Академический Документы
Профессиональный Документы
Культура Документы
Student Packet
Federal Recruiting Case Competition
Consulting Learning | Campus Recruiting
2011
1. TABLE OF CONTENTS
1. Table of Contents.........................................................................................................2
2. Case Overview & Scenario.........................................................................................3
Introduction............................................................................................................................ 3
About Cloud Computing........................................................................................................4
About the Client..................................................................................................................... 5
Case Scenario........................................................................................................................ 6
Within this packet you will find the relevant case information to get started on your
presentation. In addition, external research is expected in order to create an innovative
solution. Remember, this competition is not only a great opportunity to further develop
your teamwork, presentation, critical thinking and analytical skills, but it is also a chance
to network with Deloitte practitioners and learn more about our career opportunities and
internship programs.
Finally, please note that Pinnacle Games, Inc. is a fictitious company. None of the
information described within this case is representative of a specific Deloitte client. Any
similarities between the company data and Deloitte clients are purely coincidental in
nature.
Thank you for your interest and participation. Good Luck!
Introduction
Gaming, once a simple pastime, is now a big business. In 2010, worldwide revenues for
the industry totaled $19.1 billion a touch lower than the annual GDP of Bolivia. The key
industry players, companies such as Electronic Arts, Activision Blizzard, and Zynga,
produce a variety of games with staggering rates of sales. For example, Activisions Call
of Duty sold 6.5 million copies in the first 24 hours after its release. As a point of
comparison, the final edition of the Harry Potter series sold 6.9 million copies on the day
of its debut. However, even with these blockbusters, the overall pie is shrinking. Online
and mobile gaming is stealing market share and redefining the gaming landscape. From
2008 to 2010, the sales of games for traditional consoles shrunk by $900 million. That
being said, hardware sales have been growing, and consoles will remain the largest
gaming segment for the next five years, even as revenue growth is expected to decline
as gamers spend more of their time on social and mobile gaming.
Ten years ago, games were played on consoles and purchased on disks now gamers
can use mobile phones, tablets, or PCs to download a game in mere minutes.
Innovations like 3D and HD graphics are increasing the file size of the products and
necessitating changes to the delivery mechanism. Instead of sending out a game on two
disks, online downloads are gradually becoming the method of choice. While these
enhanced graphics are good for gamers, the constant state of innovation is putting a
strain on the IT resources of many of the market leaders. In one interview, a developer
admitted that instead of sending their development files over the terribly slow network, it
was faster to ship them via FedEx. In order to please the game consumers and creators
alike, cloud computing is becoming an integral part of any gaming companys portfolio.
In fact, new players like Zynga already use this operating model and have come to be
known as the new brand of company born in the cloud.
Picking up on the trends, established gaming companies are turning to social and mobile
games to provide new revenue streams via ad revenue. They are also drawn by the lower
costs of the social media games development can take a few short weeks, and
expenditure is measured in thousands, not millions, of dollars. Another bonus of these
new platforms is their ability to generate sustained revenue streams as users buy
upgrades within the game (an example is Zyngas Mob Wars, wherein players pay real
currency for items that only exist within the world of their game. Zynga reportedly earns
over $22,000 daily on Mob Wars alone). This move to mobile and social gaming is driving
faster, almost continuous, design cycles. While this model ensures a constant stream of
Copyright 2012 Deloitte Development LLC. All Rights Reserved.
3
games to appease consumers, recent reports have highlighted the strain the pressure of
constant delivery puts on the development staff. Gaming companies have seen
decreased morale and heightened attrition as a negative consequence of the shifts the
industry is facing.
Another side effect of the shift to mobile gaming is that the profile of a typical gamer is
dramatically changing. Traditionally, the biggest market segment was comprised of
males, aged 18-35, looking for games rich in graphics, sound, and with a solid storyline.
These types of consumers are willing to pay between $40 and $60 for a game and
upwards of $200 for the console on which to play it. Focused on this customer profile,
the gaming companies poured money into development with a high margin, low volume
revenue model. Enter social media and mobile games. The customer base shifts to a mix
of males and females, aged 5-55. Theyre looking for easy-to-use games the type that
will help kill time while they wait for the bus or stand in line a level of enjoyment that
they value at no more than $10 per game. With their low demands for quality, these
games cost mere thousands to develop and make up for their low margins with high
sales.
