Entertainment IP in Games - The Complete Guide by 3 World-class Experts

I got the world's three greatest experts to discuss entertainment IP in games. These guys have worked at Marvel, Disney, NBC Universal, Epic, Warner Brothers, and many more. Today, we discuss in quite possibly the most in-depth discussion on IP in games ever recorded. We discuss the impact of IP on games, common big problems and issues, exclusivity, deal terms and structure. You're definitely going to want to listen to that one. Licenses gone wrong, IP versus integrations, and so much more. You're not going to want to miss this episode if you want to know anything about entertainment IP in games. Taking you over there right now. I thought we could start by just having you guys talk a little bit about your backgrounds, especially your experience in IP, given just how impressive your backgrounds are. And maybe starting with

you, Ames? Yeah, sure. I'm Ames Kirshen. I'm currently the VP GM and studio and creative director of a new studio under Hasbro and Wizards of the Coast called Atomic Arcade. And we are in early days of building our our team, and our first game is going to be a AAA action adventure game focused on the GI Joe IP, and it's going to be based around Snake Eyes. So, we're really excited about that. Um Yes, really excited about it. Um My background, I started in the industry in 2000 for Warner Brothers on the licensing side. So, at the time Warner Brothers was not fully integrated publisher. They were licensing their IPs to various publishers. So, I was in charge of uh overseeing any DC games that were being done by external develop uh publishers at the time. So, we had partnerships with Atari and Infogrames at the time, and Ubisoft had the the license. Midway had Justice League, so I would oversee those. So, I cut my teeth doing that.

Then I moved over and ran games for Marvel for 4 years. And that was a similar situation where Marvel's were Marvel was in a licensing situation. So, all of their games were being done by external publishers. Activision was a big partner at the time doing the Spider-Man games, Fantastic Four, X-Men games. And this was mainly in the PS2 era and early PS3 era. And then ultimately I I wound up wanting to go over to the publishing side and and produce games directly based on my experience on the licensing side. So, I had gotten in with a uh a startup publisher called Brash that was a funded publisher that was working with external developers. And their whole business model was to be working on big Hollywood IPs. So, I knew some of the principals there and they were partially seeded and partnered with Warner

Brothers at the time so for IPs. But also Warner Brothers was testing the waters on distributing games at the time. So, they were a minority investor in Brash and they also were their distributor on the North American side and also seeded them with IPs as part of that. So, lo and behold I was back in the DC universe there because they had two projects with DC IPs, The Flash and Superman. So, there's you know, a lot of YouTube videos about those projects that never came to fruition cuz we were in full production on those. Those were a lot of fun. But then ultimately during that period the financial crisis happened. The company did not get their second round of funding. They had made some really poor decisions on some initial projects and investments they had made. And the company kind of opened and closed their doors in 18 months. So, I saw them kind of I was one of the first people to come in the door and one of the last saw them close their door 18 months later. Uh but, it was, you know, the the stars aligned cuz at that time that's when

Warner Brothers did go officially vertical and built their own Warner Brothers Games uh publishing and development uh infrastructure. So, they brought me aboard uh to be EP over their DC portfolio of games that they would develop and publish themselves. Uh eventually made it to VP of production and oversaw all of the portfolio of DC games on the production and creative side. Up until the point where I joined Hasbro at the beginning of 2021. Yeah, hi. I'm Ed Zobrist. I've been in the interactive industry for about 25 years. Uh and that includes places like Disney Interactive. So, I know my way around games and around entertainment IP. Uh both as a licensor and a licensee. Uh although I'm now retired, I my last position was uh spending 5 years at Epic Games as the head of publishing. And at Epic, publishing includes uh marketing. So, in that capacity, uh my team launched Fortnite. And I personally worked on on most of the big uh IP uh

integrations that Fortnite did that that some of which got pretty well known, pretty famous. Um oh, I want to give one shout-out though. A lot of the early deals we did at Fortnite were uh done in conjunction with uh Mark Rein who set a lot of the strategy for how the deals we did with uh entertainment studios in Fortnite. I worked out with they ended up applying them to a lot of the future deals we did. I do want to give also one other disclaimer. If anyone is hoping to hear me give confidential info or dirt on Epic or Fortnite, that's not going to happen. Um obviously, I want Epic to continue to succeed and Tim Sweeney who's not just a really smart guy, he's also very good to me. Uh but, also I want to point out since I've spent 25 years in the industry, it means I worked on way more IP games outside of Epic than I did while I was at Epic. So, a lot of what I talked about today will probably not apply to Fortnite. Yeah, so I started out in the business not in games, but at ESPN. Uh and I was

working at ESPN in one of the earlier baseball strikes. Uh they had asked me if I was working on MLB tonight and baseball MLB remote operations and baseball tonight. Um and then the players went on strike uh in '94 and I I left ESPN cuz they asked me to do America's Cup yachting. Um and while the idea of going to San Diego and sitting on the docks and covering America's Cup yachting was great, they told me that it was going to be in the basement in Bristol, Connecticut. And Bristol, Connecticut is I'm sure it's a lovely city, but kind of a pit as well. Uh but that was when I was I went home after that. I was like, I don't really want to go do America's Cup yachting. And my we're sitting around playing Sega Genesis. And my buddies are like, "Well, why don't you go make games? You sit here and scream at the scream at the games all the sports games we're playing about they got this wrong and that's wrong and that player is a a righty and he's, you know, throwing lefty." And so, like, why don't you go do that? And I had no idea. I'd

never thought about, you know, games as a career. Uh I sent my resume to two companies, Acclaim Entertainment and Electronic Arts. And Acclaim called me back like, you know, this was snail mail. Called me back like 3 days later, which is practically overnight, and said, "Can you come down for an interview? We're doing a, you know, we're doing a baseball game and we, you know, we're pretty big in the sports genre. We have NBA Jam." And I walked in the door at Acclaim. Uh I was I I they hired me to work on baseball, but the first day I was there, uh a producer named Seth Rosenfeld turned to me and said, "You know, do you know anything about the NBA?" And I said, "I I know a great deal." Uh and was like, "Can you do these stats for NBA Jam T E? Can you you know, we need an update of players and how their performance is?" And it was like my first job as I walked in the door at Acclaim. I redid all the stats and all the abilities for Jam T E and its many incarnations on many different platforms. Um and he gave it to me

thinking it was going to be like a couple week project and I I just stayed there until I finished it. Um and I'm I'm like, "Look, you the stats desperately needed updating. But that was really you know, the first job I had was all sports at Acclaim. So, it did NBA Jam, um All-Star Baseball which was really Frank Thomas Big Hurt Baseball, uh NFL Quarterback Club. And then really touched most sports things including you know, helping Mark Archer's team out and and and playing Blue Sky builds for wrestling. Um but really it was was sports all the time. Um almost the point where I was like the sports guy at Acclaim and I I I was a big game player, not just sports and really wanted to do other things. And one day they came around and said, "Does anybody want to do this game South Park? It's going to have a very short development cycle." A short development cycle for those who don't know is basically another way of saying it's going to be a really shitty game, right? You have a short development

cycle, it's guaranteed. This This short This development cycle was about 4 and 1/2 months. Um which meant it's going to be whip it, dip it, ship it kind of product and it's going to really the bed both commercially and critically, not going to be any good. Um and I raised my hand and all it was like stepping forward in the military where everybody else is stepping back. And my buddies were like, "What are you doing? Like this is That game is going to suck. It's like no time for development. It's a licensed product. So, you know the licenser is going to be like super metal some and have all these rules and you're not going to make a good game." Um but the the trick there was the developer that I knew was on board was uh Iguana in Austin, Texas. And they were going to I knew the plan already was going to be to take the Turok engine and do South Park on the Turok engine. So, even if the game itself suffered from tight development timelines um that we're going to be able to do something that

worked better than anybody else there expected. And I'd worked a lot with Iguana Austin um and knew those you know, the talent at that team there. Um and so, I remember flying out to LA to meet with you know, Matt and Trey. And they showed up in pajamas. And I was thinking like this is pretty badass. Like these guys came in stoned out of their mind. Um and they were easily two of the most brilliant creatives I'd ever met. Um they were like, "We want to do Turok but with South Park characters." And I was like, "Boy, did we pick the right studio." Um so, it was a it was an awesome experience. And that game we actually um we actually shipped late. Um We ended up shipping it takes about 6 months to make the game. And we missed Christmas. Um and I remember everybody at Acclaim was pissed really pissed that we'd missed Christmas. But what happened we got we caught a lucky break. We actually shipped because

