gpb - report - virtual reality
Post on 23-Mar-2016
229 Views
Preview:
DESCRIPTION
TRANSCRIPT
Important disclosures appear at the back of this report.
GP Bullhound Ltd. is authorised and regulated by the Financial Services Authority in the United Kingdom
Sector Update
July 2009
Imaging Technologies
HOW REAL CAN WE MAKE GAMES AND VIRTUAL WORLDS?
Hugh Campbell
hugh@gpbullhound.com
London: +44 207 101 7566
Alec Dafferner
alec@gpbullhound.com
San Francisco: +1415 986 0168
Remy Valette
remy@gpbullhound.com
London: +44 207 101 7565
Digital entertainment is growing at breakneck speed
We are spending more and more time in front of screens consuming more and more digital
entertainment. In fact each year approximately 16 billion square meters of screens is
added to the market. This is the equivalent of over two A4-sized screens for every person
on Earth. And we are hungry for more. Broadband internet access is approaching 100%
penetration in developed economies and wireless broadband usage is growing fast in the
developing world. This has allowed for ever more realistic entertainment to be delivered to
a screen near you – from computer games and animated films to virtual worlds and mobile
communities. The consumer is pushing the boundaries of what can be delivered using
current business models and existing software and hardware.
Demand creates profitability problems for incumbents
As the consumer demands more realistic entertainment environments so production costs,
using traditional methods, have skyrocketed. Reality is not cheap to replicate. It requires
more manpower as well as 3D imaging and animation technology. Whilst unit sales in the
computer games industry are holding up in the recession, the share prices of the large
computer games vendors are off over 50% versus 12 months ago and off 30% versus the
S&P 500.
New online business models popular with consumers
New business models and techniques are required to provide the consumer with digital
entertainment in a sustainable and ultimately profitable way. In fact, within the computer
games industry, for those companies that look at the world differently, there are huge
profits to be made. Take ActivisionBlizzard. Its most popular game, World of Warcraft, is
marketed, distributed and played online. In addition, it is charged at $15 per month. This is
no “one hit wonder.” In Europe, CCP Games has adopted a similar model with EVE Online
a space simulation game.
Animation software may hold the key
However, the whole film and computer games industry is not going online. To reduce time-
to-market and to drive cost out of these traditional industries, we believe that a new
generation of animation software may hold the key. Companies such as Natural Motion,
Image Metrics and Illuminate Labs allow studios to save costs without sacrificing integrity.
Now it is possible to create more realistic and controllable characters, in many cases
without the need for actors, motion capture, set pieces or props.
Whenever a traditional industry comes under pressure, investment opportunities exist.
This report also touches on the advances in hardware, computer peripherals, holography
and 3D systems – all of which help make our digital lives more realistic.
INDEPENDENT TECHNOLOGY RESEARCH
VIRTUAL REALITY
2
GP Bullhound Ltd. July 2009
THE OMNIPRESENCE OF IMAGING TECHNOLOGIES
Explosion of screen availability for high quality content viewing and interaction
According to DisplaySearch more than 340 million 40” screens, 156 million
smartphones and 184 million laptops were shipped in 2008 - a total of 15.9 billion
square meters of additional screen available to play content each year. This is the
equivalent of 2.1 A4 sheets per people. As a matter of fact we are constantly
surrounded by screens and displays at work, in transportation and at home.
All these devices are constantly visually interacting with us. For example, cars
have screens for speedometers, mapping systems and movie players providing
information, services and entertainment. As a consumer we always want better
image quality and intuitive interfaces. The iPhone is the perfect illustration of a
device which answers these needs, the applications are visually attractive and the
way to access and navigate them is easy and intuitive.
For manufacturers and publishers these requirements mean more sophisticated
graphic interface and higher resolution for content. This leads to technical
challenges on processing power, communication bandwidth and storage. On the
consumer side the situation is much more comfortable because devices able to
play such content are multiples, widely available and affordable. Exhibit 1
illustrates visual devices that are constantly around us.
Exhibit 01 – Imaging technology devices sample
Source: Ostendo, Microsoft, NVIDIA, Apple, Archos
TV screen PC monitorPortable playersSmartphone3D vision glasses
VIRTUAL REALITY
3
GP Bullhound Ltd. July 2009
Increasing number of imaging technology applications
Imaging technologies are employed in the manufacturing or the delivery of
product and services in a number of different ways. The main objective is often to
improve realism, accuracy, reduce cost or enhance performance. Industries such
as entertainment (3D animation), advertising, computer aided design (CAD - 3D
modeling), healthcare (diagnostic) and internet (3D virtual world, virtual help
desks, interactive websites) are increasingly dependent on imaging technologies.
Exhibit 02 – Sample applications of imaging technologies
Source: Autodesk, Dreamworks, AP, Inteliwise, s3.images.com
The fastest growing application where multiple types of content are integrated into
a highly engaging and interactive 3D graphic format is virtual worlds. In-stat
forecasts more than 1 billion registered users and $3 billion of revenue by 2012,
of which 90% is generated from the sale of virtual items.
In the healthcare industry imaging technologies are used to improve our
understanding of the human body and to cure patients more efficiently. Advances
in medical imaging technologies are redefining the way physicians diagnose and
treat diseases. For example at the IRCAD-EITS (cancer research center) they
use 3D image rendering software and imaging technologies to improve the use of
surgical devices as well as sharing medical images with surgeons around the
world. This enables doctors to remotely capitalize on the knowledge from other
specialists and also serves as the basis for eLearning materials. It is not
surprising that more than 50% of General Electric’s healthcare revenue is coming
from imaging technologies which accounts for more that $8.6 billion in 2008.