Due to the increased competition and changing atmosphere of the industry, many of the
largest gaming companies are growing through acquisition snatching up developing
studios for their intellectual capital. This helps offset some of the pricing pressures from
the value chain from console makers to internet service providers all of whom are
looking to control the distribution of games to customers, especially in this new age of
the cloud.
In other words, it is no longer necessary to buy and install a suite of software for each
and every customer. Instead, one application can be loaded that would allow multiple
customers to log into a web based service that hosts the program. Workload shifts from
the computers of local customers to the servers of network computers that make up the
cloud.
Cloud computing functionality has exploded in the last few years, and the use of cloud
technologies has had a significant impact in the gaming industry. Cloud computing has
produced new revenue streams and has opened markets that were previously
unreachable. Customers are no longer required to buy a console and individual games.
Instead, games can be streamed directly from the web in order to provide significantly
more data to customers, allowing for a better user experience. Because of this,
traditional video game companies must change the way they develop games in order to
tap a market with significant potential for growth.
Mr. Lee is not afraid of large scale change, and coming from Google, sees the huge
potential for growth in cloud gaming. He would like to see additional research in the
future of the industry in order to make a sound investment decision.
Maria Morgan Chief Information Officer
Mrs. Morgan was recently hired as the Chief Information Officer at Pinnacle. She was
previously the Global IT lead for Disneys gaming division and has a computer
science background, receiving her undergraduate degree from the University of Texas
at Austin and her MBA from the MIT Sloan School of Management.
Mrs. Morgan is an avid supporter of technological advancement and a strong
proponent of moving Pinnacle towards cloud technology. She comes from an
analytical background and expects any proper solution to rely heavily on solid
quantitative reasoning.
Dave Cunningham Vice President of Corporate Finance
Mr. Cunningham has steadily advanced at Pinnacle since he began as a financial
analyst with the company in 1992. A University of California, Los Angeles alumni with
a degree in finance, he worked his way up to his current position as the global head of
corporate finance faster than any person in the history of the company.
Mr. Cunningham is wary of sweeping technological changes, especially when they
require significant financial investment. He expects requests for funding to be very
persuasive before he gives them the stamp of approval to go to the board.
* Note: Pinnacle and its employees are fictional and intended for illustrative purposes
only.
Case Scenario
After a rough final quarter of 2011, Pinnacles VP of Strategic Development, Young Lee,
considers the need to invest in technology that will allow the company to respond to the
changes in their market. From e-mail correspondence, he knows that the newly hired
CIO, Maria Morgan, is a strong proponent of embracing cloud technologies for improved
business processes and customer delivery. He contemplates suggesting an investment
in cloud at the board meeting in two weeks, but he knows that he needs a wellformulated plan, especially given that it would be such a large investment during
turbulent economic times. Because of the complex nature of the problem, Young Lee
decides to call upon Deloitte Consulting to assist with his presentation to the board.
Knowing that this is a multi-faceted problem, Mr. Lee asks Deloitte to bring a team
comprised of Human Capital, Technology, and Strategy & Operations practitioners. At his
team briefing he outlines the questions that he is looking to answer in the formulation of
this presentation:
1. What are some options for how Pinnacle can integrate cloud into their business in
order to achieve their five year goals?
Copyright 2012 Deloitte Development LLC. All Rights Reserved.
6
2.
3.
4.
5.
Following the team briefing Mr. Lee hands the Deloitte team a template on which to make
the presentation. He is heading on a business trip to Asia and will be out of pocket for
one week, after which he will meet with the team to be briefed on their findings. He
strongly encourages the team to perform external research prior to completing the
analysis and tells Deloitte to get creative in thinking of their solution, making sensible
assumptions when necessary.
Grow top line revenues at least 20% by the end of December 2017
Enhance the customer experience by producing high-quality, timely, and
engaging game content
Strengthen Pinnacles internal culture in order to reduce attrition by 10%
and foster a positive and productive workplace
Acquire key intellectual property in order to widen footprint in rapidly
growing gaming segments
Improve the business processes in order to facilitate the internal
development of games
Expand into innovative technologies in order to stay at the forefront of the
worldwide gaming market
suitable choice. "CU has entered this area and prepared for years, we have ported our
system to many smart TV and set-box, such as TCL, Lenovo, and Haier."
