Warner Bros. has invested heavily in superhero console games like Batman: Arkham Knight. But Marvel Entertainment has taken a different approach. Rather than use internal development studios to create huge console titles, Disney’s Marvel has turned to licensing. It works with outside game developers to infuse the Marvel characters, storylines, and environments into mobile and online games.

Those games are generating serious amounts of money and downloads, but they’re a very different beast from the Batman games. Peter Phillips, Marvel Entertainment executive vice president and general manager for interactive and digital distribution, is in charge of the games strategy. His approach has different kinds of risks than others. Disney just decided to end its Infinity toys-to-life video games and eliminate 300 jobs associated with that console game business, mainly because the toy-game market has stopped growing and competition has become too plentiful.

In the console business, Disney will put greater emphasis on licensing through deals with companies such as Electronic Arts, which made the Disney-licensed Star Wars Battlefront game. But Disney will also develop games with a mixed strategy of internal and external studios for its Disney Mobile business, headed by Phillips’ colleague Chris Heatherly.

Phillips said that Marvel’s expertise is in storytelling and characters, and making great pieces of entertainment from the 9,000 characters in the Marvel universe. Marvel will license these characters to companies like Kabam, Gazillion, and Netmarble in the mobile and online game markets, allowing those development companies to focus on what they’re good at: gameplay.

Ian Sherr, executive editor of CNet, interviewed Phillips on stage at our GamesBeat Summit 2016 event in Sausalito, Calif. Here’s an edited transcript of their conversation.

Marvel Contest of Champions has generated more than $200M in revenue.

Above: Marvel Contest of Champions has generated more than $200M in revenue.

Image Credit: Kabam

GamesBeat: Can you quickly walk through what you do, where you sit in the structure of Marvel?

Peter Phillips: My job involves three parts. The interactive piece of what I do is digital media, websites, apps, social media, plus games, which is separated out at our company. The third piece is content distribution to emerging platforms like the Netflix series, Daredevil and so on.

GamesBeat: You were talking about how Marvel is a pretty flat structure.

Phillips: We’re pretty non-hierarchical, yeah. It’s a lean organization. It works.

GamesBeat: We’re here to talk about how you take these very intricate storylines and get them, into something that works for video games. What’s the process like, taking a narrative from a movie or comic—you’re looking down the barrel of a movie that might make a billion dollars. How do you turn that into something that works for a game?

Phillips: If you look back a bit to movie-based games, that’s something that worked at a time, but doesn’t necessarily fit our current approach. We like to infuse a lot of the storylines of our current films—it doesn’t necessarily have to be a film, either. It can be a TV show or a comic. We put out comics content every Wednesday. One of the luxuries of working at Marvel is we’re constantly bringing content to the marketplace.

We take our existing titles – especially in mobile, because they’re live services games – and start introducing themes and storylines that give a nod to those other events. Captain America: Civil War, which opens Friday here in the states—we’ll have things that give a nod to that film, whether it’s characters, costumes, or storylines, especially since it pits key characters from the roster of the Avengers against each other. You’ll see that in a lot of the games we have on the marketplace.

GamesBeat: You’ve done events around previous things like Age of Ultron. For one of your games you introduced a whole event happening around that time. You didn’t have an individual game. You just marked a point in your ongoing games.

Phillips: Right. We did that for Age of Ultron, and we also did that for Ant-Man in 2015. Sometimes we’ll have a whole section of a title that’ll be a nod to a movie. We’ll go further. We’ll even have exclusive content in a game that you might see for the first time through the film.

Peter Phillips of Marvel with Ian Sherr, executive editor at CNet

Above: Peter Phillips of Marvel with Ian Sherr, executive editor at CNet

Image Credit: Michael O'Donnell/VentureBeat

GamesBeat: That kind of thinking has changed over the past decades. I remember when people would take a whole movie and try to re-create it in a game. Plenty of examples were somewhat successful sometimes. Why have views on this changed?

Phillips: If you think about a film, for example, the medium of a motion picture constrains it. You have two, two and a half hours to tell a story. The luxury of having a game is you have hundreds of hours of potential gameplay, and we can use that to tell a much longer story. It’s one of the reasons why I love this business. For two and a half hours you can fit in 20, 30 characters. In a game we’ll get dinged if we put in less than a couple hundred. We have an opportunity to create a much greater depth of story and introduce many more characters.