CAD Architecture
Movies & Games Avatar & Virtual Worlds Healthcare Diagnostic
VIRTUAL REALITY
4
GP Bullhound Ltd. July 2009
SUCCESS OF COMPUTER GENERATED ENTERTAINMENT
The macroeconomic trend in the entertainment industry is towards a growing
consumption of digital content. In fact, a study from PricewaterhouseCoopers and
Wilkofsky Gruen Associates reveals that spending on digital entertainment will
grow 10% by 2013 in comparison to non digital entertainment which will be flat or
declining.
Over the last 10 years, after the launch of Toy Story by Buena Vista, computer
generated entertainment has become a strong competitor to traditional movies.
For example Shrek 2 (the best selling title from Dreamworks) is ranked 11 on the
period 1900 – 2009 just behind Jurassic Park, Star Wars and Harry Potter. The
Exhibit 03 below shows the ranking of top 10 computer generated images (CGI)
movies and video games.
The common characteristics between the top ranked CGI movies are a good
story line supported by innovative technology. Special effect and 3D animation
technologies enable creators to produce more immersive entertainment. The
manufacturing techniques have a lot of similarities with the video games industry.
Both share 3D animation and character modeling, the key differentiator is the live
interaction engine for games which adds a lot of complexity. This prevents video
games from reaching the image quality and finished aspect of “single story” of
animated movies.
Exhibit 03 – Top 10 computer generated movies and video games
Top 10 Movies
Top 10 video games
Source: www.the-numbers.com, VGChartz.com
Rank Movie Distributor Box Office Release date
1 Shrek 2 Dreamworks SKG $441m 2004
2 Finding Nemo Buena Vista $340m 2003
3 Toy Story 2 Buena Vista $246m 1999
4 Shrek Dreamworks SKG $268m 2001
5 Shrek the Third Paramount Pictures $323m 2007
6 Monsters, Inc. Buena Vista $256m 2001
7 Toy Story Buena Vista $192m 1995
8 The Incredibles Buena Vista $261m 2004
9 Up Buena Vista $275m 2009
10 Cars Buena Vista $244m 2006
Rank Movie Publisher Platform Sales(Units) Release Date
1 Mario Kart Nintendo Wii 13.64m November 05'
2 Wii Fit Nintendo Wii 13.05m April 08'
3 Wii Play Nintendo Wii 11.00m December 06'
4 Super Smash Brothers Brawl Nintendo Wii 8.31m June 08'
5 Grand Theft Auto 4 Take Two X-Box 360 6.64m April 08'
6 New Super Mario Brothers Nintendo DS 5.53m June 06'
7 Brain Training Nintendo DS 5.45m June 06'
8 Grand Theft Auto 4 Take Two PS3 5.25m April 08'
10 Nintendogs Nintendo DS 4.52m October 05'
VIRTUAL REALITY
5
GP Bullhound Ltd. July 2009
A competitive industry exposed to consumer purchasing power and high innovation cost
In 2008, despite the recession, spending on filmed entertainment declined only
2% and spending on video games increased 22% reaching respectively $38bn
and $15.4bn (**). It shows that the consumer flow of money into the animated
entertainment industry is considerable but despite healthy revenues, profitability
issues remain for some players in the industry. Exhibit 4 below compares stock
performance of digital entertainment companies versus the economy in general
and technology companies in particular. The average drop over the past year for
Electronic Arts, Crest Animation Studios and Rainmaker Entertainment is 57%
whereas it is only -21% for S&P 500 and Nasdaq composite.
The large amount of investment required offer more engaging entertainment
experiences, is putting profitability under pressure. In addition companies are
largely exposed to the success of individual titles whilst the cost associated with
the production process is fixed. For example Disney Studios will produce 40.0%
of its CGI films with 3D features in 2009 and this will be increased to 55.6% in
2010. This will enable Disney to charge consumer a premium of $2 per seat
versus a non 3D movie.
Exhibit 04 – Stock performance of animation & games companies
Source: Capital IQ
0
20
40
60
80
100
120
140
Jul-
08
Au
g-0
8
Au
g-0
8
Se p
-08
Se p
-08
Oct
-08
Oct
-08
Oct
-08
No
v-08
No
v-08
Dec
-08
Dec
-08
Jan
-09
Jan
-09
Feb
-09
Feb
-09
Mar
-09
Mar
-09
Ap
r-09
Ap
r-09
Ap
r-09
Ma y
-09
Ma y
-09
Jun
-09
Jun
-09
Jul-
09
Jul-
09
S&P 500
Nasdaq Composite
Rainmaker Entertainment Inc.
Crest Animation Studios Ltd.
Electronic Arts Inc.
(**) Source: PricewaterhouseCoopers, Wilkofsky Gruen Associates
VIRTUAL REALITY
6
GP Bullhound Ltd. July 2009
INNOVATIVE SERVICE PROVIDERS REQUIRED
Software industry overview for digital content production
Digital movie and game producers employs three types of tools, proprietary
software, specialized software for a segment of the process (i.e. modeling or
rendering) and software packaged from large providers.
