Sunday, April 13, 2014

THE FUTURE OF THIRD PARTY INTELLECTUAL PROPERTY FRANCHISES

It is an interesting question what will happen to games, which are based on third party intellectual properties like FIFA, NHL, Madden NFL, UFC and other capital letter titles. Granted there is a BIG up as these titles do have ready following and many people do prefer a game with their real life heroes on it instead of generic characters. Today this is especially important because a basic unit for development budget keeps pushing up from million to ten millions.

However it is not your content so you need to pay for using the franchise theme. Also you can't turn the product into something else because you need to follow pretty strict guidelines regarding the brand - so no sharp metal sticks in NHL 2015 Extreme (which would be super fun). Also you end up sitting in many unproductive meetings regarding the implementation of the game and where the development is going and those meetings are already many enough without the third party implementation.

I know game companies are looking more and more into just creating their own content that can be turned into a cash cow. Rovio might be one good example that has now turned from game company into an entertainment company, which licenses its content to others. Rovio has tremendously good profit margin and while making good money from their IP they have managed to steer away from expensive product development as now they don't have a need to code up game engines without knowing if the product will sell. Unfortunately you never know what will be a success!

Third party IP will probably stay there as the games have carved up a solid segment for themselves, but I believe you need to go forward by creating your own original titles to capitalize the success.
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