Episode 38: License to Game – Licensing and IPs in Mobile Games

Introduction

[00:00:00] Jon Jordan: Hello, and welcome to the Mobile GameDev Playbook. Thanks for tuning in for another episode. This is the podcast all about what makes a great mobile game, what is and isn’t working for mobile game designers, and all the latest trends. I’m your host, Jon Jordan, and in today’s episode, we will discuss the value of brand licensing, how you can do it, and the challenges, opportunities, and issues. We have an all-star cast to talk about that. Introductions. First up, we have Rachit Moti, the CEO of Layer Licensing. How’s it going, Rachit?

[00:00:33] Rachit Moti: Very well, thanks for having me. How are you?

[00:00:35] Jon: Yes, good. I am looking forward to this. You are going to be approaching it, you have a platform we’re getting into details of what you’re doing there, but you’re enabling the brands, developers, and content creators to come together. Also, from the content creator side, we have Asi Burak, the Chief Business Officer at Tilting Point. How’s it going, Asi?

[00:00:57] Asi Burak: Good, thank you. I am excited to be over here with you.

[00:00:59] Jon: Good. To ensure we pick up all the trends, we have our expert Kalle Heikkinen, an analyst at GameRefinery by Liftoff. How’s it going, Kalle?

[00:01:11] Kalle Heikkinen: Very good, Jon. How about you?

[00:01:14] Jon: Yes, good. Let’s crack on. Let’s do some more detailed introductions. Rachit, you are in the start-up in the space, so spend some time explaining. What is Layer Licensing? What are you doing? What’s the vision? What problem are you solving for us?

[00:01:33] Rachit: Yes, sure. Great question. Layer is a marketplace that helps publishers and developers work with IP. We’re an IP licensing marketplace. That means whether you’ve got a game that’s live and in the market, you should look at content integrations to work with popular characters, automotive brands, or consumer goods that people already know and love for in-game integration.

That’s one way of looking at it, all the way to getting the rights to make a licensed game around an IP, film, or TV series. That space has historically been hard for every publisher or developer to access. It requires a lot of resources, and it’s generally something that sits towards the top of the market, the massive publishers playing this space. We’re trying to make that easier for every other developer and publisher through our marketplace.

[00:02:35] Jon: Cool. Asi, Tilting Point has worked with many big brands over the years. SpongeBob springs to mind. With your content creator hat on, where does licensing sit for you guys? Is it a big problem? From my top-down view, they’re becoming more important over time. Is that broadly correct?
[00:02:58] Asi: Yes, not only that, it’s becoming more important, over the years, in the area of licensing, you build a reputation with the licensor. You create, year-over-year, you make a more robust network and more substantial opportunities. IP is a super powerful tilting point regarding what we can offer our partners and what we can do in the market. With Web3, IP is going to be super powerful. In the IDFA era, it’s more important. Yes, the future of licensing is secure in that sense.

How does Layer Licensing bring IPs and games together?

[00:03:44] Jon: That’s a good starting point. Rachit, most of us can now understand the baseline of what you’re trying to do. Some brands are happy to go into games and want to generate revenue from that, and there are many games. Every game developer now is at least interested in the potential for that. You are bringing these things together in the marketplace.

It’s interesting what Asi was saying there is; while you’re taking friction out of that, maybe that’s not the critical issue in these license negotiations, which is more about reputation. Can you talk a bit about how you are doing the nuts and bolts of bringing people together, but it’s much more than that to be successful?

[00:04:28] Rachit: Yes. We want more and more developers and publishers to be able to play like Tilting Point. Tilting Point has this stellar track record of SpongeBob, Warhammer, Narcos, and so on. In the way we do it, what we do to help that process, and how we help simplify that unless you’ve done it, it’s hard to get a read on what that even entails.

Who do you speak to? How do you figure out costs or the process around approvals or going through a licensing contract? Our platform initially focuses on matchmaking and discovery and ensuring that people can identify who’s a fit. Then we go down that latter stage approach of, “Well, how do we make these deals come together better?”

How do we ensure comments are moving back and forth through the platform? Make sure that we have standardized ways of working together legally through standard licensing contracts and those kinds of things. Then, of course, there’s an element of ensuring that we help the developers or publishers articulate why this fits the IP. Why is this something that’s going to make sense for the fans and the audience?

There’s a huge trust element. The brand licensor or the IP holder, essentially, is the guardian of that franchise or that narrative, and if you’re licensing it, you are, by extension, saying that you’re going to protect it too and work with it in the right way. Over time, the more licensing exposure anyone has, and the more we can help them move through that, the bigger those licenses are that people can work with, and the more frequently they can start doing that. It takes time to be able to do what Tilting Point’s doing.

