Presenting the Pinnacle Universe

Niko Byron, Jeremy Chiang, Jacob Correa, Anuj Desai, Henry Neale, and Soham Sengupta

Deloitte Consulting LLP

Pinnacle Games Inc.

Strengths - 7,000 employees - Second largest gaming company - Extensive experience in the console gaming industry Weaknesses - Major decline in revenues YoY (30%) - Limited exposure to nonconsole gaming markets - Low employee retention

Opportunities - Major possibilities in emerging markets - Acquisition of up and coming developers - Domestic markets have opportunities

Threats - Continued decline in demand for console games - Outperformance from competitors - Inability to operate in new markets

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Pinnacle Games Inc: Porters Five Forces

Startups
Companies already in cloud, with potential to move PC/ Console Retail

Activision Blizzard Electronic Arts Zynga

Partner gaming studios SDK providers

Non-interactive entertainment Non-digital entertainment

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How can the cloud help Pinnacle?

Deloitte Consulting LLP

The Cloud
Revolutionary Technology - Cloud technologies have enabled companies to manage data with unprecedented effectiveness
The Cloud is out there now

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The Cloud: Strengths and Weaknesses

Strengths

Weaknesses

Pay as you go pricing, no upfront investment

Flexible and extendable capacity Easier provisioning of resources

More vulnerable to security threats than in-house servers

Increased chance of lost access to data

Decreased access to support functions More expensive in the short run
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Allows for more efficient global deployment

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Why Amazon Web Services?

Industry leader
Advanced firewall Data privacy/encryption Full/snapshot backups

Data persistency
99.999% availability Compatible with most OS and programming languages Extensive support services

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Pinnacle Universe
Cross-platform compatibility
Access via single sign-on Hosts proprietary and third-party content Scalable expansion into emerging markets Social media integration (e.g. Facebook)

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Implementation Roadmap
Target Annual Revenue for 2018: $2.6 billion

We are here Project kick-off

Culture Initiatives Initial survey 10% time Telecommuting Gain sharing Agile development

Internal Knowledge Repository Code base with version control platform VPN/SSH compatible

Cloud Solution Implementation Acquire social/mobile gaming IP Pinnacle Universe

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How do we pay for the capital?

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Debt Capital Markets vs Equity Capital Markets

Issuing Bonds
Upsides Downsides

Issuing Stocks
Upsides Downsides

Maintain control Risk of over the company bankruptcy if there is default Easier to monitor liabilities

Lessens the threat of bankruptcy

Give up control of part of the company

Could potentially upset shareholders

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Choose Debt
Easy monetary policy makes issuing bonds an attractive way to raise capital
Huge upside from switching to cloud Risk of default is extremely minute

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Change Management
Operations

Employees

Shift toward agile development Adapting to changing requirements

Employee support Adjustment to rapid release timelines Increase awareness of social trends Smooth integration of acquired employees

Increase pipeline fluidity

Low cost, high sales, frequent market shifts

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Why our solution?

Reduces project costs, increases output volume and productivity Reduce upfront costs with demand-based pay-as-you-go cost model Enable worldwide accessibility to software via internet connection Eliminate cost of hardware and licensing fees Minimizes need for support regarding hardware and software issues

Focuses resources on creating innovative new products

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Expansion into Emerging Markets

Deloitte Consulting LLP

Africa

700 million mobile broadband subscribers and counting 4-5 years behind in popular cell phone models Number of smart phones will double in next 4 years Consistent economic growth leads to growing middle class

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Increase of Mobile Phone Usage in Africa

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Acquisition Target: Maliyo Games

Nigerian company with 15 employees that creates games customized for African consumers Firm has been featured in various publications Nigeria has an easier climate for foreign ownership and investment

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India

Smart phone users expected to increase from 70 million to 400 million by 2016 800 million mobile phone users and counting One of the most rapidly growing middle classes in the world

Acquisition Target: Rolocule

Small firm of under 50 employees

Produces games that are customized to the general Indian population

Presents some risks with acquisition potential Award winning company featured by IGN, TechCrunch, Business Insider, and Engadget

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Costs and Benefits

Costs

Benefits

Maliyo: $5,000,000 (comparable transaction similar to Blammo acquisition by Glu Mobile) Rolocule: $10,000,000 (comparable transactions similar to Chilingo acquisition by EA)

Estimated revenue increase of roughly 40% (Battle.net 2.0)

Exponential increase of user base

Potentially tapping into market of mobile users five times the size of current focus Internal culture changes should improve efficiency of firm

Pinnacle Universe: $10,000,000 (Battle.net 2.0)

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Getting the Board to Buy In

Resistance to the Cloud: Explain benefits of cloud technology and challenge their previous concerns Discuss security concerns Explain new potential markets Discuss improvements in efficiency due to Internal Knowledge Repository Talk about examples of firms successfully implemented this technology Scalable growth potential
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