Eric Goldberg, managing director of Crossover Technologies, told me this week at the GameDaily Connect event in Anaheim, California, that a huge amount of money and lots of investors are circling around game developers. 17 venture capital firms are putting money into games.
Google, Amazon, Apple, Microsoft, Zynga, Sony, Tencent, NetEase, and others are busy pouring money into games or acquiring game companies. It’s clearly a golden era for games, compared to a half-dozen years ago when it was near impossible to get money.
Much of that money is going into games with branded intellectual properties or Hollywood licenses. And some tectonic shifts have happened there lately. Disney bought Fox for $71 billion last year, and AT&T bought Time Warner for $85 billion.
The fallout from those deals hasn’t fully played out yet. I suspect that Disney, which has focused only on licensing its properties to external game makers, will likely sell off FoxNext Games, which was attempting to build games internally as a third pillar at Fox alongside movies and TV.
And AT&T may likely sell off Warner Bros Interactive Entertainment — which is a jewel of Hollywood and games because it owns a dozen internal game studios — just to pay off some debt. I don’t have inside knowledge here, but both of those scenarios seem likely. And it’s all a reminder a tremendous amount of money is associated with Hollywood and games.
Fear is not helpful
These big game divisions within Hollywood companies are going to be watched closely by their non-gaming executive overseers. If they don’t generate the profits wanted, they may get sold off. I would hate to see anything happen to Warner, as it built those studios over more than a decade. It can now launch big games every year, even as each studio takes multiple years to make a game.
FoxNext is in a tough state, as it has one big hit with Marvel Strike Force ($175 million in revenue and 22 million installs). But the young FoxNext does not yet have revenues coming from titles like its Avatar strategy game or its Aliens shooter title (coming next year). I would bet this studio is still in an “investment stage,” or losing money, and that Disney CEO Bob Iger will notice if the red ink lasts for a while. If the live operations can kick in for long enough across multiple games and platforms, I would imagine even Iger would be happy.
In spite of such specters looming over his head, Aaron Loeb, president of studios at FoxNext Games, delivered an insightful and calm talk, ironically inside the Disneyland Hotel’s convention center this week, where the Mouse has demonstrated that it doesn’t have as much love for games as theme parks and films. He said Fox had an enlightened view of games, as it did not view games as merchandise. (Sadly, Disney has done so).
But Loeb said that it is not useful to focus on fear. Things can happen. Divisions can get sold. Owners can misconstrue the purpose of games. They might not recognize their value. But game developers have to be inspired to be creative to do their best work.
“Another really useful lesson we learned from our Hollywood pals, which I now try to internalize every day is that as a creative executive, as somebody whose job it is to invest in somebody making something, your fear is not useful,” Loeb said. Nothing great comes from an environment where the creative executives pile fear on top of the already fear-ladened developers.
Loeb said that what works is to gather right team and get the right idea at the right time. And that creative team has to swing for the fences.
But it’s not easy to do that. Telltales Games, which collapsed in late 2018, is a cautionary tale about using Hollywood licenses. Telltale figured out that great writing and narrative teams could deliver outstanding games like The Walking Dead.
But when it swung for the fences, things started to go wrong. The contracts had revenue guarantees, but the games began to underperform. They required tremendous art resources, and Telltale’s team swelled. Its graphics engine began to look old. It went after too many game licenses all at once, and the quality suffered. The company collapsed, and only this week did a team of investors led by Jamie Ottelie at LCG Entertainment buy what was left of Telltale.
Ottelie said at the conference that it took six months to untangle all the legal issues related to buying the assets out of administration. Some IP holders took back their licenses, like Skybound taking back The Walking Dead. The deal itself showed Hollywood’s complexities.
If it’s a licensed property, it has to match with the property owner’s wishes, said Barry Dorf of Amazon Games business development and a former EA veteran. J.K. Rowling’s Harry Potter novels generated lots of revenues for Electronic Arts back in the day, but she was a stickler to make sure the games stuck by canon and depicted things the right way. That slowed production. Eventually, Rowling stopped caring about every little detail.
But authenticity is always important to ensure that a game lives up to a film or TV property, and that means that, even if a game has an original story, it has to feel like it fits in the same creative universe, said Steve Fowler, senior vice president of FoxNext Games, during a panel I moderated at GameDaily Connect.
At Lionsgate, we’re getting a very authentic horror game today from Team Bloober based on the Blair Witch film license. Made 20 years ago, the original film was scary in part because you never saw the Blair Witch; you only knew she was messing with the minds of the hapless characters in the film. Likewise, in the game, you only see the Blair Witch’s influence in the spooky woods.
Hopes for games that could be
Yet even if the developers can deliver something authentic and awesome, a big Hollywood property might never be made into a game. The valuable The Hunger Games license never got exploited properly as a battle royale game because the author didn’t want to glorify violence. I’d love to see a game based on Stephen King’s The Dark Tower series, but I’m not holding my breath because the 2017 film bombed, yielding only $50 million in domestic box office receipts.
I also wish that Inception got a game. But I am happy that HBO is moving into games with Survios and is delivering a Westworld virtual reality game, dubbed Westworld Awakening. Netflix is also getting into games with Stranger Things 3, and Apple is greenlighting games.
My highest hopes are for works based on the worlds of fantasy author J.R.R. Tolkien. Jeff Bezos, CEO of Amazon, loves The Lord of the Rings, and he was able to secure a license to create a TV series based on the Second Age of Middle-earth, when Sauron doomed Numenor.
Amazon and Leyou’s Athlon Games recently announced they are working on a game based on that license. It has a lot of potential, but it isn’t yet everything I would like it to be. That’s because the complexities of the license are enormous.
The only reason we got the Peter Jackson movies was that Tolkien himself licensed movie rights to the Saul Zaentz company in the 1970s. Zaentz fathered the disastrous Ralph Bakshi film, but Jackson picked up that sublicense and, working with New Line and Warner, made some great movies that were in turn licensed to Electronic Arts. But EA could not go beyond what was in the films.
That’s because the Tolkein Estate, inherited by J.R.R. Tolkien’s son Christopher, held the rights to other books, such as the First Age book, The Silmarillion. I always thought that Tolkien book had the richest universe of characters, stories, and places. But the Saul Zaentz Co., now called Tolkien Enterprises, didn’t have the rights to that book. Tolkien Enterprises had the rights to what was described of the First Age and the Second Age in the appendix of The Lord of the Rings, but not much content existed for those periods. The Tolkien Estate has since fleshed all that pre-Lord of the Rings history out with additional books.
Christopher Tolkien, 94, has finally retired from his role in the estate, and his grandchildren are more likely to license films and movies than he was. I hope that the Silmarillion comes to life, both in films and games. But that would require a license from the Tolkien Estate, not just a license from Tolkien Enterprises.
Let us hope that these rich Tolkien films and shows and games will happen, and maybe the game companies will ultimately acquire the Hollywood IP holders themselves and that someday the true potential of Hollywood and games will come together.
The organizers of GameDaily Connect paid my way to Anaheim. Our coverage remains objective.