SGN chief bets on the rise of Hollywood franchises in mobile games

Hollywood and games have had a weak bond when it comes to making money from each other. But in the era of mobile games, that is starting to change, said Chris DeWolfe, the chief executive of Los Angeles-based SGN.

That kind of thinking drove SGN’s recent acquisition of TinyCo, which had a close Hollywood connection with games such as Mavel: Avengers Academy. The attitude is a lot different from the past, when Hollywood intellectual property owners just thought of games as minor brand extensions for a movie or TV show.

DeWolfe spoke with Game Awards founder Geoff Keighley in a fireside chat at the Casual Connect USA event today in San Francisco.

“We are seeing massive consolidation in mobile gaming,” DeWolfe said. “We have room for some new entrants. The mobile market can grow by 20 percent, but it is also consolidating. And we are looking for a bigger piece of a growing pie.”

SGN has created its own brands, such as Cookie Jam (a match-3 puzzler). But having Hollywood brands associated with a mobile game serves as a tool to take on one of the biggest challenges of mobile gaming: getting lost in the crowd.

“User acquisition is tough,” DeWolfe said. “There are a million apps in the app store. Intellectual property helps you get more users. It’s substitutional for advertising.”

Regarding TinyCo, DeWolfe said the company was good in the building and “invest and express” genres of games.

“They went after hardcore, rabbid fans who want to get immersed in their favorite IP,” DeWolfe said. “They don’t get enough while watching the TV show or movie and they want to extend that emotion to a mobile game. For TinyCo, we think they can do $100 million in the next year. It’s a meaningful number and we think it can get a lot bigger than that.”

Of course, DeWolfe said, it has to be a great game when it comes to art, level design, gameplay, and other details that separate the weak games from the good ones.

Mobile games are also proving to Hollywood IP owners that games can generate profits.

Above: SGN’s Chris DeWolfe talks about Hollywood IP in mobile games with Geoff Keighley at Casual Connect USA.

Image Credit: Dean Takahashi

“In the past, you had to give a minimum guarantee [from the game company to the license owner], and you paid a big chunk of money upfront,” DeWolfe said. In the past, IP owners cared about the minimum guarantee. Now they expect the game to be a meaningful contributor to their franchise’s revenue growth.”

DeWolfe said that there’s also a declining number of game companies that Hollywood will trust with their IP. That’s why the Los Angeles location and the connection to Hollywood is important for SGN, he said. The ability to add storytelling and narrative to a mobile game is also becoming increasingly important.

It’s not easy to find an IP that will be appealing on a global basis, he noted.

“If you have Family Guy, it’s probably not going to work well in Asia,” he said. “Marvel does work well. You need to have a balance of what works well in every country.”

DeWolfe said that Pokémon Go is a great example of successful augmented reality, where the Pokémon IP came together with the Ingress-based technology for mapping and AR. Rather than do the AR with expensive glasses, it also made sense for now to do the AR effects — layering the digital world on the real world — using ordinary smartphones, he said.

“With AR, people expected it would be a magical device you wear, something fantastical that is more attributable to the hardware related to console-style games,” he said. “[Niantic Labs] took a very simple version of AR and said let’s try it on a mobile device and make it available to everyone.”