Tyson Greer - The 2013-2018 Worldwide Game-based Learning and Simulation-based Markets

The 2013-2018 Worldwide Game-based Learning and Simulation-based Markets Key Findings from Recent Ambient Insight Research Serious Play Conference 2014 July 22, 2014 Tyson Greer, Chief Executive Officer Ambient Insight Ambient Insight 2014

Agenda  Introductions - Research Taxonomy  Worldwide Simulation-based Learning Revenues  Worldwide Game-based Learning Revenues and Buying Behavior  Game-based Learning Investment Patterns Ambient Insight 2014

Partial List of Ambient Insight’s Clients Ambient Insight is an integrity-based market research firm that uses predictive analytics to identify revenue opportunities for suppliers. Adobe Disney   Amazon Hasbro   Amplify Houghton Mifflin Harcourt   Apple IBM   Blackboard John Wiley & Sons   BrainPOP  McGraw-Hill  British Council  Macmillan  Cambridge University Press  Microsoft  Chungdahm Learning  Oxford University Press  Cisco  Pearson  Dell  Rosetta Stone  Ambient Insight 2014

Ambient Insight’s Learning Technology Research Taxonomy Seven International Regions Latin America Western Europe Eastern Europe North America The Middle East Africa Asia Have Eight Buyer Segments State - Local Government Higher Education Corporations - Businesses Associations & Non-Profits Federal Government Consumer PreK-12 Healthcare That Buy Eight Types of Digital Learning Products Collaboration- based Learning Simulation- based Learning Self-paced eLearning Courseware Digital Video, Text, & Audio Reference Cognitive Learning Social Learning Game-based Learning Mobile Learning From Six Types of Suppliers Custom Content Packaged Content Value Added Services (VAS) Learning Devices Installed Tools & Platforms Cloud-based Tools & Platforms These six supplier types map directly to the six subcategories of learning technology products Ambient Insight 2014

Game-based Learning is a Subset of the Learning Technology Industry Ambient Insight’s 2014 Learning Technology Research Taxonomy Ambient Insight defines Game-based Learning as one of the eight distinct types of learning technology products  We do not approach Game-based Learning as a subset of the global videogame industry, but rather as a subset of the global learning technology market  In the context of the global learning technology market, isolating Game-based Learning products is relatively straightforward  There is only one hardware-based learning technology product type and that is Personal Learning Devices (PLDs)  Ambient Insight 2014

2013-2018 Global Market Forecasts for Game-based Learning and Simulation-based Learning  Ambient Insight separates Game-based Learning revenues and Simulation-based Learning revenues  There are distinct pedagogical differences between Game-based Learning and Simulation-based Learning  Our definitions are based on the definitions developed by Alessi and Trollip 2013 Revenues in US$ Millions 2018 Revenues in US$ Millions Global Revenues by Learning Product Type*** Simulation-based Five-Year CAGR 2013-2018 $3,022.42 $7,188.33 18.9% Learning Game-based Learning $1,739.55 $2,404.12 6.7% Total 15.0% $4,761.97 $9,592.44 *** Does not include hardware Ambient Insight 2014

Pedagogical Definition of Game-based Learning There are distinct pedagogical differences between Game-based Learning and Simulation-based Learning. Ambient Insight’s 2014 Learning Technology Research Taxonomy Game-based Learning is a knowledge transfer method that utilizes "gameplay," which includes some form of competition (against oneself or others) and a reward/penalty system that essentially functions as an assessment method.  Game-based Learning products (edugames) have explicit pedagogical goals A user "wins" an edugame when they achieve the learning objectives of the gameplay   Ambient Insight 2014

Pedagogical Definition of Simulation-based Learning There are distinct pedagogical differences between Game-based Learning and Simulation-based Learning. Ambient Insight’s 2014 Learning Technology Research Taxonomy  There are four types of Simulation-based Learning: Physical Object and Environmental Process Procedural Situational     Allessi and Trollip compressed these four into two instructional strategies: learning about something (physical and process), and learning to do something (procedural and situational). Ambient Insight 2014

Gamification Versus Game-based Learning  SpongeLab on Game-based Learning versus Gamification:  “Gamification is the application of videogame rules, mechanics and conventions to a non-gaming situation. Put simply, if a student is playing a videogame and learning from it, we aren’t witnessing gamification - the student is experiencing game-based learning. An educational game hasn’t been ‘gamified’ - because it’s a game already!”  Game elements are often “bolted on” to legacy training products Badgeville sells gamification add-ons for corporate training  Course Hero has online courses that use Bunchball’s game mechanics  Oxford University Press and Scholastic use SecretBuilder’s game platform to “gamify books”  Ambient Insight 2014

2013-2018 Worldwide Simulation-based Learning Revenue Forecasts Ambient Insight 2014

