Monday, 7 October 2013

Licensing a brand for your mobile game? Some things to consider

I was at the Login Conference in San Francisco the other day and had the chance to listen to +Henry Oh from Animoca give a great talk about IP licensing for mobile games. Henry had some great points I wanted to share and elaborate on that I think all developers considering IP licensing should really take note of as well as add some of my own.  A few other experts worth seeking advice on include +Greg Suarez and +Steph Ansari who led all our IP licensing efforts when I was at glu eons ago.

One of the first things to consider is why do you want to license a particular brand?  Is it a particular target audience you want to reach?  Are you looking to build the profile of your studio by associating yourself to a particular IP holder or brand? Are you trying to build awareness with platform holders who you think won't notice you without a brand being attached to your game? Do you think you can leverage the marketing of the IP holder to give your game a boost?

These are all critical questions you should be asking yourself since they are fundamental to the success of your game.  Let's look at them in order:

1.  Audience:  Different audiences react and engage differently with different brands.  If you're looking to reach the affluent hardcore male gamer 25-32 (middle/ upper middle class) in the US market certain properties won't resonate as well as others.  Halo may work well while a property like Doom might be too old.  That said if you were targeting veteran, old school gamers 32-45 years of age, Doom might be a great choice. Understanding your audience and what brands resonate with them is the first step to choosing the right brand.  I recommend really doing some research and also asking IP holders to share their own research and demographic profiles to see how their brand resonates with.

2.  Company Profile:  There is sometimes the belief that getting a big movie brand or licensed property will do wonders for your image.  When mobile gaming was in its infancy and carriers and platforms wanted strong brands to drive consumer interest that was partially true.  Today with over 120M Americans playing games the market is already fairly mass market so the need to use brands to drive user engagement is less true than it used to be.  In addition, using big brands can have two drawbacks as well.  Sometimes it creates an expectation on the behalf of the user which the product doesn't live up to.  On the flip side some platform holders have become weary of certain games (particularly movie tie-ins) where the pressure to get the game out in parallel to the movie creates an average or even disappointing product for users.  The reality is that users and platform owners want the best, highest quality product; period.  Slapping a brand on the game only heightens that expectation so living up to it is critical.

3. Awareness with platform holders:  Though having the rights to a big brand might help get a meeting with Apple or Google's marketing team keep two things in mind:  First the brand should be relevant and very mass market.  Picking up the license to something that was big 5-10 years ago has far less impact than something that's either about to come out or can be released to coincide with the release of the digital movie in the store.  Few titles by themselves generate meaningful downloads for Apple and Google at this point (they simply have too much scale) though some generate meaningful revenues (Clash of Clans, Puzzles and Dragons, Despicable Me).  Platform holders are interested in brands that really cut through the noise and hopefully provide a tie-in to other content that can be promoted in parallel (book, movie, album).

4. Marketing:  Always the Achilles heel of most developers.  The expectation by platform holders will be that if you're bringing a big brand to their platform you'll also have negotiated solid marketing support for the game.  That would be one reason they would feature you and co-promote your title.  It's really key to discuss this with IP holders at the contract stage and get a firm commitment from them to co-market the game on your behalf.  This is easier with titles that are launching in conjunction with a movie or book since the IP holder has a vested interest in driving exposure of the property overall.  Otherwise it's extremely challenging.  Things you can request / negotiate that typically are doable:  1.  Mention in any press releases related to the broader property.  2.  Mention in any below the line marketing (email) the IP holder is doing for the property.  3.  Mentions on the IP holders' social channels. 4.  Introduction to other licensing partners the IP holder may have to investigate co-marketing opportunities with them (think cereals, soft drinks, chocolates, plush toys etc.).  In some cases IP holders will actually organize mini events to get all the licensees together to foment cross promotions.  These things typically don't cost the IP holder anything and should be fairly straightforward.  Other things you can try to negotiate which are typically harder: 1.   A link / badge on all outbound marketing material that promotes your game - magazine ads, online, mobile, email. and even billboards.  Years ago when we launched Fast and Furious Universal agreed to have a small call to action on their billboards in London for the game.  This type of marketing is sure to generate interest among platform owners.  2.  Unique promotional items to be used with partners.  For example, if you're doing a movie game you could request signed merchandise from the cast to give away as promo items.  You could then run a social competition on Facebook or G+ with Apple or Google.  3.  In person appearances / interviews.  This is really tough to do but when I was at Google play we were able to secure an interview with Spielberg for Lincoln over a live hangout with fans.  This hangout was then broadcast using ABC's Jumbotron in Times Square.  Again, this type of deal is very challenging to do but if your marketing team is good you can try to negotiate these types of marketing activities up front with IP holders.  I would typically even have these conversations with IP holders at contract stage so you can set expectations.  If IP owners are lukewarm or non-committal you should really consider whether to develop their game at all since you'll loose a key leverage.

As Henry mentioned, lots of other factors go into determining a successful branded game launch and a good and fair contract.  When negotiating these deals keep in a mind a few other points:

1.  Timing:  Does the game release happen in parallel or after a major event related to the IP.  Timing has an impact on development milestones and will impact quality.  As mentioned above timing can be key to securing great marketing support as well so make sure you pay close attention to this and time your launch accordingly

2.  Economics:  Pay careful attention to deal terms.  Many IP holders will demand a minimum guarantee which is sometimes recoupable against future sales as well as a royalty on sales.  I would avoid up front guarantees if at all possible and try to keep royalties under 30%.  In addition if you have to give an up front payment make sure that it is recoupable against future sales and not on top of the royalty rate you need to pay.  You're already sharing the brunt of the burden and risk by developing the game so you should minimize further payments that could suck up valuable cash you'll need elsewhere in your business

3.  Geographic distribution rights:  I would always negotiate global rights where possible.  In particular I would make sure you at least have rights to cover Apple and Google's top markets (you can typically get this data from the likes of +App Annie and Distimo).  Make sure you at least get the US, EFIGS, Korea, Japan and China (for iOS).

4.   Creative control: I would try to get as much visibility up front on who has creative control and at what point you have to share the beta and alpha versions of your game (or even the early script for that matter).  You need to know very clearly who has control over what and how many people are involved in this process.  Typically the fewer people and organizations involved the better.  The last thing you want / need is for the movie studio to say one thing but the family / author who developed the book or franchise to say something else.  Establishing clear owners, milestones and responsibilities is key to getting a quality product out on time and on budget.

5.  Platforms:  Be forward thinking when negotiating this.  I remember when I was a glu we failed to sometimes negotiate or secure rights to certain platforms because we didn't think they were relevant.  This can really come back to bite you in the a@! if you're not careful.  Always negotiate the key platforms first and give yourself the option to develop on future platforms as well.  Who knows, Ouya might not be relevant now but in 18 months it could be very relevant in emerging markets.

Anyway, hope this helps and good hunting.  Whatever you do if you build a great quality product you should always do well regardless of whether you're using somebody else's brand.  Who knows, that next big brand might even be yours...

Mad Mork