Christmas back then meant you were in store shelves for Black Friday. Um and and you you're you the console the cartridges came out or the discs came out in time for the day after Thanksgiving. Um but we didn't land in stores until the day after Christmas on December 26th. And what that what happened there was you'd all these kids who wanted to play South Park and who were never going to get South Park for Christmas. So, they got a bunch of shitty games for Christmas and they returned them to the stores, and they're like, "What's new?" And they're like, "This South Park game just came out." And so, these kids were returning their games and getting South Park, which was obviously a more mature-rated game. Um and it ended up selling well over a million units, and after that, Acclaim let me work on whatever I wanted. It didn't just have to be sports. Um so, after Acclaim, I went to Universal um and was at Universal for a significant period of time up

through from 2000 to 2004. Uh 2004, I basically got fired {slash} let go {slash} laid off, whatever you want to call it, um and went to Warner Brothers for 9 months. Um and I do remember I was at Warner Brothers, and uh I literally was was out of work for like a day. I can't I was in St. Louis watching the Red Sox win the World Series. I flew home. Uh the head of Warner Brothers called me and said, "Hey, we heard you're no longer at Vivendi cuz world travel you know, word travels fast in this business. Um and so, he hired me the next day. I went to Warner Brothers, and I remember the first week I was at Warner Brothers, I had already agreed to go I already had agreed to go and interview at um Activision. And um even though I had taken the job at Warner Brothers, I still felt like I owed it to the friends I knew at Activision to go there. And as I'm sitting in the lobby waiting for my interview at Activision, who do I see but Ames, who knew I just started at Warner

Brothers. And he looked at me like, "What are you doing?" Um but so, then I I was there for 9 months, and then the guy that had let me go, um he ended up getting fired from Vivendi Universal, and they made me an offer to come back. Um and I ended up coming back to Vivendi Universal, and was there up and through uh you know, finish go I went back to finish Scarface. Um and then after Scarface was over, I started Ghostbusters. And after Ghostbusters, uh, I got into it again. They wanted me to rush Ghostbusters shipping, and I was like, go yourself. Um, I don't want to release a bad game cuz short development cycles or rushed development cycles are always means bad games. And I ended up going back to Universal proper to go work with Bill Kispert, um, and was there through you know, through about 3 and 1/2 years ago, 4 years ago, when I left there to to form Nifty and worked on a host of licensed IP, both sports, film, television, both

at Acclaim and Universal and Warner Brothers. Um, and so I'd really been working mostly on that. And now with Nifty Games, uh, back doing free-to-play, live, quick session, head-to-head, mobile-first sports games. Currently, there's a lot of game studios desperately seeking IP what if they can get it just because of IDFA deprecation and the potential. And the way that a lot of game studios think about the impact is really around downloads and revenue, at least from a mobile free-to-play perspective. But I was wondering if you guys could talk about the way that you guys think about it or game studios should be thinking about how does entertainment IP actually impact a game? I I can jump in first just more on the marketing side. And these guys will speak probably more on the product side. On the marketing side, you know, an entertainment IP should deliver us superior ROAS. I mean, in in marketing speak, it's it's it's it's, uh,

you're going to get more awareness plus better trial intent because of the familiarity of the IP. Um, the the the exist your pre-familiarity with gameplay or with these, uh, story will should easy onboarding cuz you have a sense of what you're getting into as you go through it. So, that's shortly going to help with the early part of the funnel. And it also gives uh instant depth for updates or for uh long play content. You sort of know what It gives you, you know, dev team uh uh a tighter sense of what they can plan around going forward. And many times the IP owner is doing some sort of marketing themselves, and they can do cross-promotions with you. Yeah, I mean, I think it, you know, it's interesting because if nothing else, like it gives you an initial world to build to play in that's that's established in terms of the rules, the settings, the characters, their abilities. You know, and some studios and some people are wired in a way where like they want to have constraints going

into a project. And some people want to start with a completely blank slate and establish all of those things themselves. But, you know, that is one of the advantages that you get in addition to the popularity and recognizability of the brand name and the characters is that you instantly get a framework for a world to build your game around, right? It's just a question of what ingredients do you want to focus on? And, you know, that's that's been the thing for me that I've been attracted to in my career is being a fan growing up with these IPs, uh you know, in the '70s and '80s in my formative years. Um you know, I couldn't imagine, just the way that I'm wired and how I grew up, somebody handing me a blank slate and is like, "Okay, in 3 and 1/2 4 years, I need you to deliver me an 85-rated AAA game that's going to sell 5 10 million units." I wouldn't even know where to start, right? So, like I need those constraints. I want those constraints. And and and a lot of studios in you know, appreciate and and think that way as well. And then there are some who are like, you know, "No way. I want to do my own thing. I don't want to

touch that." So, it's really interesting. And also, I think that like as these IPs have gone from being more fanboy and niche to, you know, the explosion and the mass popularity that we're seeing now over the last 15 years, you you seeing studios who traditionally would never have done a licensed IP game like I'll look at Insomniac who's been, you know, one of the one of the best studios in the world for a long time, but they were doing all of their own IPs. Um you know, almost their entire existence up until the point where, you know, I guess the Spider-Man opportunity came up and, you know, I guess it was a you know, something that they couldn't refuse or they had a personal passion for or some combination thereof, and you had the studio have this long-standing reputation of amazing original game-centric IPs touching one of the biggest entertainment IPs in the world. So, it's really interesting to see how that transition has evolved over time and how now these bigger studios um who traditionally don't do those type of games now, you know, are are clamoring to get their hands on them as well cuz, you know, again, there's probably people

in those studios like me and like Pete who grew up with those IPs, love those IPs, and be like, "Hey, you know what? I can make an amazing game off that if I ever got the opportunity." Yeah, I think both Ed and Aims hit it, but the you know, the last point that Aims made, which to me is the is the center of this, which is if you're making games, games are slog. It's a really hard job to make product, right? Like game making games is really really tough. And you're talking about, you know, you you know, when I first started, it was, you know, 9 to 10 months, 11 months to make a game, and then it went for, you know, a year and a year and a half, and then now 2 years or 2 and 1/2 years. Some games go much longer. If you're going to go into the salt mine every day and try to make greatness, the thing you have to have at the start of that to make something really good is passion. And when you're talking about IPs, like, you know, you heard, you know, Ed and Aims talk about sort of the games that they, you

know, they had worked on and IPs there. Like those IPs are, you know, when Aims talks about working at Marvel, like that stuff is, you know, I I grew up on Marvel. Like I grew up reading, you know, Marvel comic books in the in the early '80s. Like, that you know, that was like that was like the holy grail of awesome superhero IP. And so, when you hear that, you know, and then hear you know, those guys got to get together and make a Hulk game. Well, I still remember looking through, you know, the Hulk issue where Wolverine makes his first appearance and be like, that stuff ignites passion. And you need passion to make great stuff. And yes, all the other stuff is true. It can it can be an identifier for players to see that, you know, separate an original product. You see a Hulk game in the store and you see an original game with a big guy who smashes things. Like, the Hulk game has all of that massive nostalgia pull. But, you need that kind of emotional boost if you want to make something great. Sometimes you can get it where, you know, somebody

has an idea and the studio gets behind it. Well, you got to sell, you know, you're constantly selling that original idea. But, sometimes that blank sheet of paper with no scaffolding or rule set around you, you know, sometimes that's daunting to get everybody in the studio there. But, if you have Spider-Man, holy everybody's excited to work on Spider-Man. And then look at the product that they go and make with it, right? I begged you know, I begged Ted to to do Jurassic Park {slash} Jurassic World. And they didn't have the passion for that IP when I was at Universal trying to get them to do, you know, an action-adventure game set in the Jurassic done by Insomniac. Like, that to me was like thing. And then eventually they did it with Spider-Man. So, when they did it, you saw what they did. I I would argue that that's the best game they've ever done. And I would also argue it's one of the best superhero games ever done and one of the best IP based out games ever done. Like, it's an immense amount of people working really hard for a very long time. But, because they had a passion and fire to tell those, you

know, stories and and and not other stories, not stories that Spider-Man had previously seen, but original stories set in that world, that's when you get really real greatness comes out. Yeah, I think the other thing what Pete was saying is like the important thing is that like games like Arkham and Insomniac's Spider-Man were so high quality, it transcended the IP. So, it wasn't just like oh, I really you know, I'm I'm I'm being really appealing to MCU fans or to DCU fans of the film of the movies and the cartoons and the comics and what not. It's like that game was those two games were awesome action-adventure open-world games irrespective of the IP, right? So, everybody was talking about it on the gaming front whether they were a fan of IPs or not. And you had to have those IPs in your rotation, you know, to talk about it on the school yard or talk about it over uh the water cooler at work because again, those were games that just transcended and were you know, top top-flight high-quality games just

