A Dummy’s Guide to Licensing IP in Game Design

When I began designing Makiavelia, I intended to create diplomatic intrigue experience, strongly inspired from Game of Thrones and the Dune prequels. And I thought to myself, “why not make a GoT or Dune version of the game?” It sounded so easy and within reach.

So in mid-2017, after I contacted Herbert Properties on Facebook, I was told the rights had already been licensed to another company. After further research, I found out that Legendary had licensed the rights. At the time, the news that Denis Villeneuve would produce a movie had barely surfaced.

So I didn’t let go and approached Legendary with an simple email stating I was working on a game idea based on Dune and wanted to inquire on the possibility to produce a game using this IP. Their answer? “Sure, send us a proposal.” At that point, I sat gaping at my email thinking “is that it? A 5 billion USD media company, and not even a standard process, form, or any guidelines whatsoever?” The realization had sunk that this IP idea was way above my league.

… Or was it?

I’m a stubborn kid, and when I heard the old Dune game would be re-issued and while GoT season 8 was about to come out, I knew I had to take a real look at this side of business before drawing conclusions. Since there was so little information available on IP licensing in game design, I set out to find few people who did. And it was a rewarding initiative: they’ve shared some pretty fascinating stories which I’d like to retell in another article. And before I get to that, I wanted to put together a quick intro to licensing IP in game design. Reading this sure won’t be equivalent to earning a degree in business law, but it will hopefully give you a generic overview of what licensing in the board game industry is about.

It Starts With Design

The first thing to consider is whether the use of an IP in your game makes sense from a design point of view. Making a game first, and thinking of applying a proprietary theme later, may work for the kind of large scale production you’d find in a supermarket, banking on a merchandising trend, but you won’t fool the board game aficionados, who will see it as a blatant design flaw. A solid game design will already include the IP’s universe and lore into the game mechanics from the outset. If the design came first and the game turned out to be a great match for an IP, the game design should be reiterated to artfully integrate with the IP regardless. This will turn out to be an important feature to licensors who feel particularly passionate about their IP and who will scrutinize you and your game and find out whether you really understand the brand. For the noting, as James Takenaka pointed out “you don’t want to make a Disney princess commit murder in your game”.

Be Ready

Going after an IP is a huge investment on your part, in labor, dollars and nerves. Sure, you already envision the awesome graphic and compelling copywriting assets you’ll receive from the licensor, and the $ signs are already spinning to the 6-digits on your eyeballs. But all this honey will come at a cost. Depending on the size of IP you’re chasing after, upfront costs you’ll have to secure may go up to 6 digit for the top tier and certainly not below a 4 digit for lower tiers. In some cases, you may even be told to pay an advance to pitch your project at all. From the licensor’s perspective, especially larger ones who have their own licensing departments, the mere consideration of your request will cost them money. On your end, you may have to recruit an IP agent yourself to maximize your chances and hire an attorney to ensure you won’t be walked over. And assuming you end up signing the contract, you’re entering a strenuous period of production, with incessant approvals to request and reports to submit, while a countdown keeps ticking frantically. If you haven’t completed your mission by the end of the agreement, the game is over for you—literally. Even the beautiful but unsold copies you’ve created will instantly turn into garbage. More often than not “it’s a better idea to create your own IP while being open about the sources of your inspirations” suggested James.

Hunt for the Licensor

If you’re really determined to pursue an IP, then your first step is to find whether it is available at all. Finding the information is more difficult than it seems. Some owners may not even be joinable and may have an unnamed agent handling such requests. Others may not even know who in their organisation would be the person in charge of licensing—or simply be completely unprepared for your request. If you’d prefer to shop around for a suitable IP, you may attend the Licensing Expo where you’ll get to pitch your idea. You may end up having contact with the owner only to find out the rights have already been licensed to someone else or that licensing is simply not in their business model, and they are not open for it. The best approach, suggested Shawn Smith, “is to hire an agent and let them do the talk for you—they know who to speak to and what to say.” Supposing you’ve managed to get in touch, you may get a positive response such as “send us your proposal”, so now what do you do?