It also gives us an opportunity to do a tip-of-the-spear sort of thing. If you look at our business—we’ve heard a couple of people today talking about how dear Marvel is to them from their childhood. People collected comics when they were kids. That’s not necessarily the case in every part of the world. Marvel is much newer in markets like China. That’s been an amazing market for us, but people know us there because of the Avengers films.

It’s our job to go into new markets and introduce our brand by showing that it’s not just about the Avengers. The Avengers are wonderful, but we have 8000 or 9000 characters and incredible depth of stories. That’s the opportunity.

GamesBeat: Do you think of these games as the tip of the spear in terms of bringing new people to your audience? If you go back, a lot of them used to be fan service. Thinking of Lord of the Rings or Star Wars games, they were mostly just about reliving familiar moments. Is it different now?

Phillips: It is. Our games aren’t fan service in the sense that you just defined it. They’re certainly a nod to our fans. We thrive in the mid-core area. We have plenty of games in that genre. But we’re also in casual and family titles. What’s important for us is to not only give something to people who are very familiar with our brand—certainly when we have a new title we get people talking about it for months in advance. We release news and they’re really excited. They’re the first to play. But it’s also an opportunity to onboard people who aren’t as familiar with our brand.

Certainly it’s an opportunity internationally, like I just mentioned, but it’s also an opportunity to get people familiar with our company in depth. That’s even the case in a market like the United States where people know Marvel pretty well.

Peter Phillips, executive vice president and general manager at Marvel Entertainment.

Above: Peter Phillips, executive vice president and general manager at Marvel Entertainment.

Image Credit: Michael O'Donnell/VentureBeat

GamesBeat: There are some examples that run counter. If we think about the Lego games, those re-create the characters and the universe. But they also have that tongue-in-cheek aspect to it.

Phillips: Lego is unique, yeah. They have great style. Everything they do in their games is hilarious.

Lego has some titles that are very similar to the films, but we also just released a title with Lego a couple of months ago that was a nod to six of our films, our TV shows, and our publishing business as well. It’s an amalgamation of all that stuff. An incredible depth of storytelling allows us to release a game of that size.

GamesBeat: When you were doing that, were you thinking of—obviously the average age of a Lego player is a little younger. Is that pulling people in? How are you balancing it when you do a game like that?

Phillips: Lego is definitely a family title for us. It has a lot of longevity. Lego gives players an opportunity to not only play games that involve skill and achievement, but there are also parts that offer an open world. For us it’s an opportunity not only to bring in a younger demographic, but also get kids playing with their parents. We see that a lot with those titles. It’s an opportunity to onboard both groups. Lego also has a thriving consumer products business, which is a big piece.

GamesBeat: How do you choose who to work with? Marvel has partnered up with a lot of other companies – Kabam, Lego. How do you figure out who’s right and who’s not?

Phillips: It’s a bit like dating. It’s a fit thing. We’re seeking partners to develop games that fit the depth of our characters, the authenticity of our stories. Our IP is very important to us. The approvals, as folks in the audience may know—it’s difficult to get things through from time to time. We’re rigid about making sure it’s true to Marvel.

But we look to be partners. We look to make sure that the story fits with how we would tell it, so somebody who knows Marvel can say, “Yeah, this is a Marvel game,” and it’s something they can enjoy. We typically sit down with a potential partner and talk about ideas, whether it’s a mechanic that might make sense or an idea for a story. Sometimes we want to make sure we try something different. We released a builder a couple of months ago that was different for us, reimagining the Avengers if they were in college. It was something no one had thought of before.

GamesBeat: What did you learn from doing that, from the response to trying something very different?

Phillips: It’s probably too early to make a definitive statement. The game’s gotten a nice response. It’s charting. A lot of what we’re going to continue to try to learn—can we take that IP and do more with it? That’s what we do with games. What’s important in our business is extending games across multiple sets of our business. Can publishing use it? Contest of Champions has a publishing line that came out of that. Can consumer products do something? That’s important, because we’re creating intellectual property.

Peter Phillips of Marvel and Ian Sherr of CNet at GamesBeat Summit 2016.

