Monday, June 16, 2008

Why Isn't my [movie, book, star] a Game: Licensing Edition


Several times a week I get calls the help make a game from greatest movie, book, celebrity, song, musician, brand or something else genuinely recognized by millions of people. More often than not, the game business is just not interested. This is because games succeed based on the quality of the game play. Story, art direction, character development can all enhance a game and lead to incremental sales, but when it comes down to it, if it is not fun to play, it won't succeed.  There's not much story in Tetris, and unaltered from the game, Halo's story would not carry a linear narrative.  A license will not make the game mechanic any more fun. It will only assist in marketing. To do so, there must be an event around the time of launch which will let the world know the game is out. "Event" means something big, like a tent pole film which makes the license front of mind for the 120 million plus people who walk through Wal-Mart each week. Short of that, good luck selling. If there is no event, and the publisher has to let the world know the game is out there, they may as well invest in their own brand.

Game production carries an opportunity cost. A publisher can only make so many and they already have more ideas than slots. If they take a license, it is usually for portfolio management.  It is easier to launch something with a known name or story, than an original IP, but it still has to make financial sense. The license fee creates increased cost and lowers margins, but the marketing impact of the property and the risk mitigation should make up for it. The publishers everyone wants to deal with have evaluation criteria in place. They are all basically the same and all looking for
1) a film with a release date set two or more years out;
2) a production budget commitment of USD 80 million or more;
3) USD 80 million or more committed to marketing; and
4) a high likelihood of sequel films.
Anyone should be able to look at the list and understand why more licenses are not turned into games. You should also see why Pixar and Dreamworks animations always find deals. When viewed through this prism, books immediately fall away, television shows - who knows if they will still be on the air and/or popular in two years, musicians - no launch event, and the list goes on. Some may say the publishers are being unreasonable, but these unreasonable entities will be investing somewhere between USD 20 and USD 30 million into a property owned by someone else over the course of the development and launch of the first product. We are not talking about a JIT inventory produced lunch box. Moreover, they will likely not generate an acceptable return on the first product and will look to make more.

The hardest factor to deal with, and usually the gating item, is timing. Games take two years to produce, and films, generally are released 12 to 18 months after commencement of production. Commencement of production is the relevant date because the purchase option is usually not exercised until commencement and until exercise the studio does not have the right to license a game.  On the game side, we see studios shopping films which are either not greenlit, creating  risk of a game release with no film support and an expensive license; or a film about to got into production, leaving too little time to make a decent game. Some publisher buy them either as part of a block sale of rights, or because the object is too shiny for them not to grab.   The cost of a license falls precipitously from two years prior to release to a year before release.  Sometimes it is too hard for a smallish publisher to pass on the opportunity to buy a massive license at a very low, or even no, cost. 

The studios try to get ahead of the curve and encourage the publishers to put a game in production because the film is "fast tracked" or "really is going to go" but even if the film does go, the timing and content will likely be off. Starting a game production is like starting a freight train. Steering it in a new direction is very time consuming. If the film content changes, it is hugely painful to revise the game. If the release date is delayed, the game release cannot be held.  It is not like fine wine and will not age well. If it is moved forward, the game will be launched into a void. I tried to introduce the idea of a tiered royalty, where a publisher would pay a reduced royalty if the film is not released in a relevant window, but it doesn't work.  If there is no film support, the publishers view it as paying to launch an original IP they don't own.

Ok, now let's say you have a big old effects laden film with a 2 year production cycle and you get out early to talk to publishers. There is lots of support and Wal-Mart may even make it an "F4" event. The publishers want to know it will be sequelized. The game license will be for a number of years - usually 7 to 10 - and publishers hope to amortize their investment over a number of releases. If there is no movie support in the future, the value of the license is significantly reduced. Harry Potter games in a movie year, sell a ton, but sales drop off in a non movie year. Pixar games are some of the top sellers in release years, but sequels to the games without film support sell only a small fraction. Requiring sequels may sound onerous, and limiting, I thought so until I worked on Peter Jackson's King Kong. I figured we had two and a half years of lead time, a guaranteed release date and Peter Jackson coming off of Lord of the Rings. People would be knocking our doors down. Don't get me wrong, there was a lot of interest and the property commanded a great deal, ground breaking in many respects, but some publishers didn't even come to the table. When I spoke with one publisher, who I won't name, but let's call the "Shmee EH" I described the opportunity:
"The budget is committed and so is the release date for one of the best known film properties in history to be written and directed by one of the most successful film makers in history."
"Not interested" without missing a beat.
"Not interested? You don't even have to think about it?"
"No. The monkey dies. No sequel."
"You won't find enough of those." then I realized, they held the licenses for Harry Potter, Lord of the Rings, and James Bond. 
A lot of this will be changing in the very near future as the studios get into the game development business. Warner, Universal and Paramount already announced their plans and are already at work on film properties.  Disney has been doing it for years.  This is a great move by the studios and if they put the right people in place, they will do very well.  It is more in their interest to build a great game out of the IP than a licensee.   They own the property, and they are moving higher up on the revenue tree.  Rather than getting a piece of the sales, they are getting the sales revenue.  The producer/actor/director or other participants will theoretically get royalties directly off of sales, rather than a piece of the studio's piece.   I say theoretically because it is not clear how cross company royalties will be handled.  It will be interesting to see how their licenses are received once they start up internal, but that's another story.

