Succeeding with Licensed IP for Mobile F2P Games This presentation provides a framework for evaluating IP for use in mobile games. It also provides some guidance for negotiating IP licensing terms.

1. Succeeding with Licensed
IP for Mobile F2P Games
Eric Benjamin Seufert
Platform, N3TWORK

2. Who I Am
N3TWORK Mobile Dev
Memo
Freemium
Economics

3. Who I Am
N3TWORK Mobile Dev
Memo
Freemium
Economics

4. Presentation Structure
1) Why license an IP?

5. Presentation Structure
1) Why license an IP?
2) Evaluating an IP: fit, utility, and
resonance

6. Presentation Structure
1) Why license an IP?
2) Evaluating an IP: fit, utility, and
resonance
3) Negotiating an IP license: pitfalls and
dealbreakers

7. Why license an IP?

8. User Acquisition is competitive.
● Lots of app developers -- and, increasingly,
brands -- are all vying for the same impressions.
It’s not easy to stand out.
Why license an IP?

9. Mobile UA for Games in 2017
Unit Monetization
MarginalUnitAcquisitionCost
Hyper-Casual
Build & Battle
Social Casino
PVP Card Collection
Pure Casual Hybrid Casual
Story-driven
Sports / Racing
Tournament-Driven PVP

10. Mobile UA for Games in 2017
Unit Monetization
MarginalUnitAcquisitionCost
Hyper-Casual
Build & Battle
Social Casino
PVP Card Collection
Pure Casual Hybrid Casual
Story-driven
Sports / Racing
Tournament-Driven PVP
Success! The licensed IP increased engagement /
monetization and / or decreased
marginal unit acquisition costs at scale.

11. Mobile UA for Games in 2017
Source: eMarketer

12. Mobile UA for Games in 2017
Source: eMarketer

13. Mobile UA for Games in 2017
Source: Liftoff

14. An IP provides an established,
fully-vetted audience.
● Demonstrable affinity -> ability to reach people
with a message that has proven resonance for
them.
Why license an IP?

15. Why license an IP?

16. “Free” user acquisition.
● It’s not going to happen;
Why not license an IP?

17. “Free” user acquisition.
● It’s not going to happen;
● Brand affinity might increase CTRs from fans, but
it won’t manifest clicks out of thin air.
Why not license an IP?

18. Why not license an IP?

19. Earned media from the announcement of
the partnership.
● It’s not going to happen;
Why not license an IP?

20. Earned media from the announcement of
the partnership.
● It’s not going to happen;
● IP licensing deals for mobile games aren’t big
news anymore. Consumers don’t care;
Why not license an IP?

21. Earned media from the announcement of
the partnership.
● It’s not going to happen;
● IP licensing deals for mobile games aren’t big
news anymore. Consumers don’t care;
● What’s that worth, anyway?
Why not license an IP?

22. The IP has a huge presence on Facebook
/ Twitter / Snapchat.
● It’s not going to help;
Why not license an IP?

23. The IP has a huge presence on Facebook
/ Twitter / Snapchat.
● It’s not going to help;
● Organic social media reach is almost
non-existent. You’ll have to pay to reach the
brand’s social media audience.
Why not license an IP?

24. Why not license an IP?

25. Why not license an IP?

26. Hard truths to accept about IP
licensing for mobile games

27. ● Difficult to align incentives between licensor
/ developer;
Hard truths to accept about IP
licensing for mobile games

28. ● Difficult to align incentives between licensor
/ developer;
● License owner might not understand mobile
space / care about your success;
Hard truths to accept about IP
licensing for mobile games

29. ● Social Media followers won’t translate into
downloads;
Hard truths to accept about IP
licensing for mobile games

30. ● Social Media followers won’t translate into
downloads;
● You’re probably pricing the partnership on
the basis of an entirely different form of
media;
Hard truths to accept about IP
licensing for mobile games

31. ● No free lunch: you’ll still need to pay for
installs;
Hard truths to accept about IP
licensing for mobile games

32. ● No free lunch: you’ll still need to pay for
installs;
● Not every license owner knows their
audience well / has recent, relevant data on
their brand’s fans.
Hard truths to accept about IP
licensing for mobile games

33. 1) Why license an IP?
2) Evaluating an IP: fit, utility, and
resonance
3) Negotiating an IP license: pitfalls and
dealbreakers
Presentation Structure

34. Finding Fit: Assessing Game Mechanics

35. Finding Fit: Assessing Game Mechanics
● What’s a Mechanic in this context?;

36. Finding Fit: Assessing Game Mechanics
● What’s a Mechanic in this context?;
● Defining, focal form that gameplay takes
(outside of the metagame);

37. Finding Fit: Assessing Game Mechanics
● What’s a Mechanic in this context?;
● The defining, focal form that core (not
meta) gameplay takes;
● Eg. Match 3, Build & Battle, Endless
Runner, Simulation, Shooter, Platformer,
etc.