in general that you had to have. And I think that's the interesting tipping point now is that you know, as there's been such contraction in the industry and there's such fewer games, but they're bigger bets now is like you know, it's in the past like but you know, when Pete was talking back in the the 16-bit era, right? There was a huge amount of flood of games out there, a huge amount of publishers. I can't even imagine how many SKUs were released every year, you know, between you know, Sega and Nintendo in that era, but you know, the expectation level for an IP game in that era was not the same even remotely the same in the same stratosphere as it is now. So, and any like you know, Pete said the investment level was low. So, you know, if the game wasn't high quality and didn't get a good Metacritic, it wasn't necessarily reflected in the sales because the IP was so huge, the investment was relatively low. You sold a couple hundred thousand or a million units, right? If you were the publisher, you were making money. The investment level now and the expectation of quality and the amount of content you have to have

now, you know, we don't you know, 50, 100, 200 million dollar investments to make these AAA games. You know, that's no longer the case. You can't just sell and get your return based on the game on the IP alone. These games have to stand alone and and go up against and be competitive with the biggest non-IP games in the industry. So, that's the paradigm shift that I think that's changed. And I think along the way the games like Arkham and and Insomniac's Spider-Man have paved the way to say, you know what? No, you can make that high-quality level of game that will transcend with these IPs if you have the right studio with the right passion and the right experience behind it, like Pete was saying. Right. And you know, when when Aims when Aims goes and does Batman, he you know, he has he has all the work of having to to hide all the other terrible Batman-based games previous. There were there were there were some okay ones there in there as well, but like the problem and Ed probably speak to this better than anything is like you know,

marketing, when they see that IP, like sometimes they you know, it's like you can try to say, well, you know what? Well, the game's not that great, but it's still Batman. And Batman IP is awesome, so maybe we can sell it even if the game isn't up to snuff. You know, and often times production hands marketing a really crappy experience because lots of reasons we can get into, but you know, then that's what happens in this business. Like, oh, it's it's Batman, so it still can be marketed. Because kids are still going to want to play a Batman game regardless. I I think the best thing that's ever happened for IP games is social media. Because in the old days, like Aims and Pete were saying, you could sort of hit and run. A lot of these publishers would just shove it out there. You'd see the package on the shelf of some IP really popular that you want to play, you'd just buy it. And then it is it's crappy. You don't know any better. But I think that in this modern day is age or or to give you another example, when I did The Simpsons Hit & Run, part of the

marketing plan that we focused on was how were we going to convince people that this wasn't just another crappy Simpsons game like all the previous Simpsons games had been. And we had to go out of our way to try to get views review comments and quotes to put on our early marketing and our favorite ended up being best Simpsons game ever, which we had to use over and over again to sort of overcome that preconceived notion that all Simpsons games had sucked until that until that point. But, when the when social media came along, suddenly the speed of which people found out whether game was good or bad became hyper fast, really hyper accelerated. And the great games could now stand out and do extremely well. Arkham, I think, was probably the the great pivot point where you say, "Oh, you can make a great game and you can have great sales and it doesn't have to be day and date with some movie. It just be a great game based on IP and it will work." And I think that the business model and the attractiveness of the publishers shifted from, "Oh, let's just get it out as

quickly as we can." to know, "Let's invest in this and make something really big and we'll get a much bigger return." Yeah, and because Ed, are you really going to take shots at the game, right? Like they Go ahead and say it. I was just going to I was just going to give Ed for crapping on Krusty's Fun House. Like which was a really really bad Simpsons game. But, did you did you work on that, Pete? No, I didn't. THAT WAS BEFORE MY TIME. TWO two or three years before I even got to Acclaim. But, yes. It was excellent game. But, that's a you know, I was just going to you know, emphasize his point about social media, right? Cuz all of a sudden everybody had a platform to know whether a game was great or crappy, right? And that was very influential on probably on people's decision-making process at that point. And again, like I said, you know, now the investments to make those games was such that you could not just rely on the IP and a cool-looking box cover anymore. The games had to stand on their own. They had to be quality. And again, you had this platform where people immediately knew if the game was good or

not. So, yeah, I'd say that's a huge, you know, pivot point in in the life cycle of the evolution of IP games in our industry. Right. Yeah, it's it's definitely Oh, sorry. Guys, you know, that's Continue. I know it's your podcast, so maybe we'll let you talk at some point. I'm I'm learning here, guys. I'm I'm I'm I'm enjoying uh listening to the stories. You know, I think at its point about social media, obviously, he gets it. But you know, before we had social media, we really had to rely on sort of, you know, Metacritics and critic rankings and really having a dialogue with some of the better, you know, media people within games, you know, so the the the ones that really got it and weren't sort of shills, you know, you know, Tal IGE N and and Andy and Andrew and, you know, Game Informer. Like, there were, you know, Geoff Keighley or, you know, Engadget Kroll. Like, there were a group of unbelievably really smart, talented journalists that you

could have a dialogue with, but the dialogue was slower. Now, that dialogue is immediate. And it's needed because games now are even more immediate and games now don't just ship in a cartridge or a disc and then they're out and you can't do anything about it. Now, it's constantly changing. So, social media has to respond to the fact that Fortnite's getting its update every single day. That store is getting updated. Yeah. So, maybe we could take it back to product or sorry, impact of IP and marketing and given social media, given how fast things, you know, how fast news comes out, how do you think about whether it's on the free-to-play side or mobile free-to-play side, the impact of ROAS or, you know, unit ship given social media. How How do you How do you think about whether it's a framework for quantifying that or when when you're trying to understand what the potential impact could be and you're looking at an IP, what what kind of goes through your head? A lot

A lot of the same parameters you look at for any green light process when you're thinking about making game. You're looking at the competitive set. You're looking if you have a trail a history. A great thing about IP as opposed to original IP is there is some sense of of of what's gone on in the past that you can look at and can measure. Very often other people have made games using that IP and you can examine what went well and what didn't go well with them. You're coming You're instantly coming along with a partner in this particular case because it's whoever owns the IP. And yeah, the the the kind of partner you're working with also has an influence on how well you're going to perform. So that that comes into consideration. Certain partners all IP partners meaning licensors, they're they're literally just looking for the highest monetary return they can get and they don't care about anything else versus other licensors are actively trying to improve the brand brand equity and they they're they're they're very cautious to not hurt the brand equity and trying to do the best for their product. Uh so there's a lot of

different factors that come into play when you're dealing with a licensed IP. Right. And maybe also Okay. say to that to that point too. I think you know, one of the things when I wanted to Marvel that I you know, kind of try to change was you know, at that point Marvel had was coming out of bankruptcy. This was the end of 2003. And you know, across the board they they kind of just you know, leveraged you know, licensing out their IP not just in games but in you know, film as well. You know, the stories are out there about how many different studios Marvel did deals with to get you know, minimum guarantees to help fund their recovery. But in doing so they mortgaged their future, right, by giving all of these studios, you know, massively studio-friendly deals and rights in, you know, for a long period of time to these IPs. So, you know, Marvel's, you know, all their top IPs were were basically mortgaged out to the biggest studios in town.

