Differing perspectives on licensing IPs

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NEW YORK -- When critics slam video-game developers for succumbing to license-itis, they generally aim their barbs at hardcore retail games and mobile games. Casual games rarely draw fire because their meager budgets typically can't support licensing fees.

However, one casual-game startup intends to base at least 80% of the 30 games it plans to release each year on licenses. And most won't be your typical movie or hot TV licenses, but more affordable classic TV licenses, like "I Love Lucy," "The Honeymooners," and "The Three Stooges."

It's an intriguing strategy to differentiate Beanbag Studios' games from the rest of the pack, but it's anyone's guess as to whether nostalgia will indeed attract casual gamers who are usually older than the average gaming demographic.

"Not only are we expecting more mature gamers to recognize the brands we're licensing," says Steve Bergenholtz, president of the year-old, Plano, Texas-based company, "but we're hoping they'll enjoy the fun and diversity we intend to offer. Each license will generate several SKUs, such as the five unique 'I Love Lucy' games we're developing."

In the first "Lucy" game, scheduled for release in December, gamers are faced with a number of challenges, including answering trivia questions and rearranging video clips so they are in the correct order. Subsequent games -- including "I Love Lucy Slots," "The Three Stooges Pinball," and "The Honeymooners Bowling" -- will be available between year-end and April.

Bergenholtz's plan is to turn out games quickly and inexpensively, but he rejects the notion that he has set up a video game assembly line.

"What we've done is streamline the development process with a focus on iteration," he says. "For example, other developers complete their games and then go ahead and test them, finding out all kinds of things that don't work properly and need fixing. That wastes a huge amount of development time. We'll be testing our games with focus groups throughout the process and making adjustments as we go. When the game is finished, it will be finished."

Beanbag Studios is employing a team of 29 developers -- all under one roof in London, Ontario, Canada -- with no more than five or six working on each game. Almost a dozen games are near-completion, each having been built for under $250,000, which includes the licensing and marketing costs.

"We use a cyclical system," explains studio director Gary Corriveau, "where we do a prototype, we iterate that prototype, and then, while we're getting the rest of the design put together, the programmer can go work on another prototype. So the teams are always juggling more than one project at a time. We'll likely be working on 8-12 games simultaneously."

He recognizes Beanbag's approach to game development as an unorthodox one, but one that he expects will differentiate it from, say, other casual game market leaders, like Popcap Games.

"Popcap says its approach is to build the kind of games its developers like to play," says Corriveau. "We say that we're not developing games for the Beanbag family. We go out to the consumers, beg them for feedback, and fine-tune our games throughout the process. We have absolutely no objection to canning a project if the feedback isn't positive and we can't figure out a way to add the fun factor that the consumers are looking for."

While Beanbag's first games will be based on classic TV licenses, Bergenholtz insists Beanbag isn't locked into that strategy. In fact, he is currently talking to a movie studio about a 10-title movie deal. But he is also seeking out other classic TV licenses, which he describes as a huge opportunity for the licensors to "take their properties off the shelf, dust them off, and bring them into the video games arena ... which makes our licensing their titles a win-win for them and for us."

But that licensing strategy doesn't play well at other casual game developers, particularly Seattle, Wash.-based Popcap, whose games are all based on original intellectual property.

"We never create games from licenses mainly because of the additional expense," explains CEO David Roberts, "and also because licenses frequently mean a loss of creative control over the finished product. While we're all about the 'fun factor' in a game, the person who oversees and protects the IP -- say, 'Sponge Bob Square-Pants' -- is focused entirely on how the property is portrayed in the game and generally not whether the game is fun or not. So we always decline overtures from the owners of such brands and characters, and simply focus on making games that are as fun as they can possibly be."

But as the casual games sector matures and grows into a multi-billion-dollar-a-year industry, the rewards are increasing and it, too, is turning into a hits-driven business like the larger video game market, says Joel Brodie, president of casual game reviews Web site Gamezebo.com. Audiences are becoming more demanding, he adds, production budgets are rising, "virtual shelf space" is decreasing, and license-itis is starting to take hold.

Brodie does not believe, however, that licensing IP is the perfect solution for casual games makers: "There is one huge difference between the video games and casual games markets," he explains. "Video games are, for the most part, sold with no trials at retail, so the box is partly what sells the game. Casual games are -- and shall remain -- a try-or-buy business. Meaning that while a strong license may help a publisher get online distribution and free trial downloads, if the game sucks, it's not going to impact sales one iota."

Brodie is a strong believer in a casual game developer creating its own original IP, but he understands why some choose not to: "It's a whole lot easier to license IP -- you just sign a contract, throw in the assets, and -- voila! -- instant casual game with brand recognition."

However, he recommends original IP as the better long-term strategy despite the challenges: "The secret to the success of casual game companies like Popcap is not that it created, for example, 'Bejeweled.' It's that it has licensed out 'Bejeweled' so it can be played anywhere -- on a plane, in a car, on an Xbox, probably even Zanzibar," he chuckles.

"When you create a casual game around your own IP, you are essentially an IP owner," he notes. "When you license out someone else's IP, you are merely a game developer. Just like in real estate, it's better to own your IP than to just rent it."

Paul "The Game Master" Hyman is the former editor-in-chief of CMP Media's GamePower. He has covered the games industry for more than a dozen years. His columns for The Hollywood Reporter run exclusively on this Web site.
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