The insane success of the incredibly popular and lucrative Kim Kardashian branded mobile game developed by Glu Mobile suggests that celebrity IP can catapult games apps to the top of the charts. But a review of recent hits and misses shows that developers need more than a major name to make it big. In a crowded market – where massive marketing costs and regular payments to rights holders can devour fortunes, not make them – app companies need to rethink how they structure deals and share the burden.
“App companies have got to be far more aggressive and assertive when they negotiate marketing commitments, and not be blinded by the IP, or the money they think they can make with it,” observes Nusrat Shah, CFO of Exient. The award-winning UK games studio is best known for its work on the Madden, FIFA, Need for Speed, Tiger series for Electronic Arts, and Angry Birds Go and Angry Birds Transformers for Rovio Entertainment.
In particular, smaller, independent app developers should also be wary of negotiating deals with high upfront payments. It’s all about having a realistic timetable and making the right choices, according to Russell Binder, a partner at Striker Entertainment LLC, a marketing agency specialized in licensing and the extension of pop culturally relevant brands into consumer products programs including mobile games. “You have to know your development timeline and budget for the game. And you need to make sure you’re not so top heavy in guarantees that you run out of funding to complete the game and launch it without a significant marketing commitment.”
At Cosi Games poor timing, not planning, produced what Josh Blitz, the studio’s CEO and Co-Founder calls “an extreme example of how strategies based on IP can go severely and seriously wrong.”
Committed to creating “the next wave of celebrity-focused mobile games,” Blitz recalls the story of how his company struck out in late 2014 to build on the success of its hit game Pelé: Soccer Legend by releasing a game featuring boxing legend Muhammad Ali. Over a year of hard work produced a solid game, but the coincidence of the launch – which unfortunately coincided with the athlete’s death – was bad timing (and a bad rap) Cosi couldn’t shake.
“Ali passed and we couldn’t get over the hump of people thinking we made the game to exploit his death,” Blitz recalls. Even the pledge to donate all proceeds from the first month of charity and 5-star ratings from users who loved the gameplay, couldn’t quiet trolls and critics. Downloads dwindled and operating costs – compounded by the royalties payments guaranteed IP owners – spiraled.
Cosi Games closed the gap by working with Pollen VC, a FinTech company with offices in London and San Francisco that provides app developers and companies early access to revenues they’ve earned from the app stores. Accelerating access to earned revenues allowed Cosi to keep pace with its contractual commitments, and fund the development of two new games sure to reboot the company’s reputation for producing world-class sports games and gameplay. “You need to be well funded to work with IP,” Blitz explains. “If you’re not, then you have to take advantage of models that will allow you to access the money to have it ready to pay IP owners and invest in the marketing to grow and scale your game.”
Today Blitz evangelizes against relying on big-name IP for big wins. “Games have to have the metrics in place, supported by solid KPIs and a good user experience, “ Blitz explains. “Don’t hedge your bets on IP.”
Good advice since even top-name IP can miss the mark. The easy and obvious example is Kim Kardashian Hollywood vs. Katie Perry Pop, two mobile games from Glu Mobile that followed similar concepts, but met very different fates.
At the time Glu’s CEO Niccolo de Masi made the bet that Perry’s massive social following (79.1 million followers on Twitter compared to Kardashian’s 37.8 million) would likely translate into significant sales. “Size of social following, uniqueness of genre, ability to fit the core aspiration of their fan base to the game mechanic are the things that we look for,”Masi said in an interview with Variety. “If you think about how much money people paid for Super Bowl commercials during her halftime performance in February, we’re effectively channeling that promotional power and brand power to this game.”
In contrast to Kim Kardashian Hollywood – which became a monster mobile release – Katy Perry Pop was declared an immediate flop. It failed to reach the top grossing list in either the U.K. or U.S. markets. In fact, Forbes estimates that Katy Perry Pop was downloaded just over 1.3 million times, likely generating only six figures in revenue. As of June 2016 Kim Kardashian: Hollywood has pulled in more than $157 million in sales since launching in 2014.
Keith Boesky, the principal at Boesky & Company, a boutique advisory firm focused on the games industry, suggests Katy Perry Pop flopped because it because it failed to “build something that is organic to the license and a value-add to the audience.” It’s a simple strategy but getting harder to execute in a market that is oversaturated with leisure choices. As Boesky sees it: There is a massive shift underway, driven by the desire of games companies to evolve into platforms and dominate audience attention. Winners will be the ones that in becoming the “anchor for their audiences’ leisure time choices and the hub for their experiences.”
Embracing this approach has helped Next Games, the makers of the blockbuster mobile game The Walking Dead: No Man’s Land, triple revenues from €31.1 million in 2016, up from €9.7 million the year before.) Earlier this month Next Games marked yet another milestone – becoming the first games company to go public on NASDAQ First North Finland.
“A game cannot be a marketing vehicle for the original IP,” Next Games CMO Saara Bergström tells me. This conviction – and a “selective and systematic” approach to licensing IP – is at the core of the company’s continued success. “We made the decision early on that we didn’t want a relationship where [the rights holder] hands over the license like the key to a Ferrari and checks back in a year to see how the game is going,” Bergström explains. “We wanted a close collaboration [with the rights holder] because we saw that it was the only way to create bespoke experiences around the brand that really resonate with the fans.”
Fortunately for Next Games, both the cable network (AMC) and the writers share this conviction. For Season 7 of the series, for example, they let Next Games developers read the script in advance, allowing them to create fresh content for the game that was in sync with the latest episode. Audiences were able to watch the show on Sunday and then play new levels of the game on Monday, perfectly matched to action and themes from the TV show. “Fans love it, and it’s a good return on investment for us as well,” Bergström says. “It’s a great way of working with IP and the way we want to make licensed games in the future.”
Andrew Green, head of business operations at the TinyCo (a division of Jam City) tells me close collaboration with show creators enhanced by “tons of additional licensing deals and talent deals” was the recipe for success that turned niche IP into a mobile game with mass appeal. Family Guy: The Quest For Stuff made the list of top grossing games apps within the first week of launch (and without paid user acquisition).
It’s the blueprint TinyCo is following to produce Futurama: Worlds of Tomorrow. Show creators Matt Groening and David X. Cohen are involved, and the show’s original voice actors, animators and writers are on board. What’s more, paid user acquisition (“because the tools and data are much better today than they were a few years back”) is sure to move the needle on the new mobile game slated for release this summer. It’s a lot of effort, Green says, but it also sends a clear signal to IP holders (and the market) that his studio is a solid partner with a firm grasp of the metrics that matter. “That’s what creates value for you, your partners and IP holders,” Green says. “It shows you’re going to take care of their brand and you’re serious about your business.”
There will always be companies that want to make a killing with killer-IP. But that’s a short-term win. The sustainable competitive edge belongs to studios that dedicate the extra effort and budget to negotiate deals to enhance IP – not exploit it – through partnership, promotion and a well-defined path to profit.
This article originally appeared on Forbes.