And on the game side, it was very similar. There wasn't really a strategy to say, "This particular partner with this set of development studios in their umbrella are the best fit for X-Men or best fit for or Hulk or best fit for Spider-Man." It was really about who was coming to the table cutting the biggest minimum guarantee check that they could just put right into the bank, not even thinking about the impact and importance of growing that brand through games and how important games was as a mechanism and a Trojan horse, so to speak, to get people into the IPs because, you know, not everybody gets in through a comic book or gets in through a movie. Now, you know, in in in in Gen Y and later generations, right, games were were becoming more and more the entertainment medium in which they engaged with the most, right? So, you know, it wasn't like, you know, Pete and I are old salty dogs that, you know, we grew up where, you know, like with Star Wars, it was all about the movie, right? And then we got the toys, and then we played the games. Like, my son, who was born in 2003, his very first introduction to anything Star Wars was watching me on the

original Xbox play Star Wars Battlefront. Right? He had never seen or heard of Star Wars before. So, that became his introduction to gaming, but then his introduction to the Star Wars universe. And from that, he wanted to watch all the movies. He wanted to buy all the toys. He wanted to wear all the costumes. So, to me, it was like right before my eyes, I saw this transition of the tail wagging the dog that was so different than the way things worked like in the in the '80s and early '90s, let's say, when Pete and I were were kind of in our formative years. So, you know, it was really interesting to see that transformation. So, like when I was at Marvel and I got to kind of, you know, get was handed the keys to the car and and and was able to make some of those decisions about like let's pick the best partners that are going to give us the best games, which ultimately that is not always going to yield financial returns, but those high quality games are going to help the overall integrity and appeal of that particular IP. Yeah, and it seems like in some cases there's like a fit between whether it's a partner and IP or a specific type of

gameplay and an IP and we've seen and I come from the free-to-play mobile side, so Kim Kardashian's a good example of a failed game, but then you slap Kim Kardashian on it and all of a sudden becomes a hit game. And so Ames or or any any of you guys if how do you guys think about or what should people be thinking about whether it's games to use others when they think about, okay, I have an engine, whether it's Turock or whatever or I I have something. Now, I'm trying to understand whether this IP would fit or not. Okay, so I I mean I think for, you know, when you get when you get an engine like if you're worried about that, I think you have to start earlier than that, right? To me, you have to start with do you have a game concept that makes sense for the actual IP, right? And if you don't, if you try to if you try to jam something in, that's not going to work. It's got to be something that naturally fits itself for the IP. I think one of the biggest problems with that is so

often that the the IP holder tries to dictate to you what your what your your story is slash what the character can do and often for a long time games were seen as the, you know, sort of a medium where you ended up where, oh, you know, we can do this in the movies, right? Like we can have a character in this film, he can shoot guns, but if you try to shoot guns in a video game, well, the the you know, the actor that portrays that character, he doesn't want to do that or be seen as shooting guns in the game. Like, are you kidding me? Like, you know, why do why do I have to play by a different set of rules than the other medium? So, if you're going to get those types of restrictions, you know, that's right away you're entering a bad deal. You know, you shouldn't do that because they're not they're not taking games seriously. You know, and I think you you've seen a lot of changes. Like, if you look at what, you know, Fortnite has done, right? All of these characters are like, "Oh, NO, WE DON'T WANT THAT CHARACTER SHOOTING GUNS."

RIGHT? All of a sudden, "Oh, Fortnite? Oh, MY KID MY MY MY my son Jackson, he he didn't know, you know, it's amazing how many characters he's exposed to that he never knew before that he only learns because they're in Fortnite." Right? And forever, you had all these, you know, "Oh, we're not going to let our characters shoot guns." Like and then Fortnite comes along and it's like, "Wait, hold on. It's the most successful game of all time and every kid is playing it. It's all kids talk about at school and you can become culturally relevant simply by showing up in their store." Like, and by the way, it works. It's true. And all of a sudden, people like, "Oh, when they when you they see a chance to be exposure." But for for a long time, you know, games were not given that same consideration. They were dictated rules about what you could do and couldn't do all because they didn't respect games at all. And that they just viewed them as, "This is a lunchbox." Right? "Oh, go out there and make me my

ancillary revenue." Right? Can't do that in the movie version. You can do that in the movie version, but can't do it in the games. And it's really taking games like League of Legends and Fortnite, games that sort of are everywhere all over the world and are the most played most viewed mediums to start to really, you know, wake people up again. And the other big factor is that we're seeing people who grew up on games and love games are now finally at the executive level and finally in the stance to be like, "No, games aren't a little bitch." Like, they are actually like should be treated with the same respect. Oh, yeah, that's right cuz we're kicking their ass in terms of revenue. So, we understand now how the how that those tables have turned. Funny, our maybe you can help me with this, Ames, but our number one concern in Fortnite was how we were going to convince DC to allow us to have Batman inside of our inside our our shooting game. We had like the long discussions. I mean, Donald Mustard was very huge

comic book fan, huge Batman fan, had long deep discussions about how we could present it in a way that felt naturally natural and authentic for for Batman to be in the game. Hopefully, it worked out. But I'm wondering Ames on on on the DC side, how much thought went into that before you sort of went along with it? Yeah, I mean, you know, the good news is, you know, Jim was Jim Lee was the chief creative officer of DC at the time and and he's a huge gamer and he really, you know, embraces and understands the importance of games. You know, he's worked on a few game projects himself directly over the years, so he gets it and understands it in addition to being a gamer. I mean, he's literally a lifelong MMO guy. So, you know, understanding that basically Fortnite is not the real DC universe, right? Fortnite is its own universe. It's a virtual universe, right? And you're not necessarily playing Batman. You are your character who's equipping the Batman skin and living out a Batman fantasy as opposed to a game like Arkham which we say is more canonical and you're actually in Gotham City and you are Batman. So, we tried to find ways that

again, you know, embraces the fact that, you know, we want people wanted to have these characters in the game. But again, Fortnite is a different kind of universe and a different virtual world from the canonical DC universe where these rules obviously that it's a version of cosplay. It It's like wearing a Halloween costume. It's not actually that character because a player is putting the skin on and going on and playing at it, and therefore, just like cosplay or probably more akin to to Halloween, you don't have to actually follow the actual rules when you give the player that kind of agency. And and and Whatever you have to tell yourself to get it Thank you and Ames. Batman ended up in Fortnite, right? Like to me, it's just a crisis on a different if infinite earth, right? Like Yeah. Right. Batman like I used to argue that all the time. Like, you know, the the rules of DC, like, okay, well, if Superman can be Russian in one universe, why can't Batman shoot a gun

in another? Right? Like it's not the same Batman. It's just a different shard. And so, you know, we have to like even the notion that you'd have to make up some char like, oh, it's a costume. Like, all true, by the way, but even the notion that you had to do that. Like, come on. It's ridiculous. Like, it's just SO RIDIC LIKE STOP disrespecting video games like and and get and make them second-class citizens, but thank god you guys found a way to figure it out because, you know, my son cares more about Batman because he sees the Batman skin in the Fortnite store. Well, that also opened the floodgates. Once we had Batman, it was much easier to explain to other licensees because it was the it was the one shiny example of someone who would never touch a gun was now using weapons inside of Fortnite. Right. And it seems like IP restrictions is an example of potential issue or problem when when you're working with IP, but in terms of other things that some of the folks in our audience should be looking

out for when working with IP, what are some of these potential problems that can arise that that you guys have experienced? Well, it really Okay. So, it's not the case anymore because now it's, you know, the examples I gave these studios want to work on these IPs, but like you know, in in the back in the day if a publisher would get the rights to an IP, right? And they had you know, sometimes they'd go with an external developer and find try to find an external developer to develop the game, but a lot of times they had a ecosystem of developers under their umbrella, internal studios, and they would just say, "Okay, this studio is available. We We have this license. We need to deliver a game for Marvel. We're going to assign it to this studio." But is that the right studio to make that game? Like is their DNA the right studio to make that kind of game given the mechanics and the features you would need to do to do that character right in addition to they have the right technology and engine. And then third piece is does that studio love and have the passion for making that IP? And a lot of times two or three

of those things would be no, if not all three, right? So that's a big reason why you know, some of these games came out and they were not, you know, up to par. Some of it might have been budget and time, but a lot of it might have just been fit and passion wasn't there. So you have to make sure that like you know, again, especially in today's day and age where the game itself has to stand alone and you're not going to sell your units and make your return on the name of the IP and a pretty box pretty box art is the studio has to be the right fit. The studio has to have the passion for it. And if you don't have it then like Pete said, these things are you know, this is a three-four year if you're talking about triple A whether it's free to play, mobile or even triple A you know, console, it's you're seeing it now. They're both of them are three to four year commitments to come to market, right? So if if you're not passionate about it and you don't have a unique take on it and you're not the right fit for it then you know, it's it's not for you. And and and I think that's one of the things where we tripped up before, but I think that's you know, generally speaking that's evolved and changed over time and that's why you're seeing the Arkham's and

you're seeing the Insomniac Spider-Man's of the world, you know, getting those kind of, you know, reviews and sales numbers. And a lot of those times those games didn't get financial they get nobody skimped on them financially, right? You don't look at that Spider-Man game or you know that Batman game and think like oh the the budget was significantly smaller. Often times and I don't know if this is still as true today, but it certainly has been true and I'm guessing it's true in a number of areas particularly on games that don't get as much love, but you saw the development cost cut you know the cost to license the IP to make the game come out of the development budget. And so inherently IP based games always had smaller development budgets and guess what? The budget matters. How much time you have, how much team size you have, the quality of those team people, how much you spend on making the game makes the game better or worse. So when you start with a lesser budget,