Proprietary software suite
A number of leading publishers and studios have developed their own proprietary
software. For example Blue Sky (subsidiary of Fox Entertainment, creator of “Ice
Age”) has developed a proprietary software called CGI Studio. The software suite
is a programming language and renderer that can manipulate and visualize 3D
elements. The core of the technology is a ray tracing engine that can simulate the
way light behaves on objects and surfaces in a natural environment.
Specialized software
Specialized software is dedicated to a particular segment of the production
process. It can be a full software solution for modeling, visual effects, rendering,
lighting or a plug-in to integrate in a larger software package. Most start-ups are
part of this category.
Software package
This class of software can do the same functions as the proprietary software with
more features but less customization as they can address multiples domains.
This includes major software provider for content creation, simulation and
computer-aided design such as Autodesk (Maya, 3ds max), Adobe (after effect,
lifecycle), Dassault System (3DVIA, Catia design).
Exhibit 07 – Simplified overview of the 3D animation industry
Source: GP Bullhound
3D animation studios
ProprietaryOutsourced Specialized Multi purpose
Solution & services
3D animation universe
Publishers Animation software
Software providers
VIRTUAL REALITY
7
GP Bullhound Ltd. July 2009
The steps in computer generated content production
A quick summary on how the industry works and is structured will help to
understand the positioning and offering of companies that operates in the CGI
entertainment value chain. Exhibit 5 shows the various production steps of digital
entertainment.
Exhibit 05 – Computer generated movies production process
Source: Dreamworks Studio, Pipal Research
Modeling
The modeling phase consists of the creation of 3D shapes for characters, objects
and buildings. It is highly creative work done by artists and “digital sculptors”. In
this area, Autodesk provides 3D modeling software called 3ds Max. However in
2008 the company bought Softimage to extend its offering to content creation for
digital movies and games. Specialized studios like Sparx have dedicated teams
of digital artists in charge of building 3D key frame for animated productions for
clients such as Disney and TF1.
Rigging
This step is where all the possible movement and attitudes of the character are
defined in order to create uniformity of the animation across the entire movie. The
outcomes of rigging are computer scripts that will be used by the animation as a
frame work. Proprietary software packages are quite common in this area but
character rigging can also be implemented via modeling software including Maya
from Autodesk.
Layout
The layout department of an animation studio ensures the appearance of the
story shot by shot is consistent and establishes a shooting style as well as
defining the spatial relationships between objects in a scene.
Animation
The animation process gathers the information and data from the modeling,
rigging and voice recording steps so as to create movements and actions of the
3D objects and characters. This step involves various techniques to create
realistic animations. Physic simulation models based on scientific laws are used
in order to make movements as realistic as possible. Other techniques include
motion capture to digitalize facial movements and gestures.
Development Pre‐Production Production Post‐Production
Script Writing
Storyboarding
Design ‐ Modelling
Character Rigging
Voice Recording
Layout
Animation
Visual Effects
Lighting
Sound Effects
Music
Final Delivery
3‐4 Years
VIRTUAL REALITY
8
GP Bullhound Ltd. July 2009
The animation segment is a convergent area where a wide range of companies
are focusing on the various aspects of animation i.e. global motion, specific
movements and real time interaction.
The company Natural Motion is focusing on Dynamic Motion Synthesis (DMS)
specially targeted for real time interactions employed during video games, movies
and simulations. The technology is used by clients such as Electronic Arts or
Sony Imageworks for games and Airbus or Northrop Grumman for simulations.
The startup Image Metrics is focusing on facial animation where modeling is a
complex task to achieve and physics models cannot be utilized. The company
has developed a facial motion capture technology that creates 3D models based
on the expressions and emotions of real actors.
In 2007 Intel bought Havok for $110m a provider of animation tools for games.
The company offers an animation software development kit which can be
combined with physics and a special effects platform to produce realistic
graphical designs and motions.
In terms of market size the segment is difficult to measure. According to
jonpeddie.com the worldwide 3D modeling and animation market is estimated at
$221m today growing at +11% CAGR between 2010 and 2013.
Exhibit 06 – Worldwide 3D modelling and animation market size
Source: www.jonpeddie.com
The potential growth for the animation market is considerable as more and more
activities are done on screens. For example the company Animantz employs
animation techniques to improve e-learning interfaces and it has worked for
clients including Loreal and Asayahi Airlines.
Lighting
The light is a key element in the perception of volume and perspective in 3D
animation. The task of generating realistic lighting conditions especially in real
time is quite complex as it impacts all characters and objects in a scene.
Companies like Geomerics and Illuminate labs are specifically focusing on
providing solutions for dynamic lighting creation and optimization.
219
237
221
238
262
293
329
100
150
200
250
300
350
2007 2008 2009 2010 2011 2012 2013
$m
VIRTUAL REALITY
9
GP Bullhound Ltd. July 2009
Visual Effect
Special effects are built using specific plug-ins to existing 3D modeling and
animation software. For example visual effects for object explosion can be
simulated using Havok Destruction. Autodesk has several plug-ins for smoke and
light simulation (Autodesk Smoke, Autodesk Lustre). Blue Sky uses proprietary
software tools to create animated effects in order to highlight actions and transmit
emotions. Particular programs have been coded to simulated even tiny details
such as the impact of the rain on the character’s fur.
