How Lionsgate is trying to break the movie-game curse

Since Peter Levin joined movie studio Lionsgate last year as head of interactive ventures and games, he has been a heavy dealmaker.

Levin has commissioned movie-themed games, created a multi-company deal to fashion a virtual reality game from Keanu Reeves’ John Wick film, and he even invested on his own in an esports professional gaming team.

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Levin spoke with Ian Sherr, executive editor of Cnet, at our GamesBeat 2015 conference last week. Here’s an edited transcript of our conversation.

GamesBeat: What’s interesting to me is that the movie industry has this weird sinusoidal pattern. It invests heavily in games, then stops investing, and then invests again. It’ll do licensed games or do its own. Where we are in that pattern? Can this be done well? Can a movie company make good video games?

Peter Levin: A resounding yes to that question. Let’s reverse engineer your query.

It’s a unique moment in time. The media companies en masse are looking at the games part of their business through a different lens. You see companies like Warner Bros., for example, over the last seven-eight years, taking breathtaking strides in bringing product to life, whether it’s Arkham or Mordor. What they’ve been able to do with the Lego property, coupled to their own intellectual properties, it’s definitely a left-of-center direction versus where big media was a decade ago.

The fundamental driver is that the economics can no longer be ignored. The interactive business at Warner Bros. drove something like $1.5 billion in revenue in the last year. That’s nothing to sneeze at. But the other dynamics that are happening—With the state of the games business, you have a type of engagement you haven’t seen before. Whether that’s free-to-play, mobile, social, tablet, DLC, or—I don’t want to call it licensed properties, but partnering between intellectual property and game mechanics that are creating sustainable long-term products that live on multiple platforms in multiple environments. That didn’t exist before.

The model that used to exist was very short shelf-life, six to eight weeks, shrink-wrapped, trucked, pitched through a holiday cycle, and if you’re moving units you can sustain its life. If not, on to the next one. Now you have titles that are living for years. They’re not only driving revenue, but they’re creating a unique conduit of engagement with the audiences of those intellectual properties. We’ve not seen that before.

Across the board, you’re seeing a healthy appetite and some different approaches from different media companies to how they’re treating this business. But they’re now looking at it very much as a business, not just an extension of their licensing and merchandising exercise.

GamesBeat: How do you avoid the boom-and-bust that tends to happen for a company that’s working outside its core competency? We see companies that have real success with something, and then they’ll maybe not have as much success, and then pull back.

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Levin: I wouldn’t say it’s not in their core competency. It’s telling stories in another medium. That is their core competency. We’re a hit-driven industry at our core. Lionsgate has as much if not more than most—we’re a content company, full stop. That’s both exciting and at times daunting. You’re adapting intellectual property in different mediums.

What we’re looking for, in terms of the adaptation of our intellectual property in the realm of gaming, is the same passion, dedication, and vision that we look for when we look for a showrunner in television, the same way we look for writers, directors, and producers in our theatrical product. We’re now considering it as contemplatively, even if it’s a nascent part of our business. I don’t think there’s any less discipline applied to finding those partners and how we deploy against it.

GamesBeat: How does VR change the dynamic here? Right now most of the noise that’s made in VR is around games. I’m sure some people in the audience might say, “No! There’s still video and movies!” But maybe you can talk a bit about how you’re looking at this and thinking it through.

Levin: In several different ways. Like every new media environment, marketing and promotion is driving a lot of the early traction. That’s very OK. How better to raise awareness for an emerging platform than to couple that experience to ginormous intellectual properties? Who wouldn’t want a Hunger Games VR experience, the likes of which our marketing department just executed against in New York in partnership with Samsung? It creates that lift, that rising tide.

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Some of the very discrete games products we’re developing – we have a John Wick FPS coming out the first or second quarter of next year in partnership with Grab Games, Starbreeze, and Weaver—The interesting thing, and at its core you’ll understand this when the hardware ships, is it’s both an experience and a game. Understanding that mechanic is very much predicated on the consumption of that experience.

VR is giving us this wonderful hybrid opportunity, this palette to play with. The boundaries are ill-defined right now. Some of the stuff we’re seeing out of Valve right now is nothing short of brilliant. You have to rip that headset off your head. There are gaming mechanics to it and an underlying gaming narrative, but I’d argue that the experience itself is both commercial—there’s going to be episodic content that’s derivative of existing IP as well as original IP adapted within the environment.

Some of the early excitement is from the games audience. Much of that is because Valve and Steam, with 125-million-plus gamers, there’s a lot of context for gaming. Morpheus and PS4, there’s a lot of context for gaming. With those platforms you know you have the computation power to drive a qualitative VR experience. Perhaps less so with some of the other hardware. But we’re figuring it all out.

It’s one of those unique moments where it’s so much more about the steak and not the sizzle. Everyone who’s played with it is just overwhelmed. Some of it has a way to go, but everyone I know that’s put it on is wowed. I give the hardware folks a lot of credit for not shipping prematurely. Let’s wait until we get it right. This is worth waiting for.

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GamesBeat: Although the first hardware is launching in November.

Levin: This is true. But some of these deadlines have been pushed. Interestingly, you don’t get a lot of negative blowback. People are feeling like this is a real thing, not smoke and mirrors, not a marketing exercise.

GamesBeat: That’s what’s interesting to me right now. At least the way Hollywood is approaching VR, a lot of it is around marketing. Finding ways to take your IP and apply it to VR is something that’s still very experimental at this stage. The best thing to do is just create experiences.

