Licensed products appear to be a major driver in the amusements and gaming industries – but how important are they really to developers, and are they more of a gamble than they seem? Jon Bruford reports.
A good licence can, there is no doubt, increase revenue in many ways. The general consensus is that a licence increases consumer awareness and, perhaps subconsciously, increases a player’s acceptance of the product because of familiarity.
Of course, a licence is about more than a face on a machine, or a logo in a game. As John McLoughlin of Bell-Fruit Games says: “Although there have been successful licences which have not had an obvious ‘machine association’ such as Lord of the Rings and The Simpsons, the very best licences are those where the concept behind the licence is associated with the gameplay on the machine.
“Obvious examples of this are Deal or No Deal, Who Wants to be a Millionaire? and Monopoly, where the feature board is an inherent part of the game. It is, however, important to understand that a licence alone does not make a good game. Our industry is littered with licences that have failed to turn into a winning machine. A licensed game may well attract the player in the first place but if the game does not have sufficient depth and player appeal it will not make the grade.”
To confirm that this philosophy pays off, Bell-Fruit has a great history in winning licences, with Deal or No Deal still doing superb numbers and Monopoly showing no signs of age.
Other licences are less obviously game-related, though. At the recent ICE exhibition in London, Novomatic unveiled an attractive Marilyn Monroe mystery progressive; while actor licences are unusual, several gaming companies have tried their hand at character licences, such as Dirty Harry, or Rocky. The benefit these licences bring is that they are evergreen – they’re probably not going to go out of fashion any time soon.
Keys to success
The terms of the licence can be critical to profitability. If a licence is only available for one platform – for example online, or a single class of slot – it becomes much less attractive for a developer, because it’s more cost-effective to develop a product once then deploy it to multiple platforms, such as mobile, online, FOBT and slot.
Acquiring a licence before the property becomes a hit can bring big benefits too. One of the most successful licences of recent years is the Bullseye SWP from FatSpanner, where online content director Paul Slavin explains: “Historically we had huge success when we bought the Bullseye licence. It was completely dead at the time and was not active anywhere in any formats, and we bought into it first. Then it was the success it was, which meant the licences went on and were sold on for online deals, for AWP and much more. We know that rejuvenating an older licence really can work, and if you’re lucky you can get them very cheaply.”
Yet the evergreen licences remain surer bets, he agrees: “If it’s Dirty Dancing, or Muhammad Ali or whatever, it’s not necessarily going to grow as a licence, but it is what it is and it’s not going to go away – that’s a far smaller gamble to a company like us because you know what you’re buying into. If you’re tendering blind for a licence from a movie that’s not even finished, that’s a real gamble. You have to balance these things.”
The other thing an evergreen licence can do is to attract the right demographic. FatSpanner knows that to attract a 40-year-old pub player, a Lady Gaga licence might not be the way forward. “They [evergreen licences] are cheaper, but they fit the demographic,” says Slavin. “It’s not until you get to a certain age that, on average, you have more money to play with. So people that spend a lot of money on slots tend to be slightly older. It’s a licence they recognise, where an 18-year-old might go in somewhere and not know the licence.”
But even an evergreen licence comes with hazards, if there is a monetary guarantee (MG) in the contract. This can cause a real headache for developers, says Slavin: “Rights owners all want MGs now, even on a dormant licence, without giving you, the developer, any guarantee on anything in return. A few years ago we paid a very large sum of money as an initial payment against royalties for a TV show, and they gave us a load of figures and information on what it was going to do. But what they couldn’t guarantee was that after the first 20 episodes, would there be any more? They thought it would almost definitely happen – but it ran for three weeks, then came off the air never to return. It stopped earning us money after about four months and we were paying the MG off for three years.
“Even charities want MGs now. If I went to a charity and said, we want to use your logo on our game and we will donate 20 percent of whatever the game earns to your charity, they want a MG. And this is when you are only trying to donate money for no reason other than trying to do something nice!”
One solution is to use themes that nobody owns – for example Battle of Britain – to tap into a general zeitgeist and identity that appeals to certain age groups. It’s simple and effective, and the games look great.
Getting it wrong
Success can also backfire, resulting in a huge increase in the cost of the licence, or even a complete overhaul of how the deal works. Recalls FatSpanner’s Slavin: “One well-known game show licence was bought before the show had even been screened in the UK, and so was acquired for a reasonable sum. Then the licence became very successful, alongside the show, and when it came up for renewal a couple of years later an unreasonable amount of money was asked for renewal. Then the game show’s owners came up with a new idea – developers could tender for the rights to develop the game, and in a role reversal, the producers would reap 80 percent of revenue to the developer’s 20 percent. By that time the licence was so strong, they could do that.
“But for developers like us, you help create and grow the brand, bring it to the public, and strengthen the brand – but when it becomes convenient, the rug can be pulled from under you by the licence holder. That’s why we – and many of our competitors – are now trying to find that balance between licensed products and building our own bank of products.”
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