[00:06:29] Jon: Yes. If I’m an indie developer, I’ve made some games, and I am interested in what’s happening, how do I access your platform? What are the early steps?

[00:06:40] Rachit: The early steps for Layer are simple. You go on our website: Layer Licensing, you can sign up, and it lets you into the product. Essentially, we ask the questions around, tell us about your games, tell us about your audience, what are you interested in? Commercially, what’s viable as well? Because in this space, there’s no point trying to reach out to a Lucasfilm type.

If your game is small, it’s not even the right genre fit, and it’s not going to be thematically in line with what they’re doing. We help the developers there express what they are after; where you might be making puzzle games, we might be targeting a US audience, and we might already know that our audience is skewing 25 to 45 females, for example. By taking all of that in and knowing what commercials might work for them, our system pushes them IP that overlaps with that audience.

It’s IP that will resonate with those players. That’s important to ensure that we don’t just apply any random brand or IP because that’s where we see failures in the market. People have done what people call IP slapping or label slapping. To avoid that, try and find the overlaps between your audience and the IP audience. We try and go down that route, but the early stages of signing up to Layer, are just using the platform and setting up a profile and saying what you’re after, and the platform does the rest of it.

[00:08:13] Jon: That’s an interesting point where you’re saying because my first impression was developers turn up, and it’s such a big world of all these IPs, and there will be a whole bunch out there. But how do you find out the ones you don’t know that they’re the ones you need to talk to? It sounds like there’s all this audience, that idea of a crossover between audience, it’s so great because you can go, “I’ve got this game, and I’ve got a lot of players in this part of the world,” and you might find it’s potentially a local IP that you’ve never heard of. It’s like an IP discovery mechanic going on there.

[00:08:49] Rachit: Yes. That’s the thing. If you think about it, no one can know every IP out there and where the audience will be right for you. Similarly, only some licensors know every game out there. No one also knows the audiences available to work with from the licensor side. Yes, that discovery element, historically, has been tricky. We try and change that as much as we can.

How does licensing work from content creator’s point of view?

[00:09:18] Jon: Asi, when you think about your licensing, how does that work from your content creator’s point of view? Certain things you do with SpongeBob and things you do with Warhammer fall out more logically, but can you give us some examples of how you thought about that?

[00:09:40] Asi: We have a unique publisher position versus a developer that owns a game. That’s one title or a couple. The way we think about content and the way we think about IP matches coming from an engine. That’s our perspective. Over the years, we have aggregated a large number of engines. Nowadays, it’s 40 and some of them we outright own as first-party, but some of them are third-party deals that we’re doing with the developers. The idea of an engine is that, from our very risk-averse approach, it needs to be something already proven without an IP.

It’s scalable, monetizes, and then the IP will do two straightforward things if it’s a good match. One is it’s going to bring organic traffic, but even more importantly, if it’s done well, it’s going to lower the cost per install and the CPI. That will allow the same engine to be successful at X with IP to be 3 to 5X. We base the IP product on a previous success that only amplifies what was done before. Of course, I’m shortcutting. It’s still a significant effort to match the AP, make the new game, and ensure that the values are kept, but that’s the high-level thinking about it.

[00:11:29] Jon: From a commercial point of view, one of the issues with IP is that you’re giving away a cut of revenue because you’re getting someone else’s IP. You have to be very clearly aligned that you’re just not doing it because it’s cool within the company to do Star Wars or something.

[00:11:48] Asi: For sure. As I said, when I’m thinking about the amplification of whether it’s 3X, 5X, and it allows me to run much more user acquisition profitably, that needs to be much higher than the part of the pie that I’m giving away to the licensor, that should be the principle.

IP trends in mobile games

[00:12:10] Jon: Kalle, coming to you from a trend point of view, what are we seeing regarding your market analysis of how IP is being used? Can you pull anything out there, and in what ways?

[00:12:26] Kalle: It’s fascinating that if we look at new games launched, for example, in the last year that has found sustained success in the top two hundred grossing, there are four games, Diablo, MARVEL SNAP, Dislyte, and then the idle game The Office. Dislyte is the only one that doesn’t use an IP. It’s tough to launch a new game now and make it to the top, but it’s even more complicated if you’re not using an IP.