you're saying right off the bat we're making a trade. The value of the IP is go we're going to we're going to spend money to get it and we're going to take that money out of the amount it costs to make the game so the game is inherently lesser than a non IP based game. Well, then Here's that should have been shared with marketing, right? Because like a lot of the value of the IP is that it's awareness if the awareness built in the tent. So by the way, it's not just marketing. Some of it is product development. It's not a blank slate so you are helping the dev side as well, but shouldn't entirely come out of the dev side of the budget. I agree with that, you know, completely. I I'd also say Justin but one of the issues around new for someone new who has never done an IP game before particularly these mobile companies or it's new to them is that they need to understand that you know, they're not just you know, Peter alluded to creative constraints, but you're going to have a lot more approval approvals in the process. It's going to slow it down. It's meant to you know, make certain that it's it's on on brand and not

violating the IP, but that means you just need to be prepared for a lot more steps involved with the process and there are more cooks involved with the process. You just can't go as quickly as you can with your own game. Another variable I just throw in there that was an artifact of of what we saw in terms of lower quality games during the period of time, let's say in the PS2 and early PS3 era, was a lot of the games based on the on IPs were based on the movie version, right? And the whole see the movie, play the game equation was hugely successful in some cases, but in a lot of cases it wasn't, right? And and and a lot of times going back to what Pete was saying in terms of time and budget, like hitting the movie date superseded the quality and the investment in the game, right? Because if you weren't there day and date with the movie to sell that fantasy of see the movie, play the game, run out of the theater, go to Best Buy, and go buy the game, and then play the game, right? That only worked in very few occasions, but that became the model for a period of time. And again, like to hit that

movie date means you were sacrificing a lot of quality and more time that that that that game needed to bake and to iterate be iterative and to be polished, that just was thrown out the window because of the dates and that constraint. So, you lost the time. Yeah. Well, I was just going to say spoiler alert, the person who came up with that concept wasn't on the creative development team, right? That was not the person trying to make the game better. Right. Right? That was the person who didn't give a about the game and just cared about trying to make a big marketing date and didn't care if the game was good or not because they weren't they were using the game to help sell the movie. Because the game wasn't seen as an artistic medium. The game was seen as a lunchbox to help sell the film. And maybe the next question I can ask you guys, especially for our audience, especially those new to IP licensing, is like in terms of the licensor, what are

they looking for? What should our audience know about what the licensor would would be looking for, what they would want? I I think that you guys need to talk more broadly or specifically about it, but I think very broadly they're obviously looking for a financial return from it. They're looking for They're smart. They're looking for ways to enhance the brand equity of VIP. They often are trying to make certain that, you know, these these licensors have limited resources, so there's not going to be a huge drain on their staff if they're going to to to to do this. In some cases, there are soft soft requirements like trying to keep certain talent on the IP or executives happy within the studio or the entertainment company that need to be taken into account. You know, very often those people want to have a say in in it and if it somehow makes them happy to do so, it's you need to be take taken account whether or not some movie star is going to have some comments on your your game up front. And hopefully, if

you're working with a good licensor like I Both these guys I've worked with both these guys. They're very very good. They'll be up front with you about the kind of issues you're going to run into and that should you know about them in advance and you can deal with them. Uh yeah, I think also as a you know, the the you know, the examples that we gave about some of the bigger IPs on the planet, you know, the Star Warses and the Disneys and the Marvels and the and uh DC and the success that they've had both on the critical and the commercial side, I think will wake the rest of the industry up, right? About how if done well, these things can be really successful and really get a lot of people engaged in your brand. And a lot of the times going back to the tail wagging the dog thing, a lot of times this is the way that they're engaging with these IPs as their introduction. And you know, no longer did they look at it like, okay, you know, we have a checklist of things that we need to accompany the IP ecosystem, especially when it's a movie, right? And the QSR program with McDonald's and the toy line

is one of them and the games used to be one of the parts of the S checkboxes. Where now I think studio executives and IP executives are realizing that it's a critical critical part of the overall ecosystem and success factor for engaging and monetizing on that bigger IP. And if it's not quality, then those things are not going to come to fruition. So, you know, I think the broader industry, the broader IP holders across the planet have woken up to that. I mean, you're now you're seeing a lot of these other IP holders, you know, try to have dedicated game divisions, whether they're actually funding and publishing it themselves or they have an infrastructure to support them working with external companies. I think I think they see the value in it again, not just on the monetary level, but in terms of engaging people in the brand. Right. And maybe the question that a lot of folks are want to know about I It seems like some folks don't like to answer this question, but in terms of how deals are structured, terms of a license, can you And you had mentioned

MG. Could you guys speak to explain MG and explain what a typical deal might look like in in order to secure an IP for a game if if to the extent that you guys can talk about it? Yeah, terms would be great, too. You know, I'm going to I'm going to hand that off to Ed. And I'll I'll be happy to jump in with anecdotes when based on what Ed says. Okay, I'll I'll give the basis, you can jump in when it comes to get estimating the range for royalty rates. There you go. Yeah, the MG is a minimum guarantee. So, so there's a couple of basic parts of a licensing deal, right? You're going to have obviously a term, all contracts have a term, but in this case, it's defining how long you can use this IP. So, that's part of the boilerplate. You often have if you're a royalty deal, you don't have to be a royalty deal, by the way, but if you're a royalty deal, it means you have a usually a minimum guarantee that over the life of the deal you will pay this amount and often there's an advance. So on signing you're giving them an advance amount and then over the life of it the

deal you're promising them you will pay a certain minimum guarantee. Now the expectation of everyone is that you'll be so successful you'll break the royalty barrier. You'll do better than that minimum guarantee. But in the event that it goes badly you will still owe the minimum guarantee to the the license licen- licensor. They're also typically that there's a sell-off period if you're a physical good. We're talking mainly about digital games so you don't really have those kind of issues here. They typically have very clear about what will require approvals on their part whether be marketing or product approvals and and and all of that. And sometimes talk about categories very specifically which categories cuz other other licensees may be getting categories. They may also be getting games based on your IP but they're in a distinctly different category hopefully. So you're whether or not you're getting exclusivity for that category is part of the part of the deal. And sometimes there's a minute there's a minimum marketing requirement you know

to be you know things like that. There's potentially sometimes if they you know if it's a big entertainment company there's a part of the marketing spend would be spent within the entertainment company across their their different channels and mediums. So that's another just part of the equation as well. And going back to what Ed said sometimes about term you know term sometimes like if I recall what's been a while now like so you know there would be a minimum amount of games like in a term as well. Like you know if we're going to give you this license for 5 years there needs to be a minimum of two game commitment. And but you got to be strategic about that cuz they don't go back to what we talked about before about time meeting quality right? It's like how much time is it going to take to make one high quality game? Probably at that period of time it was a minimum of two two and a half years. So you had to be careful about you know asking too much out of the publisher that ultimately was cutting your nose off to spite your face about actually getting quality out of it. Yeah, I think you have to ask yourself what, you know, what your objectives are in sort of when you're licensing a game

to a different publisher. Like, you know, what what's the objectives? Are you trying to make a great game because you want to protect the IP or do you want to make it so that you have a game that comes out for day and date with the movie, right? Like, what is important to you about this in licensing the game? And then that's what you have to ask yourself for in terms of is the minimum guarantee important? Cuz sometimes it is, right? Sometimes you have certain numbers you have to hit. You got to sell a certain number of things. You have to maintain your job or or, you know, when I work with Bill Kispert at Universal, Bill was there to make great stuff, right? He wanted to make culturally important games that stood out. And he's done that his entire career. Um that he's has the ability to do that. But sometimes there's a commerce aspect of the business. And and yes, games can be art and all that stuff, but if games don't make money, you don't get to make more games, right? You don't get to keep working in the business if you make games that don't make any money. So, you know, it it's really important that you understand that like

giving the game the amount of proper amount of time to be able to make game. But sometimes your objectives for a license are different things, right? Sometimes it's just like, "Hey, we have to get a certain number of deals done based on this film to be able to to tell people this is what we're doing for this particular filmmaker or this particular producer or this particular actor." So, it really depends on what you're trying to do that shapes those deals accordingly. You know, sometimes it's about making a great game and sometimes it's about making money. And and sometimes when it's it's to what Ain can beat we're talking about for marketing reasons, sometimes when it's purely for marketing, you're not even dealing with the licensing department. You're dealing with the marketing department at the studios for the the sort of cross promotion. Very often it's not a full game, but some sort of cross promotional license will occur. The games people are aware of them and are obviously helping coordinate them, but very often that the the deal's actually done with the marketing department at the studios for those types of like a Happy Meal style promotion.

