may include: higher balance-sheet leverage, dynamic business environments, and higher levels of earnings and pricevolatility. S - Speculative Risk - High-growth situations appropriate only for investors willing to accept a high degree of volatility and risk.Company characteristics may include: unpredictable earnings, small capitalization, aggressive growth strategies, rapidly changingmarket dynamics, high leverage, extreme price volatility and unknown competitive challenges.Valuation, Ratings and Risks. The recommendation and price target contained within this report are based on a time horizon of 12months but there is no guarantee the objective will be achieved within the specified time horizon. Price targets are determined by asubjective review of fundamental and/or quantitative factors of the issuer, its industry, and the security type. A variety of methods may beused to determine the value of a security including, but not limited to, discounted cash flow, earnings multiples, peer group comparisons,and sum of the parts. Overall market risk, interest rate risk, and general economic risks impact all securities. Specific informationregarding the price target and recommendation is provided in the text of our most recent research report.Distribution of Investment Ratings. As of September 30, 2015, Baird U.S. Equity Research covered 737 companies, with 51% ratedOutperform/Buy, 48% rated Neutral/Hold and 1% rated Underperform/Sell. Within these rating categories, 13% of Outperform/Buy-rated,6% of Neutral/Hold-rated and 1% rated Underperform/Sell companies have compensated Baird for investment banking services in thepast 12 months and/or Baird managed or co-managed a public offering of securities for these companies in the past 12 months.Analyst Compensation. Analyst compensation is based on: 1) the correlation between the analyst's recommendations and stock priceperformance; 2) ratings and direct feedback from our investing clients, our institutional and retail sales force (as applicable) and fromindependent rating services; 3) the analyst's productivity, including the quality of the analyst's research and the analyst's contribution tothe growth and development of our overall research effort and 4) compliance with all of Robert W. Baird’s internal policies andprocedures. This compensation criteria and actual compensation is reviewed and approved on an annual basis by Baird's ResearchOversight Committee.Analyst compensation is derived from all revenue sources of the firm, including revenues from investment banking. Baird does notcompensate research analysts based on specific investment banking transactions.A complete listing of all companies covered by Baird U.S. Equity Research and applicable research disclosures can be accessed athttp://www.rwbaird.com/research-insights/research/coverage/research-disclosure.aspx .You can also call 1-800-792-2473 or write: Robert W. Baird & Co., Equity Research, 777 E. Wisconsin Avenue, Milwaukee, WI 53202.Analyst Certification. The senior research analyst(s) certifies that the views expressed in this research report and/or financial model



http://www.rwbaird.com/research-insights/research/coverage/research-disclosure.aspx

accurately reflect such senior analyst's personal views about the subject securities or issuers and that no part of his or her compensationwas, is, or will be directly or indirectly related to the specific recommendations or views contained in the research report.DisclaimersBaird prohibits analysts from owning stock in companies they cover.This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflectour judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but wecannot guarantee the accuracy.ADDITIONAL INFORMATION ON COMPANIES MENTIONED HEREIN IS AVAILABLE UPON REQUESTThe Dow Jones Industrial Average, S&P 500, S&P 400 and Russell 2000 are unmanaged common stock indices used to measure andreport performance of various sectors of the stock market; direct investment in indices is not available.Baird is exempt from the requirement to hold an Australian financial services license. Baird is regulated by the United States Securitiesand Exchange Commission, FINRA, and various other self-regulatory organizations and those laws and regulations may differ fromAustralian laws. This report has been prepared in accordance with the laws and regulations governing United States broker-dealers andnot Australian laws.Copyright 2015 Robert W. Baird & Co. IncorporatedOther DisclosuresThe information and rating included in this report represent the Analyst’s long-term (12 month) view as described above. The researchanalyst(s) named in this report may at times, discuss, at the request of our clients, including Robert W. Baird & Co. salespersons andtraders, or may have discussed in this report, certain trading strategies based on catalysts or events that may have a near-term impacton the market price of the equity securities discussed in this report. These trading strategies may differ from the analysts’ published pricetarget or rating for such securities. Any such trading strategies are distinct from and do not affect the analysts’ fundamental long-term (12month) rating for such securities, as described above. In addition, Robert W. Baird & Co. Incorporated and/or its affiliates (Baird) mayprovide to certain clients additional or research supplemental products or services, such as outlooks, commentaries and other detailedanalyses, which focus on covered stocks, companies, industries or sectors. Not all clients who receive our standard company-specificresearch reports are eligible to receive these additional or supplemental products or services. Baird determines in its sole discretion theclients who will receive additional or supplemental products or services, in light of various factors including the size and scope of theclient relationships. These additional or supplemental products or services may feature different analytical or research techniques andinformation than are contained in Baird’s standard research reports. Any ratings and recommendations contained in such additional orresearch supplemental products are consistent with the Analyst’s long-term ratings and recommendations contained in more broadlydisseminated standard research reports.United Kingdom (“UK”) disclosure requirements for the purpose of distributing this research into the UK and other countriesfor which Robert W. Baird Limited (“RWBL”) holds a MiFID passport.This material is distributed in the UK and the European Economic Area (“EEA”) by RWBL, which has an office at Finsbury Circus House,15 Finsbury Circus, London EC2M 7EB and is authorized and regulated by the Financial Conduct Authority (“FCA”).For the purposes of the FCA requirements, this investment research report is classified as investment research and is objective.This material is only directed at and is only made available to persons in the EEA who would satisfy the criteria of being "Professional"investors under MiFID and to persons in the UK falling within articles 19, 38, 47, and 49 of the Financial Services and Markets Act of2000 (Financial Promotion) Order 2005 (all such persons being referred to as “relevant persons”). Accordingly, this document is intendedonly for persons regarded as investment professionals (or equivalent) and is not to be distributed to or passed onto any other person(such as persons who would be classified as Retail clients under MiFID).Robert W. Baird & Co. Incorporated and RWBL have in place organizational and administrative arrangements for the disclosure andavoidance of conflicts of interest with respect to research recommendations.This material is not intended for persons in jurisdictions where the distribution or publication of this research report is not permitted underthe applicable laws or regulations of such jurisdiction.Investment involves risk. The price of securities may fluctuate and past performance is not indicative of future results. Anyrecommendation contained in the research report does not have regard to the specific investment objectives, financial situation and theparticular needs of any individuals. You are advised to exercise caution in relation to the research report. If you are in any doubt aboutany of the contents of this document, you should obtain independent professional advice.RWBL is exempt from the requirement to hold an Australian financial services license. RWBL is regulated by the FCA under UK laws,which may differ from Australian laws. This document has been prepared in accordance with FCA requirements and not Australian laws.Dividend Yield. As used in this report, the term “dividend yield” refers, on a percentage basis, to the historical distributions made by theissuer relative to its current market price. Such distributions are not guaranteed, may be modified at the issuer’s discretion, may exceedoperating cash flow, subsidized by borrowed funds or include a return of investment principal.

Ask the analyst a question Click here to unsubscribe



mailto:[email protected]

mailto:[email protected]?subject=Remove me from your mailing list for Interactive Entertainment/Sebastian