If you’re not making an IP-based game, there are other ways to leverage an external IP, most notably collaboration and crossover events. In this field, we see exciting things happening all the time. If you look at some GameRefinery data, we can see that collaboration events have been prevalent in Japan for a long time. Currently, 68% of the top two hundred games are utilizing those. In the West, they’re increasing as well. Nowadays, 32% of the top 200 grossing games use collaboration events. Then, on the trend side there, we see collaboration events becoming more innovative, more prominent in scale, more considerable in production values, and so forth, and they also last longer. For example, the event with The Walking Dead and State of Survival lasts for six months now. We have a very exciting Cookie Run BTS event; it’s still going on, but it will last for 100 days.
Then one more thing is that the spectrum of IPs has also practically exploded. Nowadays, you can see exciting combinations like Cristiano Ronaldo in Garena Free Fire or Gucci in Pokémon Go. Speaking of Gucci, I think one trend that is quite visible is how we see more and more of these fashion brands in games like Ralph Lauren in Fortnite, Burberry in Minecraft, and Louis Vuitton in League of Legends. It makes sense, especially with these games with this or big cosmetic economies. Those are the big things we see from our perspective in the market regarding the IP stuff.

Liveops has caused a need for new content regularly

[00:14:32] Jon: Very good. That’s probably the biggest change over the last few years, isn’t IPs and licenses getting more valuable; it’s how they’re being used, and it’s not making a game around a single IP. However, that’s something that certainly has increased a lot. Still, as LiveOps has become the lifeblood of the free-to-play mobile industry, getting brands in for limited periods is crucial.

Coming back to what you’re doing with Layer, that you’re doing these, these are quite, in a sense, small limited periods that you need to have some efficiency in doing those deals. Because you’re not making a whole game based on Gucci or something, you have Gucci in for a few months. That’s where Layer plays into how the industry is changing because you’re reducing the friction so that people might do five or six branded events a year. They can do that much quicker through a marketplace than phone people or go to conferences and stuff like that.

[00:15:33] Rachit: For sure. That was the start of what we saw in the market when we started Layer, and LiveOps exploded in general. The game industry began incorporating events in LiveOps more and more, and we figured IP is such an exciting space that, to do more of those deals, we need to see if there’s an easy way of doing that.

In this post-IDFA world, that’s becoming even more important for many companies to ensure they can run a pipeline of ongoing content that attracts players in ways they couldn’t before. That pipeline of events and LiveOps space is critical. On the licensor side, that’s also becoming more known to them. It has taken a little while to understand that on their own, they’ve previously done well. What kind of game are you going to make around IP? Which, a lot of the time, is successful, as you would know, with so many licensed games out there. But they’re also now coming to understand that, “Oh, we as a licensor, as an IP, can work in multiple games, and think about this and build a slate for our IPs to be across the market at different times, in different markets, and geographies, in different genres.”

The players in a hardcore game, seeing your IP there, may not be cannibalizing, or maybe a completely different set to those in a hyper-casual, seeing your IP in a different country six months later. There are ways of making that easier for them to understand, which is on the up.

Can there be a brand overkill?

[00:17:27] Jon: Tell me if I’m correct or not. All these trends seem to push in the same direction, and most IP holders are now much more for the reasons you said. Still, more generally as well, they are much more open to not being so precious about what they’ve got because now there are so many channels, not just in games, but clearly, brands are everywhere.

There can only be one game at a time, or it’s an exclusive license or something like that. Whereas now, even with the biggest licenses there, Marvel and Star Wars, there are multiple games all the time. Some of them are quite similar in genre, but the licensor, says, “Well, we are not going to pick or choose winners. You guys do it.” Can we still have brand overkill? Asi, I’ll ask you. Would there be some brands where you go, “I just can’t see how this adds up because there are so many games?” There are ten games out of a year that this brand does, but that doesn’t work.

[00:18:26] Asi: Yes, you do see it, even though I think they saw that it dilutes the brand and, again, in extreme cases that they do, unlike what Rachit talked about, they’re doing it with the same audience, with the same genre again and again. It’s not helpful, and they eventually see what I wanted to add to the mix here about being able to walk with many brands and different audiences and places.

Another thing that we help our developer partners with is to get to platforms that are not free-to-play, and their IPs also make a big difference. New platforms are coming in. Some already have a history, like Apple Arcade of three years. Those subscription platforms behave very differently than free-to-play. They still could be very lucrative. At Tilting Point, we like to diversify and work with them. We’re strong on Apple and Netflix, and others are coming. It doesn’t necessarily cannibalize your free-to-play efforts.

Japanese mobile game market is all about collaborations

[00:19:58] Jon: I’m going to cycle back to something you said, Kalle, and it’s something we’ve discussed in previous podcasts, which is interesting. You mentioned in Japan, in particular, the vast majority is all about collaborations, which is interesting because often what could be seen as competitive games with each other have collaborations all the time.