Exhibit 07 – ICE Age Character and Visual effects to create immersive entertainment
Source: Blue Sky Studio
Rendering
The rendering process is the creation of the final image at full resolution from the
scene’s modeling and animation characteristics. This process requires the most
processing power and memory. To decrease the amount of work, various layers
can be rendered separately and then assembled into the final movie using
compositing software. In 2007 NVIDIA bought Mental Images for $80m, the
company sells rendering software that combines physically correct light
simulation and high performance images.
Actions
Rain
Emotions
VIRTUAL REALITY
10
GP Bullhound Ltd. July 2009
DISRUPTIVE HARDWARE TECHNOLOGIES
3D stereo vision systems
One major area of innovation that will enable the entertainment industry to charge
higher price and generate better margins is 3D stereoscopic imaging. NVIDIA is
already selling its GeForce 3D Stereo Vision system for gaming applications in
partnership with Samsung. The technology requires 120Hz LCDs and shutter
glasses in order to recreate the illusion of true 3D images. The illusion of depth is
created by playing two different images, representing two perspectives of the
same object to each eye. Disney’s Digital 3-D (*) process that plays 3D film, uses
polarized glasses associated with fast cinema projector at 144 frames per
second, six times as fast as a normal movie. Every 1/24 of a second (the
projection frame rate for normal 2D movies) the two scene views called "right eye"
and "left eye" are each shown 3 times. Due to persistence of vision, the 72 image
frames and 72 black frames fed to each eye in a given second will recreate true
3D flicker-free images.
Complete solution from content to viewing
IMAX offers a 3D viewing experience with proprietary technology that combines
specific projection systems, audio settings, geometry of the facilities and also
specific camera and shooting conditions for the content creation. THR Research
shows that admission prices for 3D-Imax movies are $5 above standard
technologies which accounts for an increase of 33% on the average price of a
cinema ticket charge.
Holographic projections
Hologram technologies are based on the reproduction of the interference and
diffraction of the light coming from an object in order to create a 3D image. This
technology doesn’t require the viewer to wear any specific glasses. 3D animated
holograms are often projected using a combination of laser beams. The company
ViZoo offers Cheoptics360, a free floating display that can produce large 3D
animated images viewable on a 360˚ angle.
Blending virtual and real for more immersive entertainment
It is now also possible to connect real life physical experiences to movies and
games. Ambient features such as back ground color, airflow and vibration can be
automatically played and adjusted during the entertainment with pre-recorded
effects for movies and real-time actions for video games. Elaborated discrete
systems are available, for example the company amBX (spin off from Philips
research) provides full “sensory surround” entertainment experiences with its
proprietary technology for games, movies and web enhancements.
(*) Source: http://en.wikipedia.org/wiki/Disney_Digital_3-D
VIRTUAL REALITY
11
GP Bullhound Ltd. July 2009
Augmented reality is part of the trend toward immersion and engagement with the
viewers. The concept is to link images and real objects with an added layer of
interaction. The startup Total Immersion delivers augmented reality solutions
where virtual components are dynamically merged into live video. The application
range of this type of technology is wide and covers entertainment, publishing,
digital marketing and theme parks.
Competition between CPU and GPU to take control of the processing priority for 3D animations and modeling calculations.
GPU has primarily been designed to render graphics at higher resolution and
higher frame rates without increasing the workload on the main processor. Today
their performance enables GPU vendors to position their GPU offering as “co-
processor” within the computer architecture. In addition new operating systems
such as Mac OS X10.6 and Windows 7 have a stronger dependency on GPU
processing capabilities. For example NVIDIA’s product line called PhysX enables
the GPU hardware to do physics calculations that are the core of movement
animation in CGI movies and games. The company bought AGEIA Technologies
for $30m in 2008, a provider of hardware accelerated physics software that
enables realistic 3D motion for PC game.
Exhibit 8 shows the growth in revenue from hardware GPU vendors has
increased 14% on the period 2005-2007 compared with a 7% decline in CPU
revenues.
Exhibit 08 – Relative revenue growth between CPUs and GPUs
Source: Mercury Research
80%
85%
90%
95%
100%
105%
110%
115%
120%
2005 2007
CPU GPU
-7%
+14%
VIRTUAL REALITY
12
GP Bullhound Ltd. July 2009
SELECTED COMPANY PROFILES
Animantz was established in 2005. It started with a
small team, catering to animation and eLearning
services and currently four different business-units, eLearning, 2D Animation,
Flash Games and Preproduction.
amBX is a technology licensing business which delivers
“sensory surround” entertainment experiences. amBX
enables content creators to add real world effects using light, color, rumble and
air flow, through licensed amBX devices, to the virtual worlds of computers,
games, music, movies and TV entertainment.
Geomerics was established in 2005, the company is
specialized in graphics software for the games industry. Its product, Enlighten,
provides real time the light effects for a particular scene. This introduces film
quality lighting and atmosphere into games.
Illuminate Labs develops rendering and baking technology for games developers.
Its two products are Beast, a game engine-independent content pipeline tool used
for advanced global illumination and dynamic relighting of characters, and Turtle,
a product for Autodesk Maya that combines advanced rendering technology with
baking functionality.
Image Metrics provides superior facial animation
solutions to the entertainment industry. Its mission is
to create believable facial performances that emotionally connect audiences to
digital characters in films, games and other forms of entertainment. The company
was founded in the UK in 2000
NaturalMotion Ltd is the creator of Dynamic Motion
Synthesis (DMS), a break-through in 3D character
animation. Based on Oxford University research,
Dynamic Motion Synthesis creates high-quality 3D character animation in real
time by combining artificial intelligence, biomechanics, and dynamics simulation.
