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The Next Wave of Free-to-Play: Licensing
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The Next Wave of Free-to-Play: Licensing


June 16, 2011 Article Start Previous Page 3 of 3
 

Indeed, at Burlingame, CA-based CrowdStar, CEO Peter Relan sees in-game licensing as "lower hanging fruit," and, at the moment, prefers the smaller investment it involves compared to more expensive full-game licensing.

"I'm neither a fan nor am I not a fan of licensing an entire game," he explains. "But because the investment can be four times the magnitude higher, we are currently involved only in in-game brand integrations which is better understood, is less complex, and requires less development time. Full-game licenses are not on our drawing board but it is something we are investigating for the future."

One of the developer's more successful in-game licenses involves the Old Navy brand and CrowdStar's It Girl game in which users are challenged to become the most stylish person at cool events around the world by visiting stores and searching racks for fashionable outfits.

CrowdStar created an Old Navy store in It Girl where, rather than buying generic jeans, users could make in-game purchases of Old Navy jeans. Over 9.5 million users visited the store, 7.5 million racks were searched, 5.5 million garments were purchased with in-game cash, and 300,000 Old Navy gifts were sent to friends.

Similarly, in CrowdStar's Happy Aquarium, the developer introduced Bon Jovi-themed wallpaper, guitars, and a drum set that gamers could purchase to decorate their fish tanks.

"This is an ongoing effort on our part to find just the right brands to license and incorporate into our F2P games," says Relan.

Meanwhile, CrowdStar would only entertain the idea of creating an entire game around a brand if "the brand has a natural fit to our sort of game design skills and our audience management skills," he adds. "The investment may be high, but we might go for it if we feel the payoff isn't that risky, if we are pretty sure we can monetize users, and if we're confident we can get our investment back and make a good return on it. So far we haven't found that sort of synergy, but obviously our recent investment from Time Warner has given us a huge library of brands to sort through."

Indeed, even Bigpoint and Gazillion -- which are actively engaged in full-game licensing -- recognize that there are advantages to creating your own original IP, like not having to split revenue with an IP holder. And, if a developer's original IP is wildly successful, they can leverage that IP to build multiple businesses.

"An obvious example is FarmVille," says Gazillion's Fiden, "which has become really valuable IP for Zynga."

The bottom line, says Bigpoint's Hubertz, is that even with licenses, there are considerable risks that begin with license selection.

"If you choose a license that's really nichey or that doesn't have a huge fanbase, you may turn off gamers who might not want to play your game regardless how much fun it is," he advises. "This is a real hit-or-miss business; just because you have a license doesn't mean your game will be successful or that you'll get your money back. Licensing may be even riskier than creating your own IP -- you have to pay a license fee, a guarantee fee, royalties on your revenue, and so on. And you have a license owner looking over your shoulder which makes game development that much more difficult.

"We plan to launch a couple of licensed games next year," he says, "but whether they will be successful, well, that depends on how well we've picked the licenses. Only time will tell."


Article Start Previous Page 3 of 3

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