Expanding your brand: The advantages of licensing out your games IP

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Publishers and developers discuss how taking your franchise into film, books, merchandise and more can open up new audiences.

For decades, video games have been used by some wider entertainment firms as a licensed product (think the typical film tie-in games of the ‘90s and early 2000s). But while there are still plenty of chances for developers to work on established IP -- something we delved into a few weeks ago -- there are an increasing number of opportunities for this relationship to go the other way: for a video games brand to be adapted into film, TV, animation, books, comics, board games, merchandise and more.

We’ve seen a multitude of success stories in recent years, from the box office smash hits of the Detective Pikachu and Sonic The Hedgehog movies (both with sequels on the way) to this year’s Netflix animation series Arcane, which explores the world behind hugely popular MOBA League of Legends.

Licensing out your IP into other markets can be daunting, but there many reasons to consider doing it (beyond the obvious potential for money-making).

Sean Haran

“Sean Haran, chief business officer at Borderlands firm Gearbox Entertainment, says: “It affords you the opportunity to expand and extend your IP both in geographic and demographic reach and in monetisation. Rarely are companies capable of ‘winning’ in all sectors and those that stray too far from their core competencies struggle to achieve critical or commercial success."

"In our case, creating IP, developing and publishing interactive entertainment is our core. So partnering via licensing in adjacent spaces is a low cost, low friction way of doing so at scale. It’s not without risk and how you approach licensing is key, but that’s another question.”

Anna Knight is vice president of licensing at Informa Markets, the company that owns the annual Brand Licensing Europe and Licensing Expo events, as well as the magazine License Global. She says that the advantages for licensing games IP are much the same as they are for any other brand or product.

Anna Knight

“Licensing gives you access to increased revenue, a wider fan base, more brand awareness, different retailers (and different areas within a store), channels, markets and territories. Licensing can also extend a brand into new businesses categories without major investment in new manufacturing processes (you license your brand out to manufacturers with specialist expertise in a given area, such as apparel).”

For all the talk of new audiences, it’s important to remember that licensed adaptations and merchandise based on your games brand can create more ways to engage with your existing fans. This is something Angry Birds developer Rovio has focused on, with the mobile hit also expanded into movies, animated series and theme parks.

Hanna  Nokkala-Valkeapää

“The 360 experience helps build a deeper level of fandom around the brand,” says Hanna  Nokkala-Valkeapää, Rovio’s head of brand licensing. “Angry Birds is a brand that can reach all ages while there are multiple activities available around the brand. One size does not fit all, so the Angry Birds brand has to have an interesting offering for all types of consumers.”

Ana ​Balentović, transmedia manager at indie publisher Raw Fury, adds: “It exposes new untapped audiences to your IP while giving existing fans a chance to see their favourite IP in a new and fresh way, especially for long-existing IPs. For new IPs, you get to ride the wave of an ongoing enthusiasm and success and give fans one more way to enjoy the IP while it´s still fresh in their memory. Ultimately, other mediums offer a chance for a different story to be told than the one in the original medium, which brings extra value and depth to the IP.”

Licensing and Games

Knight notes that brand licensing has been around for almost 100 years -- while it’s not definitive, children’s author Beatrix Potter is often cited as the first example of this practice given that a 1903 soft toy made Peter Rabbit the first officially licensed character. The notion of licensing your IP into toys or apparel has been well established for decade, but in games the concept is considerably newer.

“Over the last decade more games brands and developers have woken up to the potential opportunities offered by brand licensing,” says Knight. “With the success of brands like Minecraft, Fortnite and Roblox, licensees (product manufacturers) are also much savvier now about the potential of working with gaming brands. The opportunities have changed as much as licensing and gaming have both matured as businesses. The more collaborations - think Sega Mega Drive and luxury trainer brand Lavair - and case studies there are, the further the word will spread.

“Fandom has also recently hit epic levels, and consumers really want products that connect them to a certain brand. It gives them a feeling of belonging, of being part of a tribe, and of being in the know and having something exclusive.”

Game-related merchandise has been around for a while, of course; items like branded T-shirts, collectible figures and plush toys are nothing new. But Knight observes that the number of categories now featuring games brands has risen significantly, with the industry’s top franchises adorning everything from bedding and high fashion to gifts, greetings cards and even food.

“The way we play games has also changed massively in the last decade, much in the same way we consume entertainment,” Knight continues. “It’s online, streamed, easy and quick to access, and part of a massive universe connecting millions of players. This immediacy is something consumers now demand from merchandise – they want it here, now and the more exclusive the better. The licensing industry has had to step up to meet those demands to bring merchandise to consumers much faster and ensuring they don’t miss the window of opportunity before they move on to the next fad.”

Nokkala-Valkeapää notes that the licensing opportunities for Angry Birds have changed a lot over the series’ 12-year history. Consumer products, e.g. typical merchandise, was often the largest segment of Rovio’s licensing businesses, but now its contending with the likes of location-based entertainment, such as the company’s partnership with Topgolf in the US. Similarly, the rise of content licensing has opened up avenues for the brand to get onto platforms like Netflix, Amazon and YouTube.

Gearbox’s Haran believes the biggest change in the last decade has been that there is more room for smaller IPs to be successful in licensing. Historically, the brands most likely to be brought into other sectors were the top-tier mass market franchises like Disney, Marvel and Star Wars, he argues. Yet Borderlands, for example, can now be found in books, comics, tabletop games and there’s even a movie on the way.