PixelPlay is the leading provider of games, and
entertainment services and technologies for Interactive TV and IPTV. PixelPlay's
distribution network reaches over 50m digital TV households worldwide creating
an unparalleled offering to game brand licensors, pay-TV operators and
advertisers.
VIRTUAL REALITY
13
GP Bullhound Ltd. July 2009
Presagis offers a commercial-off-the-shelf
(COTS) modeling, simulation, and embedded
display graphics software. Its solutions are used in for games, military and
industrial applications. Customers includes including Vivendi Games, Boeing,
Lockheed Martin, Airbus, Thales and Northrop Grumman.
Founded in 1995 and based in Paris, France, Sparx is
a 3D animation studio. It employs 100 digital artists in
Paris, and 120 digital artists and programmers at its
fully-owned studio in Ho Chi Min City, Vietnam. The company has earned over
100 credits in feature films, direct-to-video movies, television shows, television
commercials and music videos.
The Ballistic Pixel Lab. is a full service Post
Production / Development company providing
2D/3D animation, special effects, video
compositing/editing & game development.
Total Immersion delivers augmented reality solutions for
digital marketing, publishing and theme parks. Its
technology enables interactive experiences where live
video is merged with real objects.
Trinigy is a privately owned company selling game
engine technology and support to video game
development studios across the globe. Engineered to provide creative and
technical freedom, the company´s Vision Engine is currently in use in more than
100 commercial game productions by companies such as Ubisoft, Take 2,
Dreamcatcher, NeoWiz, Spellbound, Nitro Games and more.
ViZoo is a 3D holographic vision system provider. Its
technology enables free-floating 3D images, the
company also assists its clients in producing content
for 360 viewing.
VIRTUAL REALITY
14
GP Bullhound Ltd. July 2009
KEY EVENTS AND SECTOR CONFERENCES
Develop Awards, Date: annually in July, Location: Hilton
Metropole Hotel Brighton,UK, The Develop Awards are
the UK's only peer-voted awards for the European
development industry. Every July, Develop hosts the biggest awards night on the
game development industry calendar with over 400 people attending
Technology and Engineering Award Emmy, Date: annually in
January, Location: The Venician, Las Vegas. Launched in 1948,
Technology and Engineering Awards Emmy honor development
and innovation in broadcast technology and recognize
companies and individuals for breakthroughs in technology.
GDC '09 Europe, Date: August 17 - 19, 2009 , Location:
Cologne, Germany. GDC Europe focuses on Business, Game
Design, Production, Programming, and Visual Arts.
NAB Show, Date: annually in April, Location: Las
Vegas Convention Center, NAB Show is the world’s
largest digital media industry event attended by
media, entertainment and communications
professionals who share a passion for the next generation of video and audio
content across multiple platforms
The Academy Awards, Date: March 7th 2010, Location:
Kodak Theater , Hollywood, The Academy Award for
Visual Effects is an Oscar given to one film each year that shows highest
achievement in visual effects.
8th Annual VES Awards, Date:
February 2010, Location: Los
Angeles, California, The Visual
Effects Society (VES) is the entertainment industry's only organization
representing the full breadth of visual effects practitioners including artists,
technologists, model makers, studio leaders, supervisors and producers in all
areas of entertainment.
VIRTUAL REALITY
15
GP Bullhound Ltd. July 2009
SECTOR VALUATIONS
M&A Activity
Date Target Buyers Deal Size ($m)
EV / Sales
EV / EBITDA
Business Description
17-Nov-08 Softimage Co. Autodesk, Inc. (NasdaqGS:ADSK)
33.5 na na Develops 3D animation tools to digital artists in the games, f ilm, and TV industries
04-Feb-08 AGEIA Technologies, Inc. NVIDIA Corporation 29.7 na na Develops hardw are-accelerated physics for PC games
31-Dec-07 Colorland Animation Ltd. China Animal Healthcare Ltd. (SGX:EP4)
na na na Operates as a hand draw n (2D) and computer-generated (3D) animation studio
01-Dec-07 Activision Vivendi 5,759.8 4.1x 19.2x Develops and publishes entertainment softw are for creating games
30-Nov-07 mental images GmbH & Co. KG
NVIDIA Corporation 80.5 na na Provides rendering and 3D modeling technology to the entertainment, computer-aided design, scientif ic visualization, and architecture industries
08-Nov-07 GameOn Co Ltd. NEOWIZ Games Corporation; TStone Corp.
141.4 2.4x 8.9x Provides online gaming services
08-Nov-07 TT Games Group Warner Bros. Home Entertainment Group
210.9 1.7x 15.2x Develops and publishes games for young players and their families
17-Oct-07 Kenjitsu Oberon Media, Inc. na na na Interactive digital media asset outsourcing services to the multimedia industry
14-Sep-07 Havok Intel Corp 110.0 na na A provider of interactive softw are and services used by digital media creators in the game and movie industries
02-Mar-07 The Mill The Carlyle Group 118.3 na na Operates as a visual effects company. It offers consultancy and processing services for various data acquisition shoots
24-Oct-06 ATI Technologies Inc. Advanced Micro Devices Inc. 4,709.7 2.0x nm Engages in the design, manufacture, and sale of graphics and multimedia processing products and technologies
26-Jun-06 Pixmantec ApS Adobe Systems Inc. na na na Develops digital imaging softw are that provides advanced w orkflow management and processing capabilities for digital camera raw files
31-May-06 Patagonik Film Group, S.A. Telefonica de Contenidos, S.A.U.
na na na Offers a digital studio, characters' designers, 3D animators, and computer artists
16-May-06 Digital Domain Wyndcrest Holdings, LLC 35.0 na na Creates digital imagery for feature f ilms to provide visual special effects and/or animation
05-May-06 Pixar, Inc. Walt Disney Co. (NYSE:DIS) 7,618.7 24.1x 32.1x Operates as a digital animation studio w hich creates animated feature f ilms
04-Oct-05 Alias Systems Corp. Autodesk, Inc. 197.0 na na Develops, markets, and supports computer graphics softw are products
01-Sep-05 BGT BioGraphic Technologies, Inc.
