Games For ChangeGames For Change

The Ever-Evolving Industry

Erik V. HueySenior Vice President of Government AffairsEntertainment Software Association

June 19, 2013

The Entertainment Software AssociationThe Entertainment Software Association

Serves business and public affairs needs of U.S. computer and video game publishers

• More than 35 member companies• Activities include:

• Business and consumer research• Government relations• Legal and policy advocacy

• Content Protection• Domestic and international IP policy • Technology Policy

• Also operates E3, Video Game Voters Network, ESA Foundation

Diverse Consumer BaseDiverse Consumer Base

• The average gamer is 30 years old

• 45% of all gamers are women

• 20% of gamers are over the age of 50

• Connected play – 62% of gamers play games with others, either in-person or online.

• Cross generation play

45%45%45%

Americans Spending More Time Playing Video Games

Americans Spending More Time Playing Video Games

• Doubled in a decade from an average of 72 hours per year in 2002 to an average of 142 hours per year in 2012

• 49% of gamers are watching less TV

• 47% of gamers are spending less time at the movies

45%45%45%

Creating Next Generation Digital & Creative

Economy Jobs

Creating Next Generation Digital & Creative

Economy Jobs

Entertainment software is one of the fastest growing industries in the U.S. economy

• 381 colleges, universities, art and trade schools across the country offer courses, professional certificates, undergraduate or graduate degrees in video game design, development and programming

• The Princeton Review’s report, "Top Schools to Study Video Game Design for 2013," ranks the top undergrad and grad schools with video game design programs

No Longer a Niche IndustryNo Longer a Niche Industry• $21 billion domestically (2012) • $65 billion worldwide in sales (2012)• $83 billion worldwide in sales (2014)• More than 40 million people subscribe to Xbox Live and more than

90 million on Sony’s PlayStation Network worldwide• Mobile game sector generated $8 billion in sales in 2011; growing

to $13 billion by the end of 2013. • 67% of U.S households have video game consoles• Call of Duty: Modern Warfare 3 set launch records• Sold more than 6.5M units in the US and UK within its first 24 hours • Grossed $1 billion in 16 days; Avatar took 17 days• Call of Duty franchise set opening day records three years in a row

U.S. Computer and Video GameDOLLAR Sales Growth

Dollars in Billions

Source: The NPD Group/Retail Tracking Service; Game Industry: Total Consumer Spend* Figures include total consumer spend** Other delivery formats include subscriptions, digital full games, digital add-on content, mobile apps, social network gaming, and other physical delivery. 2000-20008 figures are sales of new physical content at retail exclusively.

Connected Play Takes OffConnected Play Takes Off

• Call of Duty: Black Ops II generated 1.2 billion hours played online since November 2012

• FIFA Soccer 13 sold 7.4 million physical copies, generated $115 million in digital sales

• World of Warcraft had 9.6+ million monthly subscribers in 2012, generated more than $1.7 billion

• Players download digital titles, stream games, and connect to social networks through digital distribution networks

The App EconomyThe App Economy

• Game play is the third most popular activity on smartphone and tablet devices

• Tablet users spend 67% of their time playing games, mobile users 43%

• More than the total amount of time spent watching videos, listening to music, checking email, engaging on social network sites, and reading magazines or books

Emerging Business ModelsEmerging Business Models

• One in four consumers spent money on virtual goods in 2011, with gamers spending an average of $64/year – a 100% increase from 2009

• SuperData Research predicts the worldwide market for virtual goods will exceed $20 billion by 2015

• 110 million people are playing more free-to-play games than they were a year ago

• Free-to-play games convert between 5% and 10% of their active player base to paying customers

The App EconomyThe App Economy

• Game sales accounted for nearly 80% of all 2012 revenue generated by apps

• 76 of top 100 grossing iOS apps were games in 2012

• Overall app market will grow to $50 billion by 2015; mobile games market to reach $18.3 billion in 2016

Source: App Annie, 2013

The Future of Video GamesThe Future of Video Games• Increased social interaction• Communities are building around games; ecosystem of interconnected

users• Casual / mobile gaming is on the rise• 24 of the top 25 apps are games

• Angry Birds has been downloaded 1.7 billion times. The free version earns $1 million a month from ads.

• Over 40% of time on Xbox Live is not spent playing games• Games are now a service, not just a static product• Streamed movies• User-created content• Seamless cross-platform experience

Rating Category BreakdownRating Category Breakdown

Ratings Awareness & UseRatings Awareness & Use

Praise for Industry’s Self-Regulation Praise for Industry’s Self-Regulation

According to a 2013 Federal Trade Commission report, video game retailers are the strictest and most effective in enforcing age rating policies

• Retailers prevented 87% of underage purchases• “The ESRB continues to lead all three industries [movies,

music, and games] in providing clear and prominent disclosures of rating information in television, print, and online advertising.”

• 100% compliance at Target

FTC Mystery Shopper 2000-2013FTC Mystery Shopper 2000-2013

Our Shared StoryOur Shared Story• Video games have proven their

positive impact, yet more can be accomplished together

• E-TECH Caucus on Capitol Hill now boasts 60 members

• Amplified efforts and collective creative strengths can shape our country’s future

More than EntertainmentMore than Entertainment

• An ESA survey found that 70% of Fortune 500 businesses, associations and nonprofits use games and interactive technology to train and recruit employees

• Doctors use Re-Mission 2 to teach young cancer patients about the disease

• The Department of Defense uses Virtual Iraq to treat Post-Traumatic Stress Disorder

• Foldit: Solve Puzzles for Science

• Half the Sky Movement

Organizations across all sectors now view video games as an effective tool

Bolstering EducationBolstering Education

• MacArthur’s Games for Change Challenge

• National STEM Video Game Challenge rewards students and developers for creating games to strengthen STEM learning

• Apps for Healthy Kids Challenge• Fostering dialogue – ESA’s

“Games & Learning Roundtable” & The Atlantic’s “Technologies in Education Forum”

• GlassLab • College Game Design Competition

Health & FitnessHealth & Fitness

• Video games promote physical activity and healthy habits

• Active games are a fun and exciting way to stay in shape

• Active Play PALA+ Challenge with the President’s Council on Fitness, Sports & Nutrition

Video: Active Play PALA+ ChallengeVideo: Active Play PALA+ Challenge

Games For ChangeGames For Change

The Ever-Evolving Industry

Erik V. HueySenior Vice President of Government AffairsEntertainment Software Association

June 19, 2013