“There are multiple reasons for this,” Haran continues. “The emergence of direct-to-consumer and e-retailing, for example. No longer does your IP need to be ‘on a shelf’ to be successful. The hurdle is much lower in a direct-to-consumer or e-retailing world thus the risk to licensors in going broader is lessened.

There’s also been the explosion of the ‘Niche Fan Economy’, with more amazing IP in the market than ever before. Interestingly, this IP is not coming from the traditional sources but from smaller players (indies), the middle-market (like Gearbox), or abroad (Anime in Japan and China is now a bigger presence in IP creation like Genshin Impact). These emergent IP engage and serve smaller followings that are extremely loyal. This loyalty and passion can translate to real success outside of their core manifestation (i.e. gaming) if you are smart and entrepreneurial enough to serve it.

“Also, I use ‘niche’ liberally because some ‘niches’ are huge. Take League of Legends or World of Warcraft: Huge gaming IPs with large, loyal followings but not necessarily mass market (yet) in terms of their main entry point, which is gaming.”

Haran’s point about the potential for indies to license out their IP is not to be overstated. Indie publisher TinyBuild has demonstrated this with its Hello Neighbour franchise: while the games remain the biggest driver of revenue, by March 2020 the publisher had sold two million copies of the books based on the series, generated $16 million. 

Raw Fury is also exploring these opportunities, currently in the early stages of a partnership with DJ2 Entertainment - the production company behind the hugely successful Sonic The Hedgehog movie - to explore the potential for adaptations of indie hits like Sable, Night Call and Mosaic. For ​Balentović, this shows there’s “a real thirst for the creativity and often very rich storytelling and worlds that indie games hold.” 

“Indie games are very unique and full of passion, and I am just happy that there is now a real interest to show this off and give an even wider audience an opportunity to get a taste of it. It proves that good content is in high demand,” she continues.

Informa Market’s Knight adds: “Indie games obviously have smaller fan bases so the potential to sell huge volumes of merchandise at retail is probably ambitious. While their fanbases are smaller, chances are they are more committed, dedicated and loyal. There’s nothing stopping an indie developer from looking at a licensing programme to reflect its fans in that way and working with smaller licensees to create niche, limited edition, highly collectible, high price point merchandise, such as apparel, artwork or even NFTs.”

Finding The Right Opportunity 

So how do you identify whether there’s potential for your games brand as an IP that can be licensed into other segments? Knight’s advice is to begin by looking at the demographics of your target audience, although warns that you should not restrict yourself to what those demographics are at present.

‘Kids’ games can have adult fans – look at the number of over 19s playing Roblox,” she says. “They may not be interested in buying a teddy, but they may be taken in by a very exclusive, limited edition piece of artwork, or cool collaboration with an under the radar brand.

“On paper, there are two approaches developers can take: create the game first and then consider the licensing opportunities they could link to that game, or decide what licensing programme they want to spin off from the game and develop the brand with that in mind. In reality, the latter doesn’t work. The latter will result in the creation of a contrived, manipulated brand that consumers will see through. It won’t give you a brand with the authenticity required to build either longevity or a loyal fanbase.”

She reiterates that brand licensing has been big business for over a century, so there are plenty of established ways to get your IP in front of the right people, or just to learn more about the process. Informa Market’s annual Brand Licensing Europe expo will return in October 2022, if developers feel they are ready to start meeting potential partners. Alternatively, the organisers have produced a free starter handbook

Nokkala-Valkeapää also says that online and live events give developers the chance to pitch their IP to experts, investors and partners. In addition to Brand Licensing Europe, she adds that there are animation-specific events like Cartoon Forum and Cartoon 360 that developers should consider attending. She also agrees with Knight’s point about targeting your core audience and extrapolating from there.

“Looking at the 360-degree plan for an IP, it is of course best to tailor the consumer journey for the relevant target audience,” she says. “A kids IP might have a completely different potential than something with a target group of male 18-35 years. So it is relevant to meet the consumers where they are likely to spend their time, whether that is a cafe, online immersive dance party, kids playground, book club, clothing store or YouTube. Overall, I would say that it is smart to think about the 360 angle right from the beginning when a new game IP is in its early stages.

“It is also important to find the right partners to work with. Rovio is currently working with IMG as a global agent, which is ideal as our brand has licensing activities all over the world in several categories. However if the IP is known in a more limited geographical area or category, then a local partner specialised in certain categories might be a good choice.  We want all our experiences (whether it is digital or physical) to bring joy to our fans and be a good brand fit for Angry Birds.”

Raw Fury’s ​Balentović warns that developers should be aware every industry and entertainment medium is different: “Each has its rhythm of doing business and producing something and their fans ultimately consume content differently than gamers do. Developers also need to be able to let go at some point, in a sense that the IP has to have a life of its own in another medium and with other people involved and engaged in producing new forms of it, the IP will inevitably evolve and change, and that is not necessarily a bad thing but a natural life of an IP.

“You should follow many leads, spin many plates in the air at the same time and try to match IPs and teams based on a good gut feeling that hopefully everyone involved have in initial meetings. And then you just let the creatives run with it and watch the IP flourish.”

Finally, Gearbox’s Haran encourages developers to have confidence in the brands they have created. Roblox, Fortnite and even long-running franchises like Mario and Pokemon all had their humble beginnings, so who’s to say yours won’t be next?

“Don’t undersell what you’ve created and the fans you serve,” he says. “But be wary of long-term exclusive deals. They tend to be exploitive in the long-run if not managed properly upfront. Find people you trust to help you navigate this space and you’ll be fine - and have some fun along the way.”

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