2013-2018 Worldwide Simulation-based Learning Market The five-year compound annual growth rate (CAGR) of the Worldwide Simulation-based Learning market is 18.9%. Revenues reached $3.0 billion in 2013. Revenues will more than double to $7.1 billion by 2017. Simulation-based Learning by Region*** 2013 Revenues in US$ Millions 2018 Revenues in US$ Millions Five-Year CAGR 2013-2018 $1,596.63 $2,951.48 13.1% North America $143.70 $740.82 38.8% Latin America $558.82 $1,083.19 14.2% Western Europe $68.66 $156.43 17.9% Eastern Europe Asia $542.85 $1,918.46 28.7% $15.97 $95.80 $51.65 $286.29 26.5% 24.5% The Middle East Africa Total 18.9% $3,022.42 $7,188.33 *** Includes custom content services and authoring tools revenue Ambient Insight 2014

2013-2018 Worldwide Simulation-based Learning Market UK-based Immerse Learning's English for Oil and Gas simulation-based product developed for a Kazakhstan oil company. "While students are learning English, they walk around a virtual version of the equipment that they are being trained to work on." Ambient Insight 2014

2013-2018 Worldwide Simulation-based Learning Market Ambient Insight 2014

Sophisticated Mobile Healthcare Education Simulations Now on the Market http://www.3d4medical.com/ Ambient Insight 2014

2013-2018 Worldwide Simulation-based Learning Five-year Growth Rates by Region 2013-2018 Growth Rates by Region 40% 30% 20% 10% 0% North America Latin America Western Europe Eastern Europe Asia Middle East Africa Ambient Insight 2014

2013-2018 Worldwide Game-based Learning Revenue Forecasts Ambient Insight 2014

2013-2018 Worldwide Game-based Learning Market The Worldwide Game-based Learning market reached $1.7 billion in 2013. The global growth rate is 6.7% and revenues will reach $2.4 billion by 2018. Game-based Learning by Region*** 2013 Revenues in US$ Millions 2018 Revenues in US$ Millions Five-Year CAGR 2013-2018 $421.96 $607.24 7.6% North America $42.20 $77.73 13.0% Latin America Western Europe $109.71 $118.41 1.5% Eastern Europe $20.25 $33.40 10.5% $1,115.89 $1,523.01 6.4% Asia The Middle East $8.44 $21.10 $9.72 $34.61 2.9% 10.4% Africa 6.7% Total $1,739.55 $2,404.12 *** Includes custom content development services revenue Ambient Insight 2014

2013-2018 Worldwide Game-based Learning Five-year Growth Rates by Region 2013-2018 Growth Rates by Region 15% 10% 5% 0% North America Latin America Western Europe Eastern Europe Asia Middle East Africa Ambient Insight 2014

Buying Patterns: 2013-2018 Worldwide Game-based Learning Market by Buyer Segment Consumers dominate the global Game-based Learning market Global Game-based Learning by Buying Segment 2013 Revenues in $US Millions 2018 Revenues in $US Millions Five Year CAGR 2012-2017 Revenues concentrated in edugame content Consumer $1,287.26 $1,586.72 4.3% PreK-12 $191.35 $336.58 12.0% Higher Education $17.40 $48.08 22.5% $86.98 $144.25 10.6% Government Revenues concentrated in custom services $52.19 $96.16 13.0% Corporate Healthcare $69.58 $34.79 $120.21 $72.12 11.6% 15.7% NGOs & Non-Profits 6.7% Total $1,739.55 $2,404.12 Ambient Insight 2014

Buying Behavior is Different in Each Country and Each Buyer Segment  The top buying countries for mobile edugames in 2013 were the US and China. By 2018, China will be the top buyer  Gaming consoles finally legal in China as of January 2014  Massive adoption of tablets in the schools across the planet is a major catalyst for Mobile Learning and mobile edugames  In the US, Game-based Learning is ubiquitous in the early grades but starts to taper out in upper middle school  New Gamesandlearning.org survey on use of edugames in K-8:  http://www.gamesandlearning.org/2014/06/09/teachers- on-using-games-in-class/#howtochoose  Companies are making volume purchasing and device provisioning easier for the schools:  Google Play for Education for tablets and Chromebooks  Apple’s Volume Purchase Program for Education Ambient Insight 2014

Buying Behavior is Different in Each Country and Each Buyer Segment  The use of edugames in the international corporate segment has always been problematic  Healthcare edugames usually designed for patient education  NGOs fund the development of edugames for disease prevention, social engineering, and the environment  HopeLab developed Re-Mission 2 with funding from Vivendi, Livestrong Foundation, the Entertainment Software Association, Cigna, Genentech, and the Annenberg Foundation. HopeLab Ambient Insight 2014

Buying Behavior is Different in Each Buyer Segment  Government agencies are increasingly paying developers to create edugames (web-based and mobile) for mHealth, literacy, and language learning  The US State Department paid The SuperGroup to develop the web-based Trace Effects edugame: “Gamers interact and solve puzzles in a virtual world filled with diverse English- speaking characters.” Ambient Insight 2014

