Key Considerations for Licensing Intellectual Property in Video Games

The video game industry is currently witnessing a surge in intellectual property (IP) licensing, with numerous live-service games incorporating popular franchises to expand their audience. However, game developers must understand that collaborating with a well-known franchise does not guarantee success. There have been several failed attempts at IP-based games, and it is essential to approach such collaborations with caution. When considering incorporating an existing franchise into a game, it is crucial to have a thorough understanding of the target property's audience and demographic. This will help determine whether the partnership is suitable for existing players and whether it will excite them. Additionally, utilizing an IP can bring new players into the game, making initial research into audience and demographic vital. The demographic of the target property's audience plays a significant role in shaping monetization elements, particularly on mobile. For instance, Gacha mechanics are well-suited for character-collection games, while live-service games tend to favor in-game purchases. It is also essential to consider acquisition channels to reach the IP's audience directly, with TV-based IP being the most common among IP-based mobile games. Licensing is no longer limited to fully licensed games; there are numerous ways to integrate a well-known franchise into an existing game, particularly within live-service games. New characters, weapons, and cosmetic accessories can be easier to negotiate and approve, especially when terms are less complicated and development costs are lower. Effective collaborations can seem like a natural fit and be a huge hit with players. However, it is crucial to be aware of how different markets may react to the collaboration. Some collaborations may not seem like a natural fit but can still be successful, often due to clever creative execution and the creation of a new gameplay style. Licensors must consider various factors before licensing their IP, including brand value, reach, and PR implications. They also want to ensure that the collaboration is financially worthwhile. Most IP rights holders have a 'get out of bed' number that they want to hit quickly and risk-free to cover internal admin and legal costs. Helping the licensor understand the game, its use of the IP, and monetization plans is vital. Providing a live and thriving in-game market can reduce the cost of licensing, especially if an easy route to recoup base costs is already available. Demonstrating the benefits of the collaboration over time, including existing live-ops events and their impact on social figures and user acquisition, can help licensors forecast the benefits and de-risk the collaboration. Open conversations can lead to greater collaboration and help gain an understanding of the licensor's motivations. Finding alignment on a major non-financial objective can lead to a better deal. Considering the needs of new players who may not be familiar with gaming, especially in mobile collaborations, is also essential. Transparency is crucial when it comes to prerequisites for attending events or downloading additional content. Utilizing promotion channels available through the licensor to issue guides and FAQs can help. Monitoring the success of licensed collaborations and events is vital, with key metrics including daily downloads, revenue, CPI, and retention curve. The data collected can shape future licensing opportunities, and building on successful partnerships can lead to regular collaborations and a significant hit with players. The interest in licensing deals and brand partnerships in video games has exploded in recent years, with companies aiming to establish themselves in the metaverse space. Large immersive worlds require branded content to feel real, and licensing in this space will continue to grow. The adaptive nature of video games and the growing popularity of open-world environments have made fan experiences easier to integrate. While Roblox and Fortnite are prominent names in licensed IP, there is more happening in the industry, and licensing deals have become an essential part of LiveOps strategies, especially in mobile games. Ultimately, it is crucial for licensors, video game studios, and metaverse/Web3 platforms to ensure that collaborations are on-brand and meet the needs of their primary audiences. Rushing into a collaboration can be a flop if the desire for revenue or PR boost is prioritized over audience needs.