Baseline Information Regarding Filipino Online

Buying Behavior

NeoGamesOnline Mobile Games Corp.

GAMES CorpSeptember 2015

PCSO Current Revenue Stream and Indicative Revenue Projection for Internet Protocol (IP) Based Interactive Games

2013 PCSO Revenue Statistics

Mobile Phone Demographics and Indicative Number of Potential Buyers

Mobile Phone Demographics and Indicative Number of Potential Buyers

https://www.techinasia.com/philippines-mobile-smartphone-penetration/

Indicative Market Size of NG-OMG Based on Internet and Mobile Phone Users and Online Gamers

Indicative Online Gamers Market Size• The number of online gamers in the

Philippines will reach 6.3 million by 2008, said a research released by the International Data Corporation (IDC). The increase is driven by the availability of new online game titles and more broadband connections.

The communities of friends or families forming "clans" when playing online also perform as a driving sector in social aspect, it said. The research also estimated that the online gaming subscriptions in the country will grow 58.4 percent annually from 2002 to 2007.

(http://www.internetworldstats.com/asia/ph.htm#1)

36

15

49

Indicative Internet and Mobile User Market Size

(Millions)

Internet User Smartphone Potential

Indicative Sales Projection after 5-Year Build-up Period

• Internet Penetration Rate: 36% of 100million Total Philippine Population of which 55% are aged 18 years and above.

• Smartphone Penetration Rate: 15% of 100 million Total Philippine Population (Smartphone use is directly tied with e-commerce)

• The indicative market size of NG-OMG is 19.8 million based on 55% of 36 million internet users that will drive the estimated 290,000 tickets a day to achieve the PhP 2.1 billion annual sales projection.

Unaudited 2013 PCSO Sales(PhP Billions)

28.5

1.11.9

0.012

Lotto ScratchKeno Sweepstakes

Indicative 2020 PCSO Revenue with NG-OMG Sales Forecast (PhP Billions)

Based on ave of last 4 years PCSO historical sales growth

PCSO Portfolio Revenue Breakdown & Indicative NG-OMG Revenue

41.31

1.59 2.75

0.0182.2

Lotto Scratch KenoSweepstakes Interactive

E-Commerce Growth Potential and Social Media as an Advertising Platform for the Filipino Millennials

E-Commerce GROWTH Factors:

• Triple-digit growth in smartphone penetration (326%)

• Quick to adapt to new technologies

• Competent and reliable workforce

• Significant use of social media (we have 40 million ACTIVE social media users in the Philippines)

• Fast Growing Internet Population

Social Media and e-Commerce

Social Media is significant in that it presents a potentially effective advertising platform!

Insights into Operations of the New Internet Protocol Based Interactive Games of the Michigan Bureau of State LotteryMichigan, USA

SALES of ONLINE SCRATCH CARDS

• Due to Confidentiality agreements NG cannot disclose actual historical sales of Portugal and Michigan lotto institutions who are members of the World Lottery Association. (Michigan News Accounts)

• World Lotto Association statistics shows that online lotto sales makes up an average of 10% of total lotto sales. (KMPG Study)

Year On-iine Lotto Sales(million)

Traditional Lotto Sales (million)

Michigan(member WLA)

2015 $2.2 (2months of operations)

$5.33 million(approximately)

Paddy Power(associate member WLA)

2008 €283.0 Confidential Source of

INSIGHTS OF MICHIGAN STATE LOTTERY TO IMPLEMENT IP-BASED LOTTO GAMES

Before opening • The Michigan lottery is estimating Internet sales will contribute an additional $128 million

to the state's School Aid Fund in the first four years. Last year, the lottery set a record with a contribution to Michigan schools of $778.4 million.

•  allow Internet lottery purchases, it increases public awareness and interest in the lottery. The younger generation, he said, wants to do everything on their smartphones. 

(http://www.crainsdetroit.com/article/20131201/NEWS/312019994/michigan-lottery-pursues-online-sales-retailers-surprised-concerned)

After opening• Launched Only Months Ago, Michigan’s Online Lottery Is Now Selling Over 300,000

Instant Tickets Per Day. • Numbers echo those provided by Michigan Lottery Director Scott Bowen at GiGse

in April, who reportedly estimated $500,000 in daily online sales. The Michigan Lottery projects that it will generate $480 million during the first eight years of online games.