The Road to Revenues is Different in Each Country - China  Hardware and Data  Most of China is on 2G, although 4G is growing  Data fees are high  Smartphone sales rising: 97.5 million shipped in Q2 2014  Monetization:  Premium apps not popular in China  Google Play not authorized to receive payments  Publishing:  Must have a Chinese partner to publish PC or Android app (illegal to do otherwise)  iDreamsky and Yodol provide localization, manage updates, and publish via their alliances with Tenent, Baidu, and Beintoo  Visibility: more than 200 Android app stores in China  Promotion: cannot use Twitter or Facebook Ambient Insight 2014

Longitudinal Analysis: The Global Game-based Learning Market Enters Mature Phase Data based on Ambient Insight’s Game-based Learning reports from 2006 to 2014. Compound Annual Growth Rates by Eight Forecast Periods 25% 20% 15% 10% 5% 0% Ambient Insight 2014

All Roads Lead to Mobile Mobile Edugames now outsell PC/Console edugames  15 of the 24 Game-based Learning companies funded in 2013 were mobile edugame developers and all of them were developing edugames for young children  Early childhood learning edugames consistently rank in the top ten bestselling mobile apps in almost every country  Learning apps designed for young children usually include gameplay  Sweden-based Toca Boca launched their first app in March 2011 and by November 2013 had reached over 50 million downloads  Ranked as the number one top selling educational app in both the Apple app store and in Google’s app store in June 2014  Toca Boca Ambient Insight 2014

Worldwide Game-based Learning Investment Patterns Leading Indicators Ambient Insight 2014

Investment Patterns: 2013-2018 Worldwide Game-based Learning Market Game-based Learning companies garnered $290.8 million in private investment funding between 2010 and 2013 Knowledge Adventure (an industry pioneer) obtained $26.8 million in funding in 2013 and another $13 million in May 2014 Ambient Insight 2014

Game-based Learning Catalysts  Game-based Learning companies garnered $85.1 million in private investment funding in 2013  There were 392 Game-based Learning startups listed on the AngelList site as of July 20, 2014:  https://angel.co/educational-games  The Big Players are interested again:  Rosetta Stone launched their game-based Kids Lingo Letter Sounds in September 2013 and the Arcade Academy edugame in October 2013 - “ The first gamified language- learning app for adults”  Houghton Mifflin Harcourt acquired Curiosityville in May 2014. Curiosityville develops games “that teach math and literacy skills to children ages three to eight” Ambient Insight 2014

Investment Patterns: 2013-2018 Worldwide Game-based Learning Market Success: one teacher at a time. Dreambox Learning obtained $14.5 million in funding in 2013 – They have raised $25.5 million since 2010 Ambient Insight 2014

Investment Patterns: 2013-2018 Worldwide Game-based Learning Market TabTale obtained $13.5 million in funding in 2013 – They have over 200 mobile apps for young children. Acquired Kids Games Club in 2013 and Chinese edugame company Coco Play in May 2014. Building a catalog by acquisition Ambient Insight 2014

Edugame Incubators/Accelerators  In 2013, Zynga.org and NewSchools Venture Fund, launched co.lab—"an accelerator that works with startups that are leveraging the power of digital games to build transformative educational technologies.“  http://playcolab.com/  Pearson Catalyst for Education:  http://catalyst.pearson.com/  Kaplan EdTech Accelerator:  http://kaplanedtechaccelerator.com/#et-overview Ambient Insight 2014

Investment Patterns: 2013-2018 Worldwide Game-based Learning Market  Kidaptive obtained $10.1 million in funding in 2013: One of the first companies selected by the Co.lab incubator Includes parental controls (Parent's Pad) and “tips on how to improve learning hurdles, like difficulty in color or shape recognition.”   Ambient Insight 2014

Investment Patterns: 2013-2018 Worldwide Game-based Learning Market Fingerprint obtained $10.5 million in funding in June 2014 (from DreamWorks) – They have garnered $20.1 million since 2011 Platform open to third-party developers and brands: “businesses can use it to break into the rapidly growing mobile playfield.” Has parental controls (“Mom-Comm technology”) Samsung Kids’ Mobile Network Powered by Fingerprint – “games with an educational twist for kids ages 3 to 7.” http://www.fingerprintplay.com/callforcontent    Ambient Insight 2014

What Gets Funded and What Sells?  Free private investment tracking sites identifies company, funding amount, and the investor:  Crunchbase:  http://www.crunchbase.com/  Education VentureBeat:  http://venturebeat.com/category/education/  Free ranking sites track the top selling educational apps and edugames by all platforms and by each country:  App Annie:  http://www.appannie.com/top/iphone/united-states/education/  Distimo:  http://www.distimo.com/leaderboards Ambient Insight 2014

What Sells? July 10, 2014 Bestselling Educational App Snapshot from App Annie for Canada, the US, and the UK There are differences in buying behavior in each store across the planet. Ambient Insight 2014

Q & A This deck is posted in Ambient Insight’s Free Resource Library at: http://www.ambientinsight.com/News/PublishedContent.aspx Tyson@ambientinsight.com Ambient Insight 2014

Tyson Greer - The 2013-2018 Worldwide Game-based Learning and Simulation-based Markets