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Levin: I would argue that—again, Jaunt recently raised some capital from established industry players like Disney. But I can tell you, my peers over there are not just looking at that as, “Oh, this is a great way to promote and market our IP.” There will be a degree of that, but demonstrate to me a successful medium where commercial product did not live alongside promotion and marketing.

You go to a film, you’ll see trailers. You’ll see commercials at the theater. You watch television and you’ll see commercials and integrated marketing. That’s actually a sign of a healthy platform emerging, where there’s going to be the coexistence of marketing and promotion right alongside commercial product. At our shop we’re doing a lot of both. We’re taking it very seriously on the commercial side, but working hand in hand with our marketing brethren. That’s a very low-cost way to raise awareness. People are so trained on some of these massive IPs – Divergent, Hunger Games. They’re showing up in droves for that experience. It’s a great way to draft behind, if you’re going to go long on the platform.

GamesBeat: What about esports? I know you just got involved with one of the teams. Where do you see that all play out?

Levin: We’re seeing it play out everywhere. You have everything from ESPN jumping into the deep end of the pool, BBC recently announcing that they’ll air the DOTA 2 championships—there’s now the ability to sell out these venues domestically on par with how quickly they sell out internationally. It’s taking a lot of folks by surprise.

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The quality of brands and marketing partners that are jumping headlong into esports—If you think about it, there are very few sports that travel globally. You have soccer. You have mixed martial arts. And you have eSports. American football doesn’t travel globally. Baseball doesn’t. Hockey doesn’t. It’s one of those things where you feel that upsurge.

I’m dating myself here, but as an early investor in GameSpy Industries way back in 1999-2000, we toyed around with live streaming competitive gaming. Back then, bandwidth was not a commodity. Every time we put on one of these events, we lost a ton of money. But it was exciting to see the activity around it. You knew someone was going to build a better mousetrap.

There’s a unique fraternal nature to esports right now. Yes, several of us did invest in a franchise, but with a lot of support from the community. Again, it’s one of those rising tides. Let’s get some folks in there who have backgrounds in sports and media and technology working with marketing partners to maximize those relationships. We’re seeing it come up conversationally a lot.

GamesBeat: When do we say it’s the moment that esports have arrived? Does it take an Olympics, where it gets blessed by a major sporting venue?

Levin: It depends on your orientation. I would say it’s clearly arrived already. Someone like myself, who can operate a bit from both sides of my brain—when ESPN jumped in that was a major thing. The numbers were quite impressive. But I feel that the amount of energy that’s spent online, within social environments, within conferences such as this—last year it was all VR. You could not escape the VR subject line. This year it’s very difficult to dodge the esports bullet. For those of us who’ve jumped in the pool, it’s exciting.

Question: I’m fascinated with the evolution of VR as a medium. How long do you think it will be until VR experiences will feel truly different from movies?

Levin: We have a large library of content at Lionsgate, 16,000-plus titles. We have hundreds if not thousands of horror titles within that library, including Saw. If you can think of a Saw-themed VR experience–

GamesBeat: I’d rather not.

Levin: There’s nothing that terrifies me more than that conceit. We’ve seen some of the demonstrations of what horror-themed VR can be. Trust you me, it is absolutely nothing like sitting back and watching a scary movie. I couldn’t have ripped that thing off my head fast enough.

So my answer to that is, I think it’s coming quickly. Some of it is going to have to be baked over time. There will have to be a tremendous amount of A/B testing. But the best creators in the business, the best writers and cinematographers, they’re all jumping in to play with this. No one sees this as gimmicky. The conversation is not of a novelty. This is yet another medium within which we can do something very discreet. But I promise you, if you’re a fan of horror – I am not – there’s nothing scarier than some of the stuff we’ve seen.

GamesBeat: Do you think that we’re going to get a two-hour VR movie? I’m going to watch Hunger Games 340 in VR?

Levin: God willing. [Laughs] I’m glad you brought that up, because it’s one of the ways we’ll be commercializing a VR environment – electronic sell-through of our product. You can think about themed theaters. You’re talking about an incredibly sophisticated quality viewing experience. You get spoiled by these home audio/video systems that not everyone can afford. If you are able to buy one of these devices, you’re replicating that experience.

GamesBeat: But I love the theater. I’ve played with the cinema apps, and those are great. But what I’m curious about is, there’s a difference between that and actually being in the world of the movie. Are we going to get to that point, or is that something that’s experiences only? Will the movies remain, “I see it on a screen, even if it’s a really awesome big-ass screen”?

Levin: Again, you’re going to have discrete examples of all of that. There will be creators who say, “No, I want you right there along for the ride.” We’ve seen some of that. You’ll see some monetization of an existing library. We even have contemplation going forward that we don’t want you that involved, that we want a somewhat voyeuristic experience with a much different aesthetic and a more immersive consumption experience. Lots of folks are interested in that.

Question: Video games are traditionally a very interactive medium. Film is obviously linear, with a focus on storytelling. In your experience, are you seeing filmmakers interested in exploring the interactive potential within VR?

Levin: The answer is yes. At Lionsgate we’re investors in Telltale Games. They have their own genre of gaming. Lots of folks doubted them early on, but they’ve clearly done something different, qualitatively and contemplatively. Once we made that investment, so many of the creators and writers we work with were running to us. “Let’s figure out a way to play together.”

We’re getting the same thing with VR. We’re spending a lot of time with these types of folks, and likewise with game creators. There’s a learning curve. They tend to want to get really granular. You’re going to see more and more established filmmakers jumping into the medium. I haven’t seen this kind of frothiness from the creative community about something in a while. It’s nothing but exciting.