And then in terms of royalty rates, I mean if we look at some public company, you know, financial reporting, we we see rates for some companies between the 20 to 30% rate. Could you guys blink twice if that's the general I'm going to leave this to the other two. I'm going to close my eyes so I CAN'T BLINK. AND THEN THERE THERE ARE RUMORS sometimes of like 50% deals depending on, you know, how how big the IP is, but well, maybe like in terms of like the the advance that you you'd mentioned the the MG advance, are there typical, if you can't speak to like specific numbers, or are there specific methodologies that you could speak to in terms of how you would come up with that number? Or is it generally just pulled out of Is it just like a market rate pulled out of somebody's buttocks or How is that number run that? Well, in theory it should be based off

of sales projections. I don't think there's an actual formula for this. And these guys have a lot more experience on the doing these than I than I I have cuz they've done so many more of these deals, so they have many more data points associated with them from the licensor side. What I will say Ed though, like without going into specific numbers or specific examples, is in theory it should start with if I make a great game based on this IP, I think I'm going to do X amount of revenue, right? And then from there, it's okay, what is the the market value of that IP in terms of the royalty rate that IP holder is going to expect to get. And that's basically the formula of how you get your MG. Like it's really pretty simple, but there's a lot of variables in there in terms of the expectations and value of the IP vis-a-vis what you think the ultimate sales and revenue coming in is going to be. Yeah, but it's probably like a percentage of wishful thinking case that it's going to be a great game, but most games fail. So, I don't know if I would

base my MG on me being having a hit game. So, Ames, would you would would you would you agree or would you submit that like maybe that approach like a percentage of of revenue over X years is the general approach in or one of the popular approaches? Again, yeah, of course you're going to have a P&L and you'll look at financials going out. You'll look at various scenarios what if the game fails, what if the game does well, and based on that you try to triangulate something that that sort of accommodates the risk associated with what you're doing and the potential upside if it happens. The the the more of these that you've done, the more it starts to feel more and more comfortable estimating what what they could be. Very often the the various IP holders have different approaches and expectations for these. I think one of the things I've learned over time is it's really important to not just assume all license deals are going to be the same and all license stores are going to be the same and they have the same

approach. You need to really stop and think about what's motivating them, what's important to them, and what's important to you. And then you can begin to modify or adjust the deal in a way that sort of satisfies everyone as best you can. Right. And then and maybe like a kind of follow-on point to this would be this this notion of exclusivity. And could you guys speak to one like, you know, how often are you guys seeing exclusivity? I mean, we're certainly seeing a lot of Marvel RPGs, for example, but then in terms of also tying it back to the deal, if you can get an exclusive, does that significantly jack up the the MG or the royalty rate of the deal? I'm knowledgeable on this one because this sort of started this whole idea of doing this podcast because that I was listening to a Twig broadcast where they made some knee-jerk response to some mobile game company doing IP that they always had to have an IP exclusive deal and they didn't have one so they screwed up. It's you don't always have to do it exclusive deals. Like it

depends on depends on the circumstances and it also depends on category definition of what is exclusivity and there's a broad range for how you can interpret this. So I think you just need really careful about trying to apply cookie-cutter recipes to this approach and every situation is different. I mean if if if if that was the same, right? For you know, Marvel, right? You you could have a set of Avengers characters, right? And you're going to say, "Okay, all those characters that were in the Avengers game now are exclusive to that one game." Like that's a terrible idea. That like robs people of a standalone game for any one of those individual characters. Or there's plenty of different types of games. Avengers can have you know, a number of different types of games that are all very very different, not the same kind of thing. A mobile free-to-play Avengers game versus a triple-A console. Like I think more today what we're seeing is lane protection. I want to make this type of game. I want to make a a puzzler or a shooter or an RTS or whatever it is,

whatever those different genres are and you split them up. It's protection of lanes so that you're not, you know, having two, you know, two Star Wars shooters against each other and that they're coming out at similar time, right? That you can I think those types of evergreen IP properties, you know, right now we're we're doing a a deal with the NFL and obviously there's a another very wonderful, very big, gigantic NFL game that comes out every year. We're not trying to be that. They do that better than anyone has ever done it. Every year that other company is making the single best console football game that's ever been made, and they do it year after year. We're trying to make a very different game. Our games are all mobile first. Right? So, we're trying to make a different experience. Ours are for, you know, a much broader range of consumer. Maybe people are not quite into the NFL, and they don't know all the playbooks yet. They don't know all of the intricacies, right? So, you're robbing players of different experiences by putting exclusivity deals in place.

You know, if you're going to do a big deal, you're going to spend a ton of money, then as a developer, you're going to do that. But, remember, whenever you put up that MG, that MG is coming directly out of the development budget more times than not. Now, I think people forget also just the the advantage of same IP, right? Like we've seen with whether it's Harry Potter or Marvel or other games. Like when the next game comes in, and that new game spends a ton of marketing, then your game actually, you know, benefits as well. So, like that's it's not always bad that there's like multiple multiple games on the market with the same IP. But, what what about like other considerations? Is there anything that we should be thinking about or the audience should be thinking about when when they think about IP? What what else should they factor in when when when they're working with IP? Yeah, the one that I always run into that's the trickiest is music. Sometimes the licensor can give you some music rights, sometimes they can't, you have to go somewhere else. Not all not all licenses require music.

Like if if you're going to do Star Wars, I'm sorry. You better You better figure out how to get get some music rights. But, I mean, we talked about Spider-Man being super successful. Other than the the the riff from that TV show, I don't know if you actually associate a specific musical theme with Spider-Man. You might not need a need to go get a special license for music in that case. Yeah, no, that's a really good point and and oftentimes the music rights are completely separate. They are not part of the game license and you have to negotiate that with, you know, whoever owns the music publishing rights, you know, which oftentimes is even a separate entity from the studio. Okay. But Warner Brothers has what they you know, the the water tower or whatever the you know, they have their own different Yeah, but like now like even there was a a separate entity what called Warner Chappell, which was broken off of the studio when the whole Warner Music thing was broken up. Yeah. So it's you know, it's oftentimes not a very clear and straight road to okay, I'm getting this IP naturally like in the case of Star

Wars, you have to have that. I don't know what their situation is versus the Warner Brothers situations, but um, you know, oftentimes it would not be all-inclusive. Yeah, it gets it gets really tricky. The rights, you know, you know, I've worked on a lot of Fast and Furious stuff and you know, so you know, the so much of Fast and Furious is about the cars. Well, guess what? The cars aren't covered in the licensing deal for Fast and Furious. That's a separate deal, right? And you have to go you know, so you may have to go get the music, but you're also going to have to get the cars and so much of the DNA of I mean, the DNA of Fast and Furious is really the cars and the stars. Um, and so you know, the Fast and Furious some of those rights come with the you can get those as part of signing the IP. Some of the actors in those films are not covered and you have to go get them independently as you know, Jess. Yeah, so You know, so it's like you know, and you know, with Fast and Furious like, you know, you also don't own the font Fast and Furious is is printed in. So

that could be an additional fee. People don't think about things like the font, but you know, if you want to do that use that font like, you know, that font is an independent font. You have to go pay for it. Well, another another interesting just comparison in this in this particular topic is you think about like, you know, like if you're making a Batman game, Gotham City is fictional, right? And everything in Gotham City is IP. Whereas a Marvel game is based in Manhattan, right? And you're going to have the Empire State Building, right? And you're going to have Madison Square Garden, and you're going to have all of these real-world landmarks because Marvel is set in the real-world Manhattan. So, when you do a Spider-Man game and it is set in Manhattan, right? You may have to go out and license those key very popular public landmarks that people are going to expect because you're based in Manhattan. So, that's just another example, I think of something that you have to consider depending on the variables of the IP and where it's set in addition to the characters and the lore you're getting as part of the IP. Yeah, I kept on explaining to my son

that this Manhattan is not quite like the Manhattan we went when we go home to to go see grandmas in New Jersey and go into Manhattan. Like it's not quite the same as Spider-Man that he's used to flying his web-slinging his way around the city. That's not quite in the same spots. Generally, it's pretty close, but it's not exact. Well, that Spider-Man game is if it doesn't have the Empire State Building, right? Like that's that's part of the fantasy, right? Is Spider-Man sitting on the top of the Empire State Building needle looking over the city. You got to have that in the game. Guys, I thought it'd be fun to talk about problems or like when licenses go wrong. And maybe a couple of problems that I have heard about were for example, one, let's say there's a there's a term uh up for a license, but a game just keeps getting delayed and so that might cause issues between the licensee and the licensor. Or let's say even post-launch, if a game to the point that we talked about earlier, Aims, when you're coming with that MGM and you