Making a Proposal

When making your proposal, it’s very important to take the perspective of the IP owner. The licensor doesn’t care about your game, it primarily cares about protecting its brand and is mildly interested in making some additional income, should your offer make sense. So it’s important to first identify the kind of IP owner you’re talking to and to “think in terms of what you can do to contribute to their brand”, suggested Anthony Hanses. It could be a person or small team of authors when dealing with the lower tier: these will be very attached to their IP and they will look for your passion and understanding of the brand you’re trying to use. To them, their property is probably the result of years of labor, and they will not let you use it unless they deem you worthy. If you’re approaching a top tier owner, then you may be dealing with dedicated licensing staff, who’ve already seen countless applicants wasting their time with unsuitable or unrealistic ideas. They will know the ins and outs of the process and will scrutinize you to find out whether you’ve got what it takes to deal with an expensive brand, and whether your plan makes sense financially to even justify further consideration. As Shawn Smith pointed out “many approach these IP owners—especially for old IPs resting on the shelf—as if they were doing them a favor. But it’s not like that: they take a huge risk” in letting you hoist their colors, because your actions could not only be detrimental to the IP, but to the owner’s brand as a whole. If they agree to let you use their IP though, don’t cry victory yet, you still have to negotiate a contract.

The Licensing Agreement

The agreement—usually written by an attorney or legal department—will be mostly the terms of use produced by the license owner. However, you’ll also need to make sure you will have your needs met too. The first item on the list will be the most expected: the royalty percentage and guarantee. Basically, you will have to agree to give % of your gross sales revenue to the owner. However you will pre-pay a non-refundable amount of royalties, regardless of your sales: that’s the guarantee. While it is often said that the percentage is 10% by industry standard, the reality on the ground is more complex, as it is pretty much impossible to know how much an IP really is worth, so the true number will emerge from negotiations. Secondly, the most important item of the agreement is the duration. Usually, you will not be able to start development or marketing until the agreement is signed, and every asset you will use for marketing and manufacturing will undergo an approval process which may be delayed. At that point in time, the ball is on the side of the licensor—who’d prefer to desist rather than see you produce below standards. Once the contract ends, you may get a short window of time to sell or destroy your stock. A third item is ensuring that you get all assets you are expecting to receive. This could be 2D or 3D assets, sounds and text. If the owner has a creative mindset, you may even be able to negotiate the creation of new material specific to your project. You need to make sure the licensor indeed has the rights on all items you require. In the case of Fast & Furious: Full Throttle, James Takenaka found out the licensor didn’t have the rights on the car trademarks, and so new gimmick car designs had to be created for the game, according to precise style guidelines. There are obviously other important items to consider in a licensing agreement, which would probably be worth a full article of its own. The takeaway here, is that the contract will require fine combing and preparedness from the licensee and that it would be preferable to work with an experienced attorney.

The Execution

Now that the agreement is signed, the clock starts ticking—and it’s ticking loudly. First, you will have to produce working prototypes using low-res assets, as the full-res probably won’t be made available to you then. You may not get constructive input on your game, that’s especially true with top tier licensors who have no interest in board games. They will look at the overarching mechanic of your game perhaps, and ensure you’re not creating unwanted situations. Lower tier licensors however, may want to provide input on your game and actually play-test it, to make sure it is conform with the expectations of the brand. Once your prototype is ready, you will have to apply the assets to your design, which will be finely combed for approval. This may be very tedious: you may have to submit each card of your game several times, push back after push back. In some cases you will have to submitted printed assets, which will consume time and money, and in other cases you will proceed through an online approval interface, which may hinder communication and be convoluted. The licensor, which you first imagined to be an enabler, can turn into an obstacle, if their demands are high and specific, or besides your expectations. At this point, Shawn advises “to pick your battles. Time is running out and the licensor can pull out the plug any time if you’re giving them trouble.” Up until the first test prints of your game, you will have to report on a weekly or biweekly basis and get approvals. Then you will have to ensure the manufacturer delivers the expected standards too, which puts you in a vulnerable sandwiched position.