You may have got examples of that, but do you think we’re not just talking about non-gaming brands when we talk about brands? Gaming brands are now part of the mix, aren’t they? It’s still a very Japanese-type thing, where you can have what would be seen as all competing companies having collaborations. Is that something that we could see more generally? Call of Duty will not have a collab with Fortnite, or is it? Who knows? If both of them feel like they’re getting something out of it.

[00:21:00] Kalle: Yes, that’s a fascinating question. Just recently, the One Piece game: One Piece Treasure Cruise in Japan had an exciting game IP-based collaboration event related to this. Players were incentivized to engage with other mobile games in that collaboration event. There were like five to six different games. Games like Monster Strike and Puzzle & Dragons, for example.

These are not by the same publisher as One Piece. This was not a cross-promotion event or anything like that. In this event, players, if they were able to clear enough collaboration tasks in, let’s say, Monster Strike or Puzzle & Dragons, players also got rewards in One Piece Treasure Cruise, and also vice versa. So, if you could clear tasks in Treasure Cruise, rewards were also displayed in those other games.

It was like the cross-promo we see in other games, but it was in event format, and as I said, these games were not from the portfolio of a single publisher, so that was very interesting. We, at least, have yet to see that much in other games. As you said, game collaborations are very popular in Japan, especially brands like Final Fantasy, which you see collaborating in many games.

Character-driven IP collaborations are getting more and more popular

[00:22:49] Jon: For me, Rachit, I don’t know if we’re in the early stages. Do you have any examples? Are we seeing that thing yet? What trends are you seeing regarding how people use the platform? Is it what you expected, or are you seeing anything interesting about the people using it in the ways you didn’t necessarily think they would be using it?

[00:23:13] Rachit: Yes, good question. Regarding the game collab space, it’s interesting. We’ve recently started seeing a few mobile IPs where the games have characters that people widely recognize; start listing on Layer to see if we can take this somewhere that isn’t necessarily competitive, that extends our reach and our placement across the market. But, looking at the licensing trends that we see in general, the types of IP that are being licensed and how they’re being licensed are quite wide.

Talking to that point that Kalle said earlier with something like Garena or Cookie Run. These are not IPs that would’ve necessarily made as much sense maybe ten years ago, or people would’ve expected it is what I’m trying to say. Cristiano Ronaldo with Garena; you wouldn’t think it would happen.

What we see in that licensing space, especially in the content space, is that the audience matters. Suppose that audience likes that, and they’re fans of Ronaldo. In that case, it’s likely to be a success, but if you try and put something in there that doesn’t make any sense to that audience, or they don’t even know it, and there’s no appeal to it, is much harder to make that fly, even if it doesn’t have to be in canon or narrative. From what we see in Layer, so much of this IP space is so character-driven that characters resonate. Characters also lend themselves to being something that can change user acquisition costs. It’s something that people can identify with. Also, for in-game monetization, it lends itself to skins, cosmetics, and anything like that.

Character-driven IP is where we see a lot of our work. Then, of course, you’ve got traditional things that are just par for the course. If you’re building a racing game, automotive licensing makes sense because that’s true to automotive racing and anything that’s a simulation. Still, outside of that, character is where we see a lot of strength.

[00:25:40] Jon: The racing one’s interesting because that’s happened over the last decade, but now you can’t get away with a racing game unless it’s a fantasy racing game. People expect you to have some proper brands if it’s the real world. You’d be seen as like you’re not a proper quality product. You don’t have to have everything, but it’s interesting.

That was the first sub-genre in the industry where the car manufacturers got big on launching cars in computer games and stuff like that, and you could see it was so clear for both sides that it would work out well. Cristiano Ronaldo is one we’ve previously discussed in the podcast.

It’s funny because we talked about it so much, so everyone noticed it. I would love to have some data, or whether it worked, that seems such an odd collaboration. Still, maybe as you say, there isn’t any cannon, so putting Cristiano Ronaldo in a shooting game works well because it’s different from what you’d expect.
[00:26:33] Kalle: By the way, now there’s a Neymar collaboration with Mech Arena. I heard from my colleague that it’s well made, and the character you can get in the game is powerful. And you can get it by logging into the game for seven days or something like that. It sounded interesting.

Layer Licensing and Netflix

[00:27:01] Jon: Without falling down my favorite rabbit hole, it is interesting that Neymar is a brand in himself. He’s a bit wider, and Cristiano Ronaldo, he’s one of the world’s best footballers ever, but he doesn’t seem to have much outside of soccer, whereas Neymar, I think he loves his NFTs, and he has a bit more broadness to him. Many as well see that online.