38. Finding Fit: Assessing Game Mechanics
● Assessing the gaming landscape involves
evaluating game mechanics first;

39. Finding Fit: Assessing Game Mechanics
● Assessing the IP landscape involves
evaluating game mechanics first;
● Very few games on mobile are supported
by games-first franchise (Angry Birds,
Clash, Candy Crush);

40. Finding Fit: Assessing Game Mechanics
● When trying to deduce audience for
successful games, makes sense to start by
looking at appeal of mechanic along mass
appeal / gender axes:

41. Finding Fit: Assessing Game Mechanics

42. Finding Fit: Assessing Game Mechanics

43. Finding Fit: Assessing Brand Audience
● Brands are not the same: they are already
big by definition (otherwise they wouldn’t
be “brands”);

44. Finding Fit: Assessing Brand Audience
● Brands are not the same: they are already
big by definition (otherwise they wouldn’t
be “brands”);
● Appeal makes no sense as evaluation
vector, rather existing size of audience;

45. Finding Fit: Assessing Brand Audience
● Age is also a more appropriate evaluation
metric because gender appeal is less
stratified / more extreme with brands;

46. Finding Fit: Assessing Brand Audiences

47. Finding Fit: Assessing Brand Audiences

48. How to align Brand with Mechanic

49. How to align Brand with Mechanic
● Does the mix of this brand with that
mechanic produce a game that:

50. How to align Brand with Mechanic
● Does the mix of this brand with that
mechanic produce a game that:
● Is cheap / easy to distribute with UA?;

51. How to align Brand with Mechanic
● Does the mix of this brand with that
mechanic produce a game that:
● Is cheap / easy to distribute with UA?;
● Is tonally consistent?;

52. How to align Brand with Mechanic
● Does the mix of this brand with that
mechanic produce a game that:
● Is cheap / easy to distribute with UA?;
● Is tonally consistent?;
● Activates an existing audience in a way
that makes them eager to spend money?

53. The Power Triad of Resonance
https://mobiledevmemo.com/power-triad-resonance-mobile-games/

54. The Power Triad of Resonance

55. The Power Triad of Resonance

56. The Power Triad of Resonance

57. 1) Why license an IP?
2) Evaluating an IP: fit, utility, and
resonance
3) Negotiating an IP license: pitfalls and
dealbreakers
Presentation Structure

58. Most contentious points in IP licensing
agreements:

59. Most contentious points in IP licensing
agreements:
● Recoup for marketing & other expenses;

60. Most contentious points in IP licensing
agreements:
● Recoup for marketing & other expenses;
● Marketing commitments from IP holder;

61. Most contentious points in IP licensing
agreements:
● Recoup for marketing & other expenses;
● Marketing commitments from IP holder;
● Accepted use / art guidelines;

62. Most contentious points in IP licensing
agreements:
● Recoup for marketing & other expenses;
● Marketing commitments from IP holder;
● Accepted use / art guidelines;
● MG.

63. Marketing Recoup
● What is recoup?;

64. Marketing Recoup
● What is recoup?;
● Reimbursing marketing expenses before
revenues are split;

65. Marketing Recoup
● What is recoup?;
● Reimbursing marketing expenses before
revenues are split;
● Eg. Revenue to partner = (Gross Receipts -
Marketing Expense) * Revenue Share;

66. Marketing Recoup
● It’s almost impossible to make UA work
unless marketing spend is recouped before
gross receipts are split;

67. Marketing Recoup: Example, Launch Month
30-Day LTV: $5
Margin: 20%
Bid: $4
Installs @ Bid:
10,000 / day
Daily Spend:
$40,000
Revenue Split:
50%
LTV Progression
Day 1:
Spend: $40,000
Revenue:
$6,000
Day 15:
Spend: $40,000
Revenue:
$40,933.85
Day 30:
Spend: $40,000
Revenue:
$49,875.45