The Race

Your job doesn’t end after manufacturing: the countdown is still running and you need to ensure you achieve your sales target within the time-frame of the agreement. By the time you’re ready to sell, you may have already missed the window of opportunity to sync your game release with some event related to the IP. With Warehouse 13, Shawn was too late for Dragon Con where all the fans of the show would have acquired signed copies of the game. In other cases, you may fail to appeal to your regular customer base, if your game was designed to appeal to the fans of the IP. You may not have access to the right distribution channel. And unless you’ve negotiated with the licensor to use their marketing resources, you may not have access to the fan base. If you miss the deadline, you could be lucky and extend your contract, but more often than not—especially if you’ve not shown tangible results—the owner is better off licensing to someone more competent, or not at all. By the end of the standard duration of the agreement, you may benefit from a small window of time to sell your stock, or you’ll be forced to bitterly destroy it. Most likely, the licensor will not let you sell the game at a discounted price, which would damage the brand more than anything. On the flipside, assuming you’re doing well, you need to be ready to supply: the success you hoped to find in licensing the IP will only be proportional to your capacity to follow along. What if the demand is huge? What if you need to translate the game in 5 languages and go through the approval process again? The steep graph line could just make it easier to slip and fall.

Conclusions

In conclusion, without an ounce of doubt, licensing IP to design a game is hella hard work and risk to be taking. Is it rewarding? Not necessarily. Some projects I heard of, barely allowed the publisher to break even—even though it was a major IP. To make significant financial gains, you may have to double-down on an extension of the agreement and take your chances with a reprint. It could even turn into a complete loss if you fail to meet the deadlines. And with each new blunder from licensees somewhere, the costs of licensing increases elsewhere. To sum up, the lessons learned in those interview come down to this: (a) be prepared and hire a lawyer from the outset, (b) empathise with the licensor and pour your heart into your work, (c) know your needs and ensure the contract will give you all the resources—especially time—to deliver and (d) good luck. On a positive note, I found out that the assumption that “green” designers and publishers have no chance to license an IP, is false. There’s a full range of licensors out there, all with different views and incentives and experiences. Especially low and middle-tier licensors are within the reach of young indie publishers. The collaboration, especially with the lower tier authors is probably the most inspiring aspect of licencing that has been retold during the interviews: when both licensor and designer put their mind together to create a beautiful product, and developing the lore of the brand even further. That and all the amazing learning experience and thrill of creation, is what gave me goosebumps hearing those stories. And I would like to share some of these with you in my next article.

Credits

Before you leave, let’s give Caesar his due. The true heroes of this story are these brave designers and publishers who’ve entered the obscure realm of IP licensing and came out with tales they kindheartedly shared. All in all, I’ve had interviews with Anthony Hanses, owner of Forged by Geeks and designer of Defense Grid: the Boardgame. James Takenaka, formerly worked for Bandai and led the production of Star Trek Deck Building Game: The Next Generation as well as led the game approvals on Fast & Furious: Full Throttle at Game Salute. Herb Ferman shared his story producing Judge Dredd: Block War in 2018. Shawn Smith, CEO of Infinite Dreams Gaming, shared invaluable insights after having led the production of Warehouse 13: the Board Game, whose fans and backers have yet to unpack for the first time. Gregory Carslaw shared his experience being approached by Scandinavia and the World to create the card game Scandinavia and the World: A Heap of Trouble. Last but not least I spoke to Michael Knight who share his unique experience in licensing his own game IP VENOM Assault in a synergistic collaboration with Evil Beagle Games. I’ve tried to bring in all the information of all their stories and lessons learned and—full disclosure—all the quotes above have been fully paraphrased by me.