The DeanBeat: Will Hollywood brands bring salvation from the rising cost of acquiring mobile gamers?

Mobile games based on movies, TV shows, and other brands are hot in the world of mobile games. Those licensed properties can help lift a mobile game out of a sea of titles in the app stores. They can also reduce the cost of user acquisition, since the brands are recognizable and can spread in a viral way, rather than through paid acquisition. Or so the thinking goes.

So many of these licensed games are coming out that it feels like movie and TV games are where social casino games were more than a year ago: the overhyped category of the moment. In just the last few weeks, we’ve seen mobile games based on Night at the Museum, Astro Boy, and Game of Thrones. Reliance Games and Kabam are specializing in making movie-based games, and a lot of other game companies are going Hollywood. And if they’re not going Hollywood, they’re chasing after brands like Garfield, sports teams, and toys.

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This happens with every new game platform. The brands arrived on Facebook and social games in 2011, but then the craze slowed down. Now, mobile games are expected to generate $25 billion in revenue in 2014 and overtake console game revenues in 2015, according to market researcher Newzoo. That has made Hollywood take notice of the latest form of “transmedia,” or entertainment that crosses multiple forms of media.

The game business has replayed this movie over and over. Hollywood soured on console games because the time it took to make quality games stretched out. That made it really hard to coordinate the release of a movie with the launch of a game. Some of the worst games ever — E. T.: The Extra-Terrestrial, James Cameron’s Avatar: The Game, Peter Jackson’s King Kong, and Catwoman — were based on movies. The profits were accordingly hit or miss, even with George Lucas’ Star Wars game studio, LucasArts, which Disney acquired and then shut down last year.

But based on everything I’ve seen, the movie-mobile-game boom is at its beginning. The risks for mobile games are much smaller, as they can be made by smaller teams. And they take less time to make. That allows game companies to wait until they can clearly discern the quality of a movie that is winding up its production. If it looks like a film will be a hit, then there’s time to create a good movie game to go with it. There’s also time to advertise the game within the wider TV advertising campaign for the film.

“In the past, Hollywood looked at mobile games like advergaming, or an advertisement to raise awareness of a movie,” said Chris DeWolfe, chief executive of SGN, at the Global Mobile Internet Conference (GMIC) this week. “While the games now do that, they are really designed to make money. They are a real revenue source.”

It’s not inconceivable, in fact, that a mobile game could become the primary profit generator for an entertainment property, given the reach of mobile devices, DeWolfe said.

Digital Domain, the visual effects and film production company started by James Cameron 21 years ago, is one of the Hollywood companies that has taken notice. In 2013, Hong Kong’s Sun Innovation and India’s Reliance MediaWorks acquired control of Digital Domain. Daniel Seah, chief executive of Digital Domain, said at the GMIC event that his company wants to work closely with game companies on movie-related projects, from an early stage.

“We want to transform Digital Domain,” said Seah. “And games can get huge profits from movie IP.”

By next year, Seah hopes to show off an entertainment property that combines movies, games, and virtual reality.

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Likewise, Peter Shiao, CEO of the transmedia entertainment company Orb Media Group, said, “Our key tenet is to make the movie business play nice with the game business,” particularly in the martial arts, fantasy, and sci-fi genres. Orb is a new studio that owns 60 entertainment properties, from which 20 movies have been made. It wants to bridge Hollywood, games, and emerging markets such as China.

“We can deliver an existing fan base that already has a relationship with us with an intellectual property,” Shiao said. “We think we can be a relevant player in the gaming world. Studios that make movies want to distribute worldwide and diversify their revenue sources. That’s why gaming makes sense.”

But movie games are subject to the same hit-or-miss risks of movies or games. SGN made a “match three” game based on The Book of Life film that just debuted. The animated film looked promising because it had good voice actors and was produced by Guillermo del Toro. It only took about eight months to create, and it came out on time just ahead of the film. But the movie has done OK at the box office, generating an estimated $48.3 million in the U.S. on a total production budget of $50 million.

DeWolfe said he believes his Book of Life game will turn a profit, but he has learned some important lessons. He said that ongoing TV shows (like Game of Thrones) can be better for retaining an audience, which is important for a game that has to monetize over a longer period of time. DeWolfe said that his company is getting advice on game writing from screenplay writers, the same way that Activision’s studios consult with Hollywood writers on the scripts for Call of Duty games. And DeWolfe said he has more ambitious projects coming.

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There’s some risk that a flood of movie and TV games will hit all at once, and make audiences sick of them. That happened a while ago when there were just too many World War II shooter games. The brands that show up at the annual Licensing Expo in Las Vegas may very well be chasing after mobile game studios, and vice versa. But hopefully, those brands will not require “minimum guarantees,” or promises from the game publishers that each mobile game will hit a certain threshold in revenue.

Jon Radoff, CEO of Disruptor Beam, maker of the Game of Thrones: Ascent game for Facebook and mobile devices, isn’t concerned that there are multiple Game of Thrones titles coming out, such as Telltale’s first episodic game based on the HBO television series. That’s because the game play for each title is very different.

“I don’t think we’re in danger of having too much Game of Thrones,” Radoff said in an interview at the Game Monetization USA Summit in San Francisco yesterday.

Shiao said that the perception among movie makers that games were about “storytelling” poisoned the relationship with game companies, which were focused on gameplay. That’s why the movie makers and game developers have to work much more closely than they have in the past.

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“From our perspective, we treat them as nice siblings who can co-develop with us,” Shiao said.

One of the problems with brands is that they don’t always translate overseas. The Chinese might love it if there were Chinese dragons in a Chinese-language version of Kabam’s The Hobbit: Kingdoms of Middle-earth. But Warner Bros., which owns the license and holds approval over Kabam’s use of the film brand, probably wouldn’t like that, said Kent Wakeford, chief operating officer at Kabam, in an on-stage interview at the Game Monetization USA Summit.

But Kabam has no complaints, as The Hobbit is more than two years old and it’s still churning out big bucks. Kabam said The Hobbit game and the movie-based Fast and Furious game have both generated more than $100 million in revenue. The company revealed a big update yesterday for The Hobbit game in time for the third Hobbit movie, which opens on Dec. 19. Wakeford said that Kabam pays royalties to Warner Bros., but it doesn’t have to pay a ton of money for user acquisition.

I’m personally looking forward to mobile games based on movies such as The Hunger Games. That series has a wider appeal to girls and women, and that’s just the kind of audience that’s a good fit for mobile games, as mobile devices reach wider demographics than other game platforms. Kabam cut a deal with movie studio Lionsgate to make such a game. And I have to believe that Disney is going to have a lot of games coming based on the new Star Wars films that are in the works.

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But I’ll have to say this. Let’s pray that they don’t screw these games up.