you're nowhere near the the rosy projections that you initially came up with, but could you guys talk about maybe some of these problems or other issues or times when things just went wrong. I I'd love to hear some of the some some of your worst stories. Well, I'll give one example. So, when I got to Marvel at the end of 2003, our MMO rights, our massively multiplayer online gaming rights were with Vivendi Universal Games. Yeah. And I think it was at least 2 years or so into the term. And there were some issues in terms of defining the right developer or the developer they had chosen was not making the material progress that they had wanted and had intended. And you know, when you look at the contract, the contract said that based on where they were, in 6 months time, contractually they were supposed to have a closed beta. Right? And And we were they didn't even

have like a playable up and running in code, let alone at a point where they would be in a closed beta. So, we had to find a way to figure out, you know, like what was going to be the future of this project, you know, with this team. Obviously, they weren't going to make that contractual obligation given where they were and what was, you know, the time frame of when that was expected to be. So, you know, there's an indication where we both decided it would probably be best that we did not move forward. They weren't going to hit the objectives of the contract and the timing and key deliverables of the contract. And we kind of negotiated a way to, you know, mutually unwind that particular deal. And we still moved forward and did our Hulk games together, but for various reasons that that particular thing did not work out. And then, you know, there once that was cleared up, then we went and we still saw very much value and viability in doing a Marvel MMO. You know, and then we went and tried to find another partner who maybe was more MMO-centric. You know, um Vivendi had multiple kinds of games going on and and, you know, and

but were very console-focused at the time other than Blizzard. And Blizzard wasn't going to do the Marvel game. So, you know, we said, "Okay, let's go get it." Going back to what I said before, my strategy was go find the best partner, the best studio for the IP and kind of game that we want to make. And so, then we went and tried to have discussions with companies that, you know, had high quality, were MMO focused, had high quality teams, that were the right fit for that kind of game, had the passion for the IP. That wasn't always very hard to do with Marvel. A lot of people obviously love that IP even pre-MCU. So, there's an example where it didn't work out and we had to go and find another solution for realizing that part of the business. I I Ames, I also say that's a great example of when a licensee did a ill-advised deal. They should not really have done that. I'm glad that they did the I'm I'm aware of that deal. Yep. Yep. and it ended up costing them. I mean, Ames is right that we it was unwound, but it was not at no cost. This This was

an expensive mistake that Vivendi is or personally made because they didn't have the wherewithal to actually accomplish what they meant to accomplish from from the get-go at the time. They They sort of saw World of Warcraft being really successful and decided they're going to replicate it outside of Blizzard. And there was just no way that the rest of the company had the DNA to make an MMO the way that Blizzard did. I think the I This is also the points to we then subsequently go on, we make Hulk with with Marvel because I think the other thing people need to bear in mind is that especially if you're doing your first deal, this is This will If you do this right, this should not be your only deal you're ever doing with this licensor. Hopefully, you're having a relationship and you can continue to make similar or lucrative deals going forward. And I think two One mistake I see early people make on when they come to do their first licensed IP deal is they approach it like it's a one-off, like you're never going to really need to work with these people again and you don't mind burning bridges. No,

you're crazy if you approach it that way because one of the most valuable thing you've generated from this is a relationship which you can nurture and then reuse in the future with somebody you now understand, now you trust, you know how to work with them because you've done the hard part by then of figuring me out how to operate with them. So, don't treat this like it's just a one-off. But also just to add to that point in that specific example of Hulk is a great example to Ed's point like the the first Hulk game that was done with Vivendi was done by Radical. It was based on the first movie. It it was not amazing, but it wasn't terrible either. It was fun. It was it was it was good. It it Vivendi made Yeah, Vivendi made it was solid. It wasn't spectacular. It wasn't bad. It was a solid game. It was a you know, it was a RBI double, right? But I think it made enough money that Vivendi saw the value in the IP. The studio The studio wanted to make another one. They had just spent whatever two, three years making this

one rather than just cutting it off and moving on to another project and starting that from scratch, they wanted to take the technology and learnings they had and leverage and iterate off of that to make a better game the second time. And so, what happened? We went from having a 72-rated Hulk game first time around to leveraging the investment that the team had made in the first game to knock it out of the park in Hulk Ultimate Destruction, which was the second game, but not based on the movie, just based on the underlying Hulk IP. Wound up being an 83-rated game and you know, to this day it still holds up in terms of being one of the best superhero games ever created. So, that's a great example whereas if you stick with it and you and you, you know, are successful enough with the first one, you're going to reap the rewards of the second one. You know, as great as Arkham Asylum, the first one was, right? A 91-rated Metacritic game sold a lot of units, right? The second one, once we established that foundation, right? And gotten that hard part out of building the tech and the

tools to just get the solid foundation of of features and mechanics to make a good bat really great Batman game, you know, we doubled down and knocked it out of the park in the second game and Arkham City, you know, was a 95 and sold it probably at least 30% more than the original game. So again, it's really about making a long-term investment and not doing the one-off as Ed said because you're going to reap the rewards. If you make a great game, you're going to reap the rewards, you know, in in subsequent versions of the game. Yeah, I think I think this is a this is a great time to mention that all of these games and and Ames and I have worked very hard on lots of licensed products. Ed knows this as well as anyone I've ever met in the industry, but like and it matters who the developer is, right? If you if you you know, when you're going to do the MMO you know, Marvel MMO, like there was no developer. Like they didn't have somebody in mind to do it, right? So it just sort of, you know, they were struggling on a business development side of things, you know,

if your developer isn't good, yeah, Radicals are really solid, really good developer and had really started to come into their own about making these big open-world games. They would have been much better off instead of doing a Marvel MMO to add all of these other superhero characters into that Hulk open-world universe and let you play with an assortment of different characters rather than trying to replicate World of Warcraft, which by the way, many people have tried, most almost all have failed, right? Like the reason why, you know, Warcraft is so great because Blizzard's the developer. But if you want to know where the horrible tales are about bad games, right? More often than not, there are developers that weren't able to cut it or didn't have the chops. And when they're really, really good, Rocksteady, you know, like then you have things that match up, right? When you're giving, you know, when when you're giving Epic the keys to your characters, they're in

really good hands. They've done it. They really know how to do it. Like they they built this incredible game. if if you ask a studio who makes football games to make a Superman game, that might not be the best fit either, right? That's right. Famously, you know, Super Superman from EA, like, you know, done out of Tiburon, right? That wasn't their that wasn't their their bag. But that, you know, like that's a good case of a good developer who you know, was trying to do something different and Warner Brothers had gotten in with that game and was was sort of over their skis and and and the game just didn't catch up. But most times, you're dealing with a case of your game is only ever going to be as good as a developer. And like as as as as much as Aims and I are involved, right? We haven't traditionally been involved on the on the exact drill down of development side. That's probably changed for Aims now, but like, you know, we're shepherding the project from concept through release of the game. And we're only ever going to be as good

as the developers who are actually doing the in the trenches, really building stuff. Couldn't have said it better myself. Hi gentlemen, I have one last question before maybe we could end with general advice from each of you and that question would be more around so we've talked about licensing for a game. But what about how how do you guys think differently about for like a game integration, like whether it's for a battle pass or whether it's for like a special event or holiday or things of that nature. How do you guys think about IP in in that kind of a situation? And and I think you've done a few of those. Could you comment on that? Yeah, it's different. It's It's funny. I think when when when you're dealing with it in that context, it's almost like the IP is making a guest star appearance inside of your product. And they'll briefly be there and then they'll be gone. A lot of the same a lot of the same

fundamentals exist for those kind of deals. And let's assume it's just it actually is a license deal, not a marketing deal. Sometimes you're doing marketing tie-ins for that. And those are Right. somewhat different in the sense that they're pretty straightforward. And again, like I said, you're usually just doing it with the marketing department. But if you're doing an actual deal where you're selling something in the game that involves the IP, they're making a guest star appearance, a lot of the same factors come to play when when you're pulling them off. The advantage the small advantage you have is that typically you you can react more quickly. You're not making an entire game, so you don't have to do three or four years in advance the way A is saying. For a true full-on game, you can you can see on the horizon much sooner where something will be a huge event. Like the Batman movie will be a huge event, and you can react to it in a time that allows you to do a good job because your interaction isn't as massive as an entire game. It's a small one. You're doing a few characters, maybe you're doing a few mechanics, you're doing some play value around you play around around that type of character. So, that could