68. Recoup Scenario:
Month 1 Spend:
$1,200,000
Month 1 Revenue:
$1,140,000
Developer Profit:
$0
IP Holder Profit:
$0
Developer Out of Pocket:
-$60,000
Deferred Recoup:
$60,000
LTV Progression
Day 1:
Spend: $40,000
Revenue:
$6,000
Day 15:
Spend: $40,000
Revenue:
$40,933.85
Day 30:
Spend: $40,000
Revenue:
$49,875.45
Marketing Recoup: Example, Launch Month

69. No Recoup Scenario:
Month 1 Spend:
$1,200,000
Month 1 Revenue:
$1,140,000
Developer Profit:
$0
IP Holder Profit:
$570,000
Developer Out of Pocket:
-$630,000
Deferred Recoup:
$0
LTV Progression
Day 1:
Spend: $40,000
Revenue:
$6,000
Day 15:
Spend: $40,000
Revenue:
$40,933.85
Day 30:
Spend: $40,000
Revenue:
$49,875.45
Marketing Recoup: Example, Launch Month

70. Marketing Recoup
● It’s almost impossible to make UA work
unless marketing spend is recouped before
gross receipts are split;
● In order to grow a game with no recoup
clause, LTV must be >= 2x unit acquisition
cost -- massive hurdle to scale.

71. Marketing commitments from IP holder

72. Marketing commitments from IP holder
● Will IP holder post on social media?;

73. Marketing commitments from IP holder
● Will IP holder post on social media?;
● If so: how often? Will posts be boosted?
Who pays?

74. Marketing commitments from IP holder
● Will IP holder post on social media?;
● If so: how often? Will posts be boosted?
Who pays?
● Will IP holder promote game in owned
channels?;

75. Marketing commitments from IP holder
● Will IP holder post on social media?;
● If so: how often? Will posts be boosted?
Who pays?
● Will IP holder promote game in owned
channels?;
● Will IP holder provide marketing materials?;

76. Accepted use / art guidelines

77. Accepted use / art guidelines
● Iteration speed on marketing / app store
assets will be very slow if IP holder must
approve all art;

78. Accepted use / art guidelines
● Iteration speed on marketing / app store
assets will be very slow if IP holder must
approve all art;
● Much faster if both parties agree to content
guidelines.

79. Minimum Guarantee

80. Minimum Guarantee
● Generally kills all incentive on the part of
the IP holder;

81. Minimum Guarantee
● Generally kills all incentive on the part of
the IP holder;
● (potentially) Huge hurdle to clear in
reaching profitability;

82. Minimum Guarantee
● Generally kills all incentive on the part of
the IP holder;
● (potentially) Huge hurdle to clear in
reaching profitability;
● Some IP holders won’t do a deal without it.

83. Minimum Guarantee
● Make sure there’s still a reason for IP
holder to remain active;

84. Minimum Guarantee
● Make sure there’s still a reason for IP
holder to remain active;
● Always better to align with performance
(payment milestones, rev share increases,
etc.);

85. Minimum Guarantee
● Make sure there’s still a reason for IP
holder to remain active;
● Always better to align with performance
(payment milestones, rev share increases,
etc.);
● Ask: “For the IP holder, could this be the
entire deal?”

86. Other considerations:
● Who travels?;
● Exclusivity;
● Chain of command / employee churn;

87. 3 Key Takeaways

88. 3 Key Takeaways
● IP will not generate installs out of thin air;

89. 3 Key Takeaways
● IP will not generate installs out of thin air;
● Purpose of IP isn’t to reduce UA costs -- it is to
bolster unit economics;

90. 3 Key Takeaways
● IP will not generate installs out of thin air;
● Purpose of IP isn’t to reduce UA costs -- it is to
bolster unit economics;
● “Cheap UA” could tank LTV; “high-value IP” could
make UA more expensive;

91. 3 Key Takeaways
● IP will not generate installs out of thin air;
● Purpose of IP isn’t to reduce UA costs -- it is to
bolster unit economics;
● “Cheap UA” could tank LTV; “high-value IP” could
make UA more expensive;
● Without a recoup clause, UA will be very, very
difficult.

92. Thank You!
eric@mobiledevmemo.com
@eric_seufert