Presagis Inc. 2.6 na na Develops artif icial intelligence softw are for game developers, animators, and military simulation
25-Jan-05 Visual Concepts Entertainment, Inc.
Take-Tw o Interactive Softw are Inc.
24.0 na na Provides technical and creative services to producers and distributors of television programming, commercials, multimedia, and feature f ilms
28-Jul-04 Criterion Softw are Group Ltd.
Electronic Arts Inc. 67.0 na na The company assists in game-specif ic engineering, performance optimization, pre-production multi-platform toolchain development
18-Jun-01 Altamira Group LizardTech Inc. na na na Develops softw are that enables high resolution graphics using advanced imaging technology.
20-Aug-98 Discreet Logic Inc. Autodesk, Inc. 453.4 3.0x 11.2x Engaged in digital systems and softw are for the creation of imagery and special effects for f ilm, video, HDTV, broadcast, and Web
Source : GP Bullhound, Capital IQ Mean 7.1x 17.3xMedian 3.0x 15.2x
VIRTUAL REALITY
16
GP Bullhound Ltd. July 2009
Private Placements
Date Company Investors Deal Size ($m)
Business Description
09-Jul-09 Emergent Game Technologies Inc.
Adena Ventures; Hopew ell Ventures, L.P.; Jerusalem Venture Partners; Walker Ventures; WorldView Technology Partners, Inc.
14.4 Offers video game development tools and middlew are for gaming design
18-Feb-09 Vertex Animation Studio FZ-LLC
Intel Capital na Provides services in virtual reality applications, and 3D multiplatform games
16-Dec-08 Image Metrics, Ltd. Saffron Hill Ventures, Ltd. 6.5 Provides facial animation solutions to the entertainment industry
17-Nov-08 Softimage Co. Autodesk, Inc. (NasdaqGS:ADSK) 33.5 Develops 3D animation tools to digital artists in the games, f ilm, and TV industries
27-Jun-08 aniBoom, Ltd. Draper Fisher Jurvetson; Evergreen Venture Partners; Tamir Fishman Ventures
10.0 Virtual animation studio that creates, produces, and distributes cartoons and animations
05-Jul-07 Geomerics Trinity Hall, University of Cambridge 4.0 Provides graphics radiosity lighting product softw are for the games industry
03-Jul-07 Emergent Game Technologies Inc.
Adena Ventures; Cisco Systems, Inc. (NasdaqGS:CSCO); Copan; Jerusalem Venture Partners; Walker Ventures; WorldView Technology Partners, Inc.
12.0 Offers video game development tools and middlew are for gaming design
13-Feb-07 aniBoom, Ltd. Evergreen Venture Partners 4.5 Virtual animation studio that creates, produces, and distributes cartoons and animations
15-Aug-06 NaturalMotion Ltd. Benchmark Capital; Isis Innovation Limited na Develops and markets animation technologies for games and film post production
04-Jul-06 MoonScoop Group CDC Entreprises; FP Gestion 5.1 Creation, production and distribution of animated series
01-Jan-06 MoonScoop Group BNP Paribas Capital 14.2 Creation, production and distribution of animated series
06-Sep-05 CritterPix, Inc. Unidsclosed 1.4 Animation studio that combines original stories and computer generated entertainment. The company is based in San Rafael, California.
27-Apr-05 Illuminate Labs AB Industrifonden; Volvo Technology Transfer AB 1.0 Develops rendering, dynamic relighting and baking technology (tool for Maya)
10-Aug-04 Telekinesys Research (Havok)
Trinity Venture Capital na Provides interactive softw are and services for digital media creators in the games and movie industries
06-Oct-02 Telekinesys Research (Havok)
ICC Venture Capital; LTG Development Capital Ltd.; Trinity Venture Capital; Enterprise Ireland, Investment Arm; AIB Equity
6.9 Provides interactive softw are and services for digital media creators in the games and movie industries
02-Jul-02 Image Metrics, Ltd. Saffron Hill Ventures, Ltd.; MC Capital Europe; Close Investments Limited
4.4 Provides facial animation solutions to the entertainment industry
Source : GP Bullhound, Capital IQ
VIRTUAL REALITY
17
GP Bullhound Ltd. July 2009
Selected Listed Companies
Mar
ke
t C
apEV
EV/L
TM
EV/N
TM
EV/L
TM
EV/N
TM
PE*
PE*
LT
M E
BIT
DA
NT
M E
BIT
DA
Sh
are
pe
rfo
rman
ce
Co
mp
any
Nam
e($
m)
($m
)T
ota
l Re
vT
ota
l Re
vEB
ITD
AEB
ITD
AL
TM
NT
MM
arg
inM
arg
in1
Mo
nth
s6
Mo
nth
s12
Mo
nth
sH
ead
qu
arte
rs
Dig
ital
an
imat
ion
Dre
amW
orks
Ani
mat
ion
SK
G In
c.2,
732.