Above: Peter Phillips of Marvel and Ian Sherr of CNet at GamesBeat Summit 2016.

Image Credit: Michael O'Donnell/VentureBeat

GamesBeat: That’s one interesting thing about the Disney world in general. You take one piece of IP, and because it’s Disney, you can send it all sorts of different places – TV, movies, books, toys. A lot of game companies aspire to be able to do that. You start there off the bat.

Phillips: Chris is here from Disney, a close partner. We do games together with his division. A lot of times we’ll look at different lines of business we have and see what we can do. Can we have talent promote the titles? Can we integrate storylines with different lines of business? Publishing is the easiest, because as I said, we put out stories every Wednesday. It’s important for us to cross lines of business. Our fans are watching our TV shows, buying products, and playing games all at once.

GamesBeat: We were joking that you’d get a question about AR and VR at some point, so what do you think of AR and VR?

Phillips: I’d love to say something controversial, but I probably can’t. Like everybody, we’re focusing on it. It’s interesting. There are some things we’ve done at the company that touch the surface, especially with our advertising partners.

GamesBeat: A lot of it’s marketing-focused?

Phillips: It’s marketing-focused. There’s a marketing execution around the film that opens on Friday. That’s interesting. In terms of the real big win, how we integrate it down the road as the consumer base absorbs it—we’re spending an awful lot of cycles on learning more about it and figure out how that can happen. There’s a lot of internal work being done at the company, all across the Walt Disney Company.

That’s probably the most I can say, but I do think it’s going to be incredibly rich, especially for gaming. I can’t imagine that we won’t have some fantastic experiences leveraging it.

Marvel: Contest of Champions Iron Man character at ChinaJoy.

Above: Marvel: Contest of Champions Iron Man character at ChinaJoy.

Image Credit: Dean Takahashi

GamesBeat: Do you imagine it’ll be dipping toes a bit the way people did with IMAX, where movies would do a scene in IMAX, little pieces, and it became a bigger and bigger thing? Is that how we’ll see VR play out broadly?

Phillips: It may. We’ve done stuff already. If anyone follows Comic-Con, we’ll have somebody film or follow interviews and things like that using 360 cameras. We’ve had opportunities to enrich those opportunities. But those are spots in a larger program of coverage.

GamesBeat: You had the Professor X experience at one Comic-Con.

Phillips: That’s right. That’s a good way to see how we’ll probably start. We’ll walk before we run.

Question: As you’ve gotten into the game business, what mistakes do you think Marvel has made that you might have learned from? And are there mistakes your partners have made that we can learn from?

Phillips: I talked before about who we look for in a partner. One of the most important things for us is somebody that honors our authenticity and our IP. We really do strive to make triple-A-quality titles. It’s easy for me to say that, but it’s important, because if things don’t feel like Marvel—we know we have to work through it.

One of the things that’s important for my team, to answer the second part of your question, is not to think like we know how to develop the game. We’re not game developers. We’re predominantly a licensing entity. We know how to tell stories. We know what the Marvel brand should look like. But we don’t know how to build a platform or an engine. That’s not necessarily how some of the other companies in our space work.

It’s really about the fit, like when I mentioned dating before. Can we work together? Can we collaborate in a way that people understand where the strengths of the Marvel games team are and where the strengths of the developer lie? Is there an existing engine? If you haven’t worked in this space – if you want to do a card battle game and you’ve never done before – why do you think this is going to work? Why will people download it? Why will fans stay there?

We’ve had games that people downloaded, but they abandoned them right away. We’ve had games with tens of millions of downloads, and that’s an amazing stat, but it’s not monetizing. It’s not something anyone can invest in. If the partner’s not happy, we’re not happy.

Marvel: Avengers Alliance 2 is making the leap from social to mobile.

Above: Marvel: Avengers Alliance 2 is making the leap from social to mobile.

Image Credit: Marvel/Disney

GamesBeat: I’m curious about the continuum of micromanagement versus letting the developer be the game experts. I’m sure you guys have swung back and forth along there over time. How much do you control your IP as it’s being used by companies that don’t own it?