Asi, you guys are working with Netflix, so on a very broad scale, in some ways, that’s a very traditional games licensor relationship, or is it? Netflix has tons of IP and is probably quite open to doing some exciting stuff, but can you explain in more detail if you can do it?

[00:27:51] Asi: It might be surprising when you go deep into the IP world, where you would assume that Netflix, for example, owns a certain IP, but in reality, it’s owned by a movie production studio that made it for Netflix. That happens with some of our titles. In that case, what happens is a very complex deal. Think about it as a four-party deal.

We have a developer that made the original engine. We have Tilting Point as a publisher; we have a licensor that, even though they work with Netflix, owns the IP, and we have Netflix as a platform for distribution. You need to satisfy all of them. It helps when the licensor is one Netflix worked together in the past. It does make things easier, but it’s still a separate deal, and it happened to us already in at least one case with Netflix.

[00:29:00] Jon: Yes. That’s a very good point. You have these licenses and sub-licenses. A famous example is The Walking Dead, where you originally have a comic book, then a TV series, and you have different licenses, so you have different games, and only the ones with AMC can show the actors’ faces.

[00:29:23] Asi: Correct. We worked with that license, and you can work with the TV show producers, and you can work with the comic book, graphic novel writers, and it’s a different place.

[00:29:37] Jon: Rachit, I’m sure there are many more examples of horrible complexity. That’s what your platform’s supposed to deal with. Can it deal with it, or are there things so complex that you can’t design for them?

[00:29:51] Rachit: Yes, look, it is case-by-case. This is a space where there are negotiations, and these deals don’t happen like an online marketplace where you add it to your cart and check out. You’re not just buying groceries. There is a back and forth, and we are always trying to get our licensors and licensees talking together, ensuring the rights are available in the right way. That we know that if it’s a comic book IP and it’s had a film made, can we access that?

Because if we can access that, it may change how they will work with the game. If they can’t, they’ve got to consider the narrative that’s available from the comic book series. It’s part of it, and that’s very hard to automate. We love that back and forth, and we know that’s part of it. It also is part of making sure that the licensor feels comfortable that you’re respecting that IP, that franchise, and everything that they can and can’t do.

No, we don’t necessarily standardize that entirely, but we try to get as much of the work done in the lead-up to that to ensure you can have more discussions. If you think about most of the market, most developers and publishers aren’t even having those discussions with licensors and aren’t in that room. If we can get more people to that point, if they’re two parties that do want to work together, I think that’s a positive outcome because, in that case, they’ll generally try and get to that win-win situation for each side.

Are brands interested in getting their IPs licensed?

[00:31:39] Jon: More generally, you’re like a marketplace where there’s a lot of demand from developers who are, at least, interested to see what’s there. I just thought on more generally, have you found the supply side, which could be, you said, brands are interested in getting their stuff licensed, but you want quite a range of brands?

You want something other than one brand. Have you found the platform something that all brands are interested in, or has there been more of an education process?

[00:32:10] Rachit: There’s a bit of both. We currently work with a couple of hundred IPs, so it’s quite wide-ranging. It goes from characters, film and TV, consumer brands and automotive to individual talent and celebrity types. Whilst everyone is protective about ensuring everything is respected and done correctly, most people are stoked to understand and are quite aware of how big the gaming market is.

If you’re a forward-thinking licensor, you must figure out how to ensure that we set our IP and properties up in that space where the audience is. Gaming has changed so much over the last couple of decades that the number of players and types is so broad. It’s very much mainstream media, so if you’re not there, you’re risking your IP by not keeping it relevant. We see positive things overall.

[00:33:17] Jon: Cool. Good. Well, thank you very much to everyone for the discussion today. We’ve covered a lot of stuff as ever. I’d be scratching the surface with these very in-depth topics, but it’s good. Your homework for today is to go and check out Layer Licensing and see if something piqued your fancy. Thank you very much to Rachit and Asi, and Kalle.

[00:33:39] Asi: Thank you.

[00:33:40] Rachit: Thank you.

[00:33:43] Jon: Thank you for watching or listening to the podcast; however, you’re consuming it. Please subscribe by your platform of choice. Every episode, we talk to people building out these exciting new models in the mobile space, which, as we all know, never ceases to tell people, is the biggest part of gaming. Although some other people in gaming still don’t seem to recognize that, there we go. Mobile is where it is all happening. Please subscribe to the podcast, and I look forward to seeing you next time. See you. Bye.

[00:34:12] Asi: Bye-bye.