32,
456.
53.
3x3.
9x11
.1x
13.3
x15
.8x
24.4
x29
.6%
29.0
%14
.3%
43.6
%6.
1%U
nite
d S
tate
s
Toei
Ani
mat
ion
Co.
Ltd
.23
6.5
122.
30.
5x0.
6x3.
3x4.
7x45
.4x
16.3
x16
.1%
13.2
%0.
2%-1
.1%
-19.
1%Ja
pan
Rai
nmak
er E
nter
tain
men
t Inc
.13
.615
.30.
5xna
10.8
xna
nmna
4.7%
na13
.1%
48.1
%-6
3.0%
Can
ada
Cre
st A
nim
atio
n S
tudi
os L
td.
15.8
19.3
1.6x
nanm
nanm
nanm
na17
.0%
70.3
%-3
7.4%
Indi
a
Whi
te S
hark
AB
2.4
2.4
0.9x
nanm
nanm
nanm
na-6
.5%
-77.
0%-8
1.9%
Sw
eden
Me
an1.
4x2.
2x8.
4x9.
0x30
.6x
20.3
x16
.8%
21.1
%7.
6%16
.8%
-39.
0%
Me
dia
n0.
9x2.
2x10
.8x
9.0x
30.6
x20
.3x
16.1
%21
.1%
13.1
%43
.6%
-37.
4%
Gam
e p
ub
lish
er
Act
ivis
ion
Bliz
zard
, Inc
.14
,733
.411
,703
.43.
2x2.
4x21
.6x
8.2x
nm17
.0x
14.7
%29
.0%
-10.
2%30
.7%
-36.
4%U
nite
d S
tate
s
Elec
tron
ic A
rts
Inc.
6,93
5.8
4,41
5.8
1.0x
1.0x
nm9.
0xnm
21.8
xnm
11.5
%-2
.1%
39.1
%-5
0.3%
Uni
ted
Sta
tes
Sha
nda
Inte
ract
ive
Ente
rtai
nmen
t Ltd
.3,
310.
42,
819.
54.
9x3.
7x10
.9x
8.6x
18.2
x13
.8x
45.5
%43
.0%
-8.6
%70
.4%
91.9
%C
hina
Squ
are
Enix
Hol
ding
s C
o., L
td.
2,55
6.3
1,77
5.7
1.2x
0.9x
8.3x
4.9x
38.3
x15
.5x
15.0
%19
.3%
-6.4
%-1
8.5%
-28.
7%Ja
pan
UB
I Sof
t Ent
erta
inm
ent S
A1,
606.
11,
388.
60.
8x0.
9x7.
5x2.
8x16
.9x
22.7
x10
.2%
30.9
%-2
9.8%
20.3
%-6
5.5%
Fran
ce
Perf
ect W
orld
Co.
, Ltd
.1,
738.
81,
581.
36.
9x5.
2x12
.7x
9.9x
20.2
x13
.6x
54.6
%52
.2%
18.7
%14
1.4%
35.1
%C
hina
Cap
com
Co.
Ltd
.1,
365.
41,
158.
71.
2x1.
3x5.
9x6.
1x15
.9x
12.8
x20
.4%
21.3
%13
.3%
10.9
%-3
5.3%
Japa
n
Take
-Tw
o In
tera
ctiv
e S
oftw
are
Inc.
763.
665
4.0
0.5x
0.6x
3.8x
nmnm
nm13
.7%
nm-2
.2%
35.6
%-5
8.2%
Uni
ted
Sta
tes
THQ
Inc.
452.
732
4.6
0.3x
0.4x
1.1x
8.1x
nmnm
31.0
%5.
1%-1
1.6%
69.9
%-5
5.8%
Uni
ted
Sta
tes
Me
an2.
2x1.
8x9.
0x7.
2x21
.9x
16.7
x25
.6%
26.6
%-4
.3%
44.4
%-2
2.6%
Me
dia
n1.
2x1.
0x7.
9x8.
2x18
.2x
15.5
x17
.7%
25.2
%-6
.4%
35.6
%-3
6.4%
Mo
vie
an
d E
nte
rtai
nm
en
t
Wal
t Dis
ney
Co.
46,6
87.0
58,3
55.0
1.6x
1.6x
7.1x
7.3x
13.6
x14
.2x
22.5
%22
.4%
7.1%
21.5
%-1
7.2%
Uni
ted
Sta
tes
Tim
e W
arne
r In
c.31
,608
.442
,457
.40.
9x1.
5x3.
2x6.
5xnm
12.9
x28
.8%
22.9
%5.
2%-4
.8%
-37.
9%U
nite
d S
tate
s
Toho
Co.
Ltd
.3,
343.
33,
540.
41.
5xnm
9.5x
nm74
.4x
nm16
.4%
nm10
.1%
-0.3
%-1
5.5%
Japa
n
Mar
vel E
nter
tain
men
t, In
c.3,
103.
83,
081.
44.
1x7.
6x8.
7x15
.8x
15.2
x32
.5x
46.6
%47
.7%
5.6%
43.8
%14
.0%
Uni
ted
Sta
tes
Lion
s G
ate
Ente
rtai
nmen
t Cor
p.68
5.8
1,13
4.0
0.8x
0.7x
nm19
.1x
nmnm
nm3.
