Day: October 11, 2011

Events over the last weeks are showing that there is a tremendous opportunity for brands and IP from other media to make a major impact in social gaming. In fact, when we were pivoting Merscom from casual to social games, there was a strong belief from Zynga down that there was no value to IP in the social gaming space.

Properties Prove Their Value

In the past few weeks, entertainment properties have clearly shown they have a place in social gaming. After 20+ social game launches, Ubi Soft had its first real success, The Smurfs & Co, which exceeded 1.3 million DAU with no Facebook advertising. More recently, the Dirty Dancing game (based on the Lionsgate IP) has been in the top-10 of fastest growing Facebook apps almost every week since its launch. The most interesting, and telling, development is Zynga’s decision to use the Indiana Jones name with Adventure World. As Zynga never makes an arbitrary decision, its data shows that using an IP such as this has a positive ROI. This phenomenon began with the first real success using a TV IP, AETN Lifetime’s Pawn Stars game. This Facebook game was able to break the top-50 with a brilliant cross promotional game tied to the TV show in lieu of Facebook ads.

How to Choose a Property

Succeeding with a brand is much more than just throwing a property on a social game. Our industry is not like the packaged software/game space, where a well-known property gets somebody to buy a boxed product in Walmart. Instead, in social gaming, the property helps elevate the game over the noise and get people to try it and hopefully enhances the gameplay experience; it does not guarantee revenue.

About five years ago at Merscom, we were able to become a top-5 casual game publisher even though our resources were much more limited (we had less cash ) than our competition by leveraging strong entertainment brands. Many of the lessons I learned during this period are applicable to social gaming, so here is how I recommend you evaluate properties:
1. Strength of the Property While a big property can have a huge impact on a social game, there are literally millions of properties available and many will have no impact on the success of a game. An old television series or movie is not likely to prompt people to click (unless, like Dirty Dancing, it has a strong relationship with loyal fans). The same can be said for many cable tv series as you are already starting at a much lower point than broadcast tv (the broadcast television networks – CBS, Fox, ABC and NBC – have orders of magnitude more viewers than even popular cable networks).

2. Demographic of the Property You need to make sure the show is popular with the demographic you plan on targeting. A show or movie that you love may not be particularly attractive for the core social gaming demographic. At Merscom, when we were using IP for casual games, our target market was 30+ women. The IP that had the most success for us was based on the Lifetime networks shows (particularly Blood Ties). It was not properties based on the type of television or movies I normally watched.

With social games, this decision is an even bigger issue. A key element of a game’s success is the ability to acquire users through Facebook ads. The costs of these ads vary dramatically based on the target demographic. Thus, if you license a property that targets 25 year old men (the costliest demographic), such as Two and a Half Men, it may cost you more than twice as much as it would to promote a game that targets older women. You need to license a property that will enhance your user acquisition strategy, not provide an additional hurdle.

3. Marketing Commitment of the Licensor In addition to the strength of the property, the Licensor’s ability and commitment to promote the title is very important. The costs of acquiring users on Facebook (and mobile social) continues to increase, so a major benefit you are getting in licensing an entertainment property is a low-cost way to acquire fans of that property. If the media company is simply looking to give you rights and then get a check without any effort on their part, there is very little value to the IP. Instead, you should look at the license (or different deal structure) as an integrated opportunity to get a property and promotion through the partner’s consumer touch points (TV, web, retail, other consumer goods, etc.). The inspired campaign I mentioned earlier that AETN Lifetime used to promote Pawn Stars (cross promotion between the game, on air with the television series and through the website) is the perfect example of how you would want your media partner to help you build an audience for your game.

4. How Well the Property Translates into a Game Even if a property does well on the above three criteria, it needs to extend naturally into a game. The recent Big Bang Theory social game is a great example of what not to do. Although it is too early to have definitive data, I will go on record as saying it will fail. I am not making this claim because of the property, it is a very popular show from a network that has enormous power with social gaming’s core demographic. But the property just does not work as a social game, thus the game (Mystic Warlord’s of Ka’a) has virtually nothing to do with why people like the show. The properties that do best as games are ones that allow developers to extend the experience to the game, not just slap it on as a marketing tool.

5. Deal terms While deal terms are important in any deal you do, and any licensing deal, they take on a greater importance in social gaming. Rather than just affecting total profitability, the deal terms can actually be the difference between a successful game and one that never gets traction. If the revenue share (royalty) to the Licensor is too high, it becomes impossible to promote the game. Most social game companies will buy performance advertising (i.e. Facebook ads) until the cost of these ads exceeds the lifetime value (LTV) of a new user. The lifetime value is a function of virality, retention and revenue per user. If a large part of that revenue is going to the Licensor, it drops LTV. The greater the revenue that goes to the Licensor, the higher the impact on LTV. Thus, if the deal is too “rich” towards the Licensor, you may never be able to justify promoting the game and it will never gain critical mass.

Parting Words

I have always believed that entertainment properties represent a great opportunity for social game developers and my convictions are stronger now than ever. That said, the recent successes of properties in our space will probably lead to everyone pursuing these properties and hundreds of branded social games in the not too distant future. Thus, to be successful, rather than licensing mediocre IP number 101, be judicious (and patient) in the property you select, negotiate a fair but not unreasonable deal and create a great game. At least that way you are putting the odds in your favor.