Phillips: Micromanaging only comes in when you want to make sure that the brand is being used correctly. The great thing about the team we have in place now is—the games that are the most successful, it’s like a love-fest. We have some games in development right now where I get texts with photographs from the development shop where everyone’s in Spidey poses. Everyone’s excited because they’re making an exciting game. They see eye to eye on what it should be. The story is great.

We typically have comic writers pen the stories for our games, like we did with Contest of Champions. Like I said, it comes back to authenticity. Future Fight, Infinity, the list goes on. It helps. But that’s really the key. We don’t want to micromanage the process. The brand is the most important part. We’re not as involved with mechanics.

Question: How many licenses do you like to involve in a given market or a given platform over certain amounts of time? Do you see a benefit in limiting yourself in that way?

Phillips: A couple of years ago, especially when mobile first got hot, we took a bit more of what I’d call a consumer products approach. We were jamming in a bit more. We started to see some of our games have success and longevity, but as the marketing spends were taking effect, we realized we needed to give them a bit more breathing room.

I can’t tell you we have a model where we do one a quarter or one every six to eight weeks. But you’ll probably see fewer, higher-quality titles. The one exception there isn’t about quality, but it pertains to your question about regions. Especially in Asia, for example, we have platforms that are very specific. You can fill in the blanks. We’re very open to doing region-only games. They may happen at the same time as a global game. That would be reasonable for us to do. But we’re not going to say we’ll do one game a month. Our most successful games have had time to breathe and embed themselves, especially with the proliferation of so many great games in the marketplace.

GamesBeat: We’ve seen the growth of games as a service. Does that mean that over time you don’t need to put out a packaged game with a disc at every X interval? You can rely on building a better game over a year or two years or more.

Phillips: That’s right. The Lego game we talked about before is a perfect example. We’re producing downloadable content for it, including for Civil War, that’s relevant to existing events. Games as a service is important to us because we look at games as a window into what’s happening with contemporary Marvel. It gives us an opportunity to keep it alive.

A lot of times games will have their best periods well after when they came to market. That’s not just true in mobile, but with console and PC titles as well. Games as a service has been the reason our business has thrived so much over the last couple of years. It’s not that boxed-product mentality where once you set it, you forget it.

Peter Phillips of Marvel and Ian Sherr at CNet talk about entertainment licensing strategy.

Above: Peter Phillips of Marvel and Ian Sherr at CNet talk about entertainment licensing strategy.

Image Credit: Michael O'Donnell/VentureBeat

GamesBeat: Our theme this year is underdogs. I wonder how you view Marvel sometimes in relation to your competitors. How do you turn weaknesses you have in your position into strengths?

Phillips: Going back to the question before, we don’t do our own development. Sometimes we have to give a lot of trust to our partners. We talked about micromanagement. I’d love for my team to have every last say on everything, but that’s not reasonable in any capacity. That’s why fit is really important.

I know I talked about triple-A and quality and that sort of thing. That doesn’t mean there’s only three or four studios we work with. I’m very interested in working with quality developers and upstart companies that have great ideas. I mentioned Chris before. We talk about this a lot. It’s more about the idea of how you can make a great game and what’s going to differentiate it in the marketplace.

I’m sitting here making sure that people download our games and play them, but I’m not only competing against the rest of the marketplace. I’m competing against other apps, digital comics apps, consumer products apps that people are finding in their searches and downloading. It’s about how you differentiate and make it so people want to play.

GamesBeat: Is there a point where you’ve produced too much stuff? Deadpool came out on iTunes and I was realizing that there were so many Marvel films, so much Marvel stuff. You have a long history of producing content, so I’m sure you think about this. What is the ceiling?

Phillips: I have no idea where the ceiling is. I really don’t. All I know is that the film coming out Friday is the third superhero movie of the year. The first two did phenomenally well. We don’t have plans to scale back. We’re a business, so we’ll have to keep looking at what the market will bear. But the appetite for this content is incredibly strong.

It’s our job to make sure that what we’re offering is a quality product. I run my business that way. I make sure we continue to listen to our fans and all our consumers and make sure we optimize. If we’re spending money against something that’s not ROI-positive, we’ll have to start pivoting.

Peter Phillips and Ian Sherr at GamesBeat Summit 2016.

Above: Peter Phillips and Ian Sherr at GamesBeat Summit 2016.

Image Credit: Michael O'Donnell/VentureBeat

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