• The Michigan Lottery projects that it will generate $480 million during the first eight years of online games. The internet games have not cannibalized sales from retailers. “There is no indication that the online games are affecting sales at our 11,000 retailers,” said Holyfield. “In fact, we continue to see sales growing in all channels.”

(http://www.onlinepokerreport.com/17106/michigan-online-lottery-sales-projected-480-million/)

MICHIGAN STATE iLOTTERY SALES

Indicative Filipino Online Consumer Behavior

BASELINE INFORMATION ON FILIPINO ONLINE BUYING BEHAVIOR

• Filipinos are among the most active in the Asia-Pacific region in using the Internet for product research and snaring online deals

 • The Nielsen report found that among

consumers who engaged in e-commerce activities, 72% of online consumers in the Philippines indicated using the Internet for grocery shopping research over the past month.

 • Of this number, 47% did so on a daily

basis, comparing favorably against the average 39% in the Asia-Pacific region.

• 61% of Filipino consumers have, in fact, done online deal searches during the past month, compared to only 39% in the Asia-Pacific.

 

THE STUDY EXPOSED THE ACHILLES HEEL OF FILIPINO ONLINE CONSUMERS• When it comes to online purchase

conversion, only 34% have made purchases online in the past month compared to 64% in the Asia-Pacific and 49% globally.

• While non-consumer packaged goods (CPG) such as electronics, clothing and travel reported the highest penetration for digital shopping intentions, the level of influence for CPG-related products was observed to be growing.

• In fact, Filipinos’ intentions to buy food and beverages via online sources more than doubled from 15% to 32% in two years, it showed.

• The study showed that 52% of Filipino respondents said they planned to purchase a computer, game or software via a connected device in the next three to six months—up from 19% two years ago—and again compared to 35% in Asia-Paci!ic"

• 46% of Filipinos surveyed indicated they would buy a mobilephone online, compared to 33% in the region, making technology categories the key driver of online purchase intention for Filipinos within the next three to six months

FILIPINO ONLINE CONSUMER BEHAVIOR

• People choose sites that are environment-friendly (78.6 percent), while 62.5 percent choose sites that donate to a good cause.

• Filipinos are generally cautious of online shopping because of security (89 percent), speed of transaction (88.5 percent), convenience of payment methods (88.5 percent), 80 percent price/values, return or exchange policy, website reputation, online review, customer service, low delivery charges, and use of various payment methods.

 • Because of the continuous rise of Internet

use among Filipinos, more and more E-commerce companies are starting to penetrate the different industries including car and auto trading, transportation services, food and recreation, and even the financial sector. You can even buy car insurance plans online or apply for a salary loan.

 • According to Digital Filipino founder Janette

Toral, in the years to come, the Philippines needs new business models that are in line with our economic situation and the needs of the rising generation.

WHAT BRANDS ARE FILIPINOS BUYING ONLINE?

• Brands have become an essential consideration in making purchase decisions

KEYS TO THE SUCCESSFUL IMPLEMENTATIONOF AN INTERNET PROTOCOL (IP) BASED INTERACTIVE GAMES PROJECT

IP-BASED INTERACTIVE GAMING SECRETS OF SUCCESS

Higher price-point games

Higher prize payments

IP-INTERACTIVE GAMING SECRETS OF SUCCESS

More Games (instant and/or online)

ITVM upgrades(Instant Ticket Vending Machine)

Increased / maintained ad expenditures

Licensed property and sports team games

IP-BASED INTERACTIVE GAMING SECRETS OF SUCCESS

• Powerball ad focus on jackpot of $150 million or more – West Virginia

• Marketing efforts focused on $5 instant games - DC

• Increased retailer base - Idaho

• Converted instant-only retailers to full-service - Idaho

• Social media interaction – Montana

• Implemented 2nd chance drawings for last top prizes of $50K or more for all $10 & $20 scratch games - Kentucky

IP-BASED INTERACTIVE GAMING OTHER SECRETS OF SUCCESS

• Based on discussions with Heads of PCSO, NG/OMG has made a representation that there is no market study available study in the Philippines to make an estimate of market size

• This baseline and indicative paper, provides the PCSO with an idea of the strength and size of the market of IP-based Interactive Games users

• It is in this regard that NG/OMG is respectfully requesting for the implementation of 2-year pilot of this project in order to validate this baseline and indicative paper.

The End