8%4.
5%4.
5%-4
0.5%
Can
ada
Me
an1.
8x2.
9x7.
1x12
.2x
34.4
x19
.8x
28.6
%24
.2%
6.5%
12.9
%-1
9.4%
Me
dia
n1.
5x1.
6x7.
9x11
.6x
15.2
x14
.2x
25.7
%22
.6%
5.6%
4.5%
-17.
2%
Tte
chn
olo
gy
pro
vid
ers
Ado
be S
yste
ms
Inc.
17,0
20.4
14,7
06.3
4.5x
5.2x
12.5
x12
.0x
24.1
x22
.4x
35.7
%42
.9%
13.1
%67
.9%
-21.
6%U
nite
d S
tate
s
NV
IDIA
Cor
pora
tion
7,06
2.4
5,74
9.6
2.0x
1.9x
nm26
.8x
nm82
.4x
nm7.
1%14
.0%
62.6
%13
.0%
Uni
ted
Sta
tes
Das
saul
t Sys
tem
es S
A5,
752.
84,
711.
12.
5x2.
5x11
.6x
10.1
x26
.9x
17.5
x21
.5%
24.8
%11
.0%
31.7
%-2
3.3%
Fran
ce
Aut
odes
k, In
c.4,
981.
64,
024.
81.
9x2.
4x9.
1x12
.1x
87.7
x25
.0x
20.6
%19
.6%
16.9
%31
.7%
-31.
6%U
nite
d S
tate
s
Dol
by L
abor
ator
ies
Inc.
4,70
6.6
4,16
2.1
5.9x
6.0x
11.6
x12
.1x
19.7
x22
.9x
51.2
%49
.1%
12.2
%62
.9%
2.3%
Uni
ted
Sta
tes
IMA
X C
orpo
ratio
n48
1.8
643.
15.
8x4.
5xnm
13.2
xnm
nmnm
34.3
%9.
6%89
.5%
17.0
%C
anad
a
DTS
Inc.
477.
540
1.8
6.5x
5.9x
21.9
x21
.8x
nm53
.0x
29.5
%26
.9%
0.9%
102.
0%-3
.9%
Uni
ted
Sta
tes
Me
an4.
1x4.
0x13
.3x
15.5
x39
.6x
37.2
x31
.7%
29.2
%11
.1%
64.0
%-6
.9%
Me
dia
n4.
5x4.
5x11
.6x
12.1
x25
.5x
24.0
x29
.5%
26.9
%12
.2%
62.9
%-3
.9%
So
urce
: G
P B
ullh
oun
d, C
apit
al IQ
(*) P
rice
/ Dilu
ted
EP
S B
efo
re E
xtra
31-J
ul-0
9
VIRTUAL REALITY
18
GP Bullhound Ltd. July 2009
Analyst Profiles
GP Bullhound is a research centric investment bank headquarted in London with offices
in San Francisco.
Hugh Campbell – Hugh is a co-founder of GP Bullhound. He previously worked
at Goldman Sachs as an equity research analyst and prior to that in corporate
finance at Citibank. He graduated from Pembroke College, Oxford University.
Alec Dafferner – Alec is a Partner and Head of GP Bullhound’s San Francisco office.
With over ten years of technology investment banking experience, Alec has executed
over 40 transactions for emerging growth companies in the U.S. and abroad, raising over
$10 billion in capital and advising on over $2.5 billion in mergers and acquisitions. Prior
to joining GP Bullhound, Alec was an Executive Director at UBS Investment Bank.
Remy Valette – Prior to GP Bullhound, Remy worked as an M&A analyst at Societe
Generale covering a number of industrial sectors. He holds a Masters in Corporate
Finance from EM Lyon Business School and also a Master in Applied Physics from Paris
VII University.
GP Bullhound Ltd, 52 Jermyn Street, London, SW1X 6LX http://www.gpbullhound.com, info@gpbullhound.com, +44 20 7101 7560
Disclaimer: Information contained in the document does not constitute an offer to buy or sell or the solicitation of any offer to buy or sell any securities. This document is made available for general information purposes only and is intended for institutional investors who have a high degree of financial sophistication and knowledge. This document and any of the products and information contained herein are not intended for the use of private investors in the UK. Although all reasonable care has been taken to ensure that the information contained in this document is accurate and current, no representation or warranty, express or implied, is made by GP Bullhound Ltd. as to its accuracy, completeness and currency. This report contains forward-looking statements, which involve risks and uncertainties. Actual results may differ significantly from the results described in the forward-looking statements. In particular, but without limiting the preceding sentences, you should be aware that statements of fact or opinion made, may not be up-to-date or may not represent the current opinion (whether public or confidential) of GP Bullhound Ltd. In addition, opinions and estimates are subject to change without notice. This report does not constitute a specific investment recommendation or advice upon which you should rely based upon, or irrespective of, your personal circumstances. Use of this document is not a substitute for obtaining proper investment advice from an authorized investment professional. Potential private investors are therefore urged to consult their own authorized investment professional before entering into any investment agreement. Past performance of securities is not necessarily a guide to future performance and the value of securities may fall as well as rise. In particular, investments in the technology sector can involve a high degree of risk and investors may not get back the full amount invested. GP Bullhound Ltd. is authorised and regulated by the Financial Services Authority in the United Kingdom.
top related