About Cloud Union
Cloud Union started R&D on cloud gaming technology in 2008. It is headquartered in Beijing,
China, and currently has 70 employees. Cloud Union's investors include Soft Bank, Intel
Capital, and other strategic investors which may bring value to the company. CU has just
announced that it has closed B Round, including which the total fund rising has reached over 10
million USD.
SOURCE Beijing Cloud Union Co., Ltd
Copyright (C) 2012 PR Newswire. All rights reserved
Zynga Releases New Games and a New Platform
NY Times, David Streitfeld
Posted 10/11/2011 09:01 PM ET
SAN FRANCISCO Oh, thank you for saving me! squeals Giselle the Lovely Maiden in
CastleVille, the latest effort from the game company Zynga.
Giselle the Lovely Maiden is not the only one who needs some help getting through the
Gloom. Zynga itself must keep up the momentum as it prepares for an expected $20
billion public offering in a manic market. It is the unquestioned leader in casual gaming
and one of the most successful Internet start-ups of any kind, but some of its most
recent player statistics look rather static.
Zynga executives put on a show for the media on Tuesday at the companys
headquarters here. They introduced several games, including CastleVille, Bingo, Hidden
Objects and a sequel to its early hit, Mafia Wars, as well as new ways of playing old
games.
They also talked about something that might be even more significant to the companys
future stockholders: a new playground that would leave it less captive to the whims of
Facebook, its crucial partner.
The larger game that is playing out is Zyngas effort to redefine itself. Fifty-nine million
people around the world played one of its games every day during the second quarter, a
wildly impressive number for a company less than five years old. But the number of
players is essentially unchanged from the fourth quarter of 2009.
And most of that playing is done via Facebook, which takes 30 percent of the revenue
that Zynga makes on its site and wields the power in the relationship.
In opening the festivities, Mark Pincus, Zyngas founder and chief executive, said the
company was not just trying to make the next hit game. It has much bigger designs.
What Zynga is calling Project Z will be a new platform, an environment tailored just for
games. Executives described it as a Web site done in partnership with Facebook, but
were murky on any financial aspects since their company was in its quiet period
preceding a public offering, as mandated by the Securities and Exchange Commission.
Clearly, however, Project Z shifts the balance of power back toward Zynga.
The platform might eventually do a lot more than that.
The world belongs to platforms. Everyone wants to be a platform, said Lou Kerner, an
analyst with Wedbush Securities. Look at Facebook: Two hundred thousand people are
writing code to make it better, and none of them are on Facebooks payroll.
Mr. Kerner sees Zynga making that same leap. If they can build and control a vibrant
gaming ecosystem and tax it appropriately, they can create significant shareholder
value, he said.
In this outcome, Zynga would be a little like a movie studio, distributing the work of
others. For the moment, however, it is living and dying by its own hits.
Cityville, its biggest game, has picked up a little steam recently with 13.5 million daily
users, according to AppData. FrontierVille, however, has been sliding faster than a
pioneer bitten by a varmint. Introduced in June 2010, FrontierVille peaked with nine
million daily players but now has about 5 percent of that.
Meanwhile, the popularity this summer of the Sims Social, a casual game from a big rival,
Electronic Arts, proved that the Zynga formula could be successfully captured by others.
Mr. Pincus stressed that Zynga was focusing on expanding the notion of play, including
getting gamers to do more during brief stints on mobile devices a five- or 15-minute
experience that feels like a meal.
Several of the new games are variants of current games designed for mobile devices.
There are about a billion PCs out there and four billion mobile devices, said the chief
mobile officer, David Ko. The opportunity is enormous.
Zynga needs a wide reach because its games are free. Nearly all its revenue comes from
selling virtual goods to the whales, the 5 percent of its players who want to get ahead
quickly, say, by buying tractors or weapons. The larger the pool of casual players, the
more whales.
CastleVille, which will be introduced before the end of the year, aims for mass appeal. In
addition to the hapless Giselle, characters include the Sexy Pirate Sonja, George the
Friendly Miner and Antonio, who in a short clip shown to the reporters dazzled a couple
of medieval babes when he took off his shirt. If this is too mushy for some players, they
can spend their time defending their castle from beasties, creatures whose bark and
bite was left for the moment to the imagination.