be a lot of fun. Um I think that the in many respects they're a lot easier to do than a than a full game cuz you're basically just inserting it inside of your game. So, that's also positive. So, in general, I think that they're relatively new occurrence doing these kinds of integrations of actual games, but I think, you know, Fortnite's done it currently successfully. I'm seeing a lot of other people beginning to do it as successfully. So, I think actually the very first one I thought that made a difference to me was a Puzzle & Dragons one with Batman. Do you remember that game? Yes. Yeah. Yeah, so yeah, that that's a case where like at Warner Brothers a lot of times these opportunities would come up through the business development group, right? And they'd come to production and creative and say, "Hey, Puzzles & Dragons wants to do an integration with DC." A lot of times it was movie-based at the time. Like that's where I think the movie That's where the evolution of the play the game, see the movie thing kind of went to was during free-to-play mobile. We do events around the movie. We're no longer doing

dedicated movie games. And and and the movie folks and the marketing folks on the movie side definitely saw the upside of having some kind of game integration. So, if we weren't doing the dedicated games, let's do these if thematically and mechanically the game made sense with the IP for an event or a stunt around the film, okay, we'll do integrations around that. We'll do the movie versions of that to do, you know, to give a a a exposure on around the movie to that particular product and that particular in incarnation of the character. But again, just in general, like what was Ed was saying, like as these things start to come up more and more, it was really about the right fit, right? Thematically, right? Like does having this DC character or that DC character in that type of game like lead, you know, for example, like Honor of Kings, we did a deal with Tencent for our DC characters in Honor of Kings, you know, high fantasy superhero-like characters were the crux of what Honor of Kings was all about. They're MOBA, right? So, having these fantastical DC characters like Wonder Woman and The Flash and

Superman in Honor of Kings, you know, it kind of made sense. And again, we did the whole multiverse thing. The DC characters get thrust into the league into the Honor of Kings world. So, narratively we made it make sense. And again, just in terms of the overall game mechanics and the and the tone and theme of the game, like it made sense for these fantastical over-the-top superpowered heroes to appear in that world and to be playable in that world for a period of time. Yeah, I think the the If If If Pete came to us and said, "Let me make Joker a quarterback uh in NFL Clash," might have been a different story. Um you know, I think one of the themes you're you're hearing here is that goes this goes back to sort of the early to mid-2000s when I was working with Ed and Ed came and said there's this there's this thing going on in Korea right now with free-to-play gaming. And I was just like uh-huh, yeah. And he's like, no I like I'm like I you know, he's I'd seen some of the games he you showed me some of

the games. I'm like, I I don't know. I don't quite get it. And he's like Pete, this this is the future. Like this is what this is where it's headed. Like if if you're not recognizing, you know, where the puck is going here it's going to start here and it's going to move into social and social then be is going to move to mobile. Like, you know, all of these things happened. Ed was the first person I ever knew who said the word free-to-play gaming to me. And if you look at where integrations are, integrations are free to play. Like because they're they can be done quick and they can still take beautiful care of the shepherdship of your IP but it's not like having to work with, you know, trying to build a game from the ground up based on an IP. You can get in, you can take a game that you already know is popular, you can service the day and date with the movie you marketing can be happy and fans of those games

can be really really excited about having their favorite characters or favorite IP making a great in in integration but it doesn't have to be there as a permanent castle built from the ground up, which is really really hard. And it's not surprising to me that Ed would go on to do, you know, Fortnite free-to-play and take Fortnite free-to-play where and then have this ultimate character integration stuff in it. But like it really to me comes from that birth of free-to-play as where IP integration has become the most successful. Yeah, I I'd also say that it is important that at Epic that that these aren't considered like happening out promotions or or marketing. These are creative endeavors that that speak to the authenticity of the game and what we're trying to accomplish so they feel, you know, honest to players. I I think the great example was when we did the Mandalorian tie-in. For for many weeks leading up to that

tie-in, we were meeting every week with Jon Favreau and Dave Filoni going over ideas and what was going on and and exploring them because the best of all worlds is when you have the creative vision on the other side equally interested in trying to come up with something that's really novel and fresh and and fun for everyone. So, those are the best case worlds. Now, when when a licensee is dealing directly with the creative talent on the other side, sometimes that can be dangerous for for a studio and they're they're kind of uneasy because they can be kind of a wild card in the mix. But if you want a really great creative product that speaks to the authenticity of that IP, it's the best way to do it. What I'll also say in the Mandalorian case is, you know, unlike with some of the DC and the Marvel stuff where you were you had out really good high-quality outlets to play those characters in dedicated DC games, you know, whether it was Injustice or whether it was in Arkham or whether the LEGO games, in the case of the Mandalorian, like, you know, I always

wanted to to play as a as Boba Fett and and and then once the Mandalorian show came out, I'm like, "Give me my Mandalorian game." And there was none. So, to realize that fantasy, the only place you could go was to go play the Mandalorian inside of Fortnite. And that was genius cuz you couldn't get that experience anywhere else. So, there's an example of where sometimes, you know, there isn't the opportunity to have a dedicated game on a particular character or an IP. And the best best option there is to integrate it into another game that already has thematically, you know, similar elements to the character or the world, and/or has mechanics that support and match up with that particular character, which all of those were the case in this Mandalorian example. And again, I got my Mandalorian fixed just, you know, out of Fortnite because I couldn't get it anywhere else. Awesome. All right. Well, gentlemen, thank you so much for your time. I thought we could wrap here with a final bit of advice for

our audience out there who might be trying to secure an IP deal in any way that someone in the audience might be able to get in touch with you. And maybe starting with you, Aims? Uh yeah, sure. I mean, I just, you know, Pete and I being the, you know, product and creative people, like it's all about fit and commitment and passion and giving them giving these projects the proper time. And again, you know, that's certainly the case as it relates to thinking about a dedicated game based on an IP, but even on these integrations, making sure it's the right fit, right? Mandalorian was that example of like, you know, given the mechanics of Fortnite, like they all, you know, the you know, gunplay and and and and and whatnot, like that's what the fantasy is of playing as a Mandalorian. That was an amazing organic fit that you couldn't get anywhere else cuz there was no other Mandalorian dedicated game. So, making sure it's the right fit, giving it the right time, you know, those are the key elements to it and uh you know, if anybody want to wants to reach out to me on my Twitter @AimsKerschner. Aims @AimsKerschner. I'm

on Twitter. Great. I'll put that in the show notes. Pete, what about you? Yeah, I would say it, you know, game, you know, the three you know, the three most important aspects of of games are gameplay, gameplay, gameplay. Like, it starts with the it starts with the playability. So, if you have an idea, you want IP, show it how it relates back to what the game is. So, that if you're going to take a character, you know, like Mandalorian or Boba Fett or any you know, any Snake Eyes like make sure that what you're you're putting that character into is game that fits that that fantasy experience, right? That you you know, it's easy to see how you could do it, right? That's why you know, some of the best characters make for some of the best games, but make sure that it starts from the grounds of what you're doing on the moment-to-moment gameplay. All the other thrills and you know, exciting Easter egg stuff, those will come as a result of great gameplay. But it starts with how the playability of what those characters or stories or that IP is and if you don't have that, you

don't really have much at all. Okay, and for folks that want to reach out to you, Pete? You know, I'm on I'm on LinkedIn. You can hit me up. All right, and Ed with the final word. Uh mine is if you're a student game studio or company that has never done a license deal before, I urge you to get a lawyer or agent or consultant that has done one before cuz you do not want to do this from scratch. I don't care how smart you are. You got good licensing deal really requires you to have some level of experience with this. You can do subsequent ones after on your own, but for that first one which is going to lay the template for future deals you do with that that particular licensor, I urge you to find someone who knows what they're doing to to help you. And by the way, this is not a show for me because I'm retired and I only do projects with friends or or or things that I really incredibly like and I really don't do licensing consulting.

But if people want to reach me, they can reach me on LinkedIn. Great. All right, gentlemen, thank you so much for your time. There you have it. Great words of advice from three possibly the three most experienced and best people to talk about in gaming IP in the industry. Thank you so much for your time and for our audience, we will catch you next time. Thanks everybody. Thanks Joseph. Thanks guys. It was really fun.