If you are a producer/director/writer/actor wanting to make sure you game is made well, get involved early. Tell the production side you want to be involved in the game early.   Remember the studio can't sell the rights prior to exercise of the option, but neither can you.  If you work together, you can get out early with the property.   Bring in a game designer to help figure out the game and hone the pitch so the publishers can see value.   It is kind of like the Darrow drawings for the Matrix pitch.  Finally, accept the fee structure as being significantly different on the front end from what you are used to in film, but know royalties actually do get paid and accountings are honest. Production will steer you to the right people, and with the right support, you can get it done . . .  or at least find out why it is not so you are ready next time.

So you get the movie issues, it's not really rocket science, but you still don't see why the publishers don't want to work with your author, creator, director, producer, artist, rapper . . . . who is very, very successful and talented. The industry worked with Tom Clancy and now his IP accounts for 1/3 of Ubisoft's revenue. Yes and no. Tom Clancy invested his own money into a game developer, launched a successful game and Ubisoft bought the developer. Wanna do that? I didn't think so. The truth of the matter is publishers do want another Clancy, and the increasingly robust technology allows for, and often demands richer story and better character development. As I said earlier, game play is paramount, but characterization and story are growing in significance.  Publishers are smart enough to see this.  Too often, the talent is not presented in a workable manner. You have to sell a game to the game business.

Usually agencies and others try to sell a track record, a three act story, or a character. I am aware of a property created by a major director and conceptual artist out right now with one of the major agencies. This guy directed a number of blockbuster films, and the concept artist created just about every character you liked in film for the past 10 or so years, but the property being presented is a three act story, not a game. There is no greenlit film, so there is no marketing incentive, and there is no game described so the publisher's don't even know what they are looking at. Publishers use marketing, sales and distribution departments to evaluate production risk and forecast sales. If the numbers look right, they buy. When you submit an IP, with no game concept, it is a lot of work. Like a studio trying crack a newly purchased novel for film, the publisher must go to work trying to find the game in the story. If you are lucky, they will go talk to developers, either internal or external to see if someone wants to work on something. In most cases, you don't even get to the developer stage. They know they have too many properties some other guy bought are still not in development. They can't buy another one.

There are ways around this issue, and it doesn't necessarily mean attaching a developer to the project. Attachments can bite you in the ass at the least opportune time. I made it work with Afro Samurai, Clive Barker and some others I can't mention yet. If you are curious about how to do it, we can talk . . .




1 comment:

mattmattmatt said...

Great post Keith.

Given the risks and challenges associated with co-development of game products you pose here, what are your thoughts on the trend toward asynchronous development of online "worlds" that capture the DNA of the brand (like Disney's "Pirates of the Caribbean" MMO) in lieu of boxed releases like "King Kong"?

Seems like issues of timing, sequels, content changes and even marketing change when you don't have to commit to simultaneous, co-developed release. Online platforms provide much more flexible treatment of brands, too -- some big properties just don't seem to stand up to the 15 hour single player experience as easily as they rise to the two hour theater experience (case in point: most superhero games, e.g. "Iron Man", or nuanced narratives like "Golden Compass"). Continually evolving online realizations of these properties may allow mixing and matching of elements across series of releases (e.g. a marvel world that has "Iron Man" or "Hulk" based content released in conjunction with those films).

Of course, do people really want a "King Kong" world? And maybe these types of releases are already doing this in the right way -- I don't see how anyone can look at DLC or match-based multiplayer and say it's anything other than "MMO lite." Given that some properties are ripe for this and others are not, do you see anyone moving more toward building brands in this space that you believe might otherwise fail on consoles due to the factors you mention here? Do you have any sense of the "checklists" that a game publisher might use to run a property through the sieve as an online release?