E3 Report: New Practices in Licensing and Ancillary Rights

Over the past few years, the space of licensing in video games has changed extensively, and a swift question to the audience at the start of this E3 developer session revealed that most were searching for ways to turn their IP into games. With that in mind, the panel began its look at the many perspectives on the game license world.

For this particular E3 session, those discussing the issues were: Germaine Gioia, Vice President Licensing - THQ, Inc.; Sandi Isaacs, Vice President Interactive - Viacom Consumer Products; Cody Alexander, Co-Head of New Media and Technologies - William Morris Consulting; Ames Kirshen, Director of Video Game Development - Marvel Enterprises; and Robert Walsh, CEO - Krome Studios. Aaron Loeb of Planet Moon Studios moderated the panel.

Perception of Licensed Content

"Spider-Man [for PlayStation/Dreamcast] changed the space of licensing," says Kirshen. For him, the quality of the graphics and game design raised the bar in terms of what a licensed game could be, and what he believes we are seeing right now is a "renaissance" in comic book and superhero video games.

Walsh agrees, noting how the Internet has changed the way gamers have looked at games. Whether original or licensed, games in this and future generations must have compelling content. "With the Internet, if it's good or bad. people will find out really, really fast."

While the general landscape of gaming may have changed, there is a perception of licensed games that is slow to change in the hardcore markets. This can be seen in game websites and magazines like EGM who, both Alexander and Kirshen argue, will knock a game's review score down a point because of its licensed content. "You might see games that are reviewing 75 or 80, and in our minds that's a 90," says Kirshen.

The perception of quality has also hit the publishers. Gioia noted that at THQ, the company has shifted to where one SKU can cost as much as 15 million dollars. "Why would I do that unless you're dealing with a substantial license or an original IP?" She argues that you have to be narrowly focused on what will work for your target demographic; properties like The Godfather with mass-market capability are really quite rare. With that in mind, there are plenty of other game size opportunities out there for content producers looking at games; it doesn't have to be the AAA game that so many licensed games seem to be skewing towards. Kirshen argues, "IP holders such as Marvel and Paramount have to stop saying 'It's gotta be a 15 million dollar game or nothing."

Franchise Building for the Next-Gen

In video games, you have a very narrow window of time to make money back, says Alexander. If a movie doesn't make it in the box office, the studio still has home video, cable, and broadcast to make up for it. In games, this just isn't the case; therefore, the game franchise sequel model is actually much more financially powerful than the movie sequel system.

"If you walk in with a game franchise," Walsh says, "You've gotta have three individual products planned. that's the fundamental change in the dev world." From the IP side, the interactive products is just one face of a multi-sided marketing pill; from the games side, developers should be focused on franchises, not games. On the other hand, things might be changing as "Everyone's talking about making one game on the [Xbox] 360 or PS3. because the costs are prohibitive."

Another change that we're seeing now is franchise games debuting out of step with the licensed property, which wouldn't have happened in the last generation of titles. "Four years ago, you couldn't say 'I want to make a game' when [the studio] isn't going to make a movie next year."

Kirshen agrees, pointing to The Incredibles and Shrek games scheduled to come out this year, well after their respective movies hit the catalogs. "We have four Marvel titles on the floor and only one of them is a direct movie tie-in."

The Only Guarantee is No Guarantee

Despite how quickly the game industry has matured with its partnerships with IP developers, there still isn't true parity between all sides of the marketing machine. Walsh says, "[Studios still say]: we want you to guarantee that the game will rate a 90 and be a blockbuster. Do you do that with a movie?"

These days, IP holders have to be concerned about how their brand is presented in a video game, says Gioia. If the consumer doesn't like it, it can be a huge problem with a wide impact. On this point, Kirshen noted that, during his time at Warner Brothers, a bad Batman game coming out 9 months before a better-reviewed Batman game had a strong impact on the latter, turning it into a flop in stores.

The disparity of the creative turnaround cycle also keeps many game developers at bay. One way to gain ground is to work as early as possible, even pitching movie-based games before the script has been shopped around to studios. This isn't a fool-proof strategy, Alexander notes, as studios often don't like this; they wouldn't have full control over the IP from the beginning.

Walsh also notes that even financially, the movie is still king. He commented that in the case of Lord of the Rings franchise, the amount of games sold simply don't compare to the one billion dollars gross the movie has made.

Movie studios are restructuring their models though, says Isaacs, and game developers and publishers can work to grab that equal seat. She notes that mining the libraries of movie studios is one way to work the system. Another is the emergence of a new tweener, Gioia notes; a new generation of sophisticated, media-savvy, tech-ready kids demand quality games.

Not every movie makes a great game, though, and not every game makes a great movie, Walsh argues. Properly assessing the IP and the market is key. Something that might not be a great next-gen console title could make a fantastic Game Boy game.

Kirshen sometimes finds this hard for some of his clients to accept. "If I [make a PSP deal], they'll say: where's the console deal?" Furthermore, some clients are under the impression that anything can be made into a game these days. Anecdotes of Gilmore Girls pitches and combining IP with the sport of polo explained everything.

Making a Game

All on the panel agrees on the major points needed before a game gets made. One of the first things to ask one's self is: is it a game? Does it bear all the components to make a franchise? Another is: is it economically sound? How does the competition and the marketing landscape look? Yet another is: can the game be made? Do we have the talent on both the developer's side and the IP side? Are they committed?

Respect for the talent and the chain of command keeps the game focused. "The game makers are talent," says Isaacs. "We the studio have to respect talent on both ends: film makers and game makers." This combined with a mutual symbiosis can create a great game. Alexander noted Peter Jackson's involvement in shooting footage specifically for the King Kong game

Licensed games are not immune to the unholy pyramid of time, quality and money. Pick two, so the saying goes. "If you have to, start cutting where you can cut... If it takes you down from an 80 to a 70, you just have to live with it," notes Kirshen.

Walsh emphasizes that games live and die in the publishing office. For others, this is all the reason to not worry about it. Isaacs stated it quite simply: "Make a good game first."