For decades in the game industry, there was one sure way to spot a game that had almost no chance of becoming a critical and commercial success: Games based on a license (aside from sports licenses) were almost never a top performer. Some of them were among the very worst games (Superman 64, anyone?) you could find. A license was the hallmark of low quality gaming.
Why would licenses mean poor quality? There were many reasons, but the most important one was time. Most of the licenses you'd see were movie licenses, tied to a big-budget film that game publishers expected would have a huge audience. Work would begin on a game, but usually the movie would be coming out in two years or less. This was less than the 2-3 years a top-quality game would often take to develop... so something would have to give. Either the game would be rushed to meet the movie release, or the game would be released well after the movie had been in theaters and left. Either way, sales wouldn't be great.
A short digression here: Sports licenses have been, and continue to be, an exception when it comes to licensed games. Sure, there have been poor sports games built around licenses, but in general sports games have been much better performers than other licenses. The major reasons are that licensed sports games are created to model actual game play, so at least you're starting with a game that you know works as a game. When you start with a movie or a book, you have to figure out how to make a game out of it, which is often a very difficult task in itself. Second, licensed sports games are based on something that happens every year, so whether it takes one year or three to build your game, the license it's based on is still going strong and is a great marketing opportunity every year.
Fast-forward to the modern era of game design. Yes, AAA console or PC titles still take many years to develop, but those aren't being built around movie licenses any more. (If anything, it's going the other way, as the Warcraft and Assassin's Creed movies demonstrate.) Now, though, mobile and social games can be created in months rather than years, and thus top-quality games can be constructed on a timetable to take advantage of a major movie marketing campaign. The result is that licensed games have become both much better games, and much more profitable for the companies that publish them.
"we've seen Kim Kardashian: Hollywood rake in $50 million in its first month, and it looks like it will be worth hundreds of millions of dollars to Glu Mobile"
Look no further than a company like Kabam to see where licenses have been an effective, money-making tool. Kabam has its own IP like Kingdoms of Camelot that has done very well, but its licensed games like The Hobbit: Kingdoms of Middle Earth and Fast & Furious 6: The Game have been real moneymakers. More than that, the games have helped Kabam find new audiences for its other games.
Other game companies can show similar success with licenses, like Telltale Games. The company has been doing licensed titles for years, and finally had a breakout hit with The Walking Dead. With the success of that game, the company was able to land the license for Game of Thrones, which is very likely going to be another major hit. DeNA has been busy licensing Transformers and Marvel. Zynga has licensed Warner Bros.' Looney Tunes, as well as Tiger Woods and the NFL, as part of its new strategy to expand its audience.
Most recently, we've seen Kim Kardashian: Hollywood rake in $50 million in its first month, and it looks like it will be worth hundreds of millions of dollars to Glu Mobile. There's an example of a great way to work with the right license. Glu Mobile took an existing game, Stardom: Hollywood, that they knew worked well, and found a license that fit the game's play style very well. The game has strong appeal to Kim Kardashian's millions of fans, letting them feel like they have a closer association with Kardashian. The game's style matches the desire of the fan base, and by having a proven game and a proven license Glu Mobile minimized its risk.
How do you find and take best advantage of a license? Here are some key things to remember:
Find a licensor you can work with
Licensors can make your life a living hell, or they can be a terrific help. Choose wisely. Ask around, find out if you know other people who have dealt with a particular company on a license. Hopefully you'll hear good things, but don't be surprised if you hear some horror stories. There are licensors where approvals can take months, or endless changes can be requested, or the materials you need to proceed with your game development take weeks to show up. There are many, many ways that a licensor can make things difficult or easy. Find a licensor who will be responsive, flexible, creative, and willing to help, if you can.
Pick the right license
Kim Kardashian: Hollywood may make people look for celebrity licenses with similar social presence, but that's a shallow analysis. Other companies will no doubt be looking for similar licensing coups, but it's not as easy as just finding a celebrity with a large Twitter following. The nature of the celebrity's following has to be considered, and then that profile must be matched up with the right game. It's also true that not every celebrity will cooperate willingly in the promotion of a licensed product, even though they may benefit substantially from the success of the product. Ms. Kardashian has been promoting her game in appearances on TV and elsewhere, especially on social media, and her efforts have certainly been a large part of the game's success.
Get the terms of the deal right
Watch out for guaranteed minimums, hefty advance payments, penalty clauses and the like. Remember that in most cases, licenses are not transferable if you sell the company, and licenses may evaporate if your company gets into financial trouble. Unlike intellectual properties that you create, licenses don't add value to your company in the same way. THQ found this out the hard way.
Use licenses to build audience for your company
Yes, licenses can be a remarkably cost-effective audience acquisition tool, especially as CPI (cost per install) keeps rising. The best use of a license for your company is to leverage the audience you acquire by introducing them to your other games, especially non-licensed ones. Ideally your license was chosen to bring in people who would be inclined to play your other games. If you've got a high-profile science-fiction license that will bring in millions of players, you should have some other science-fiction games they would be interested in. Or games in other genres that have a similar play style - if they liked playing the licensed game, you should be able to introduce them to a number of your other games and get some good results. Otherwise, you're not getting the full value from your license.
Do it well, and do it swiftly
If you are going to do a licensed game, do the best job you can. Get it on the market expeditiously - if the development effort drags on too long, you risk missing the best opportunity to take advantage of the license, if there's anything time-dependent on the license.
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