Licensing An IP: Is It A Good Idea?

Licensing someone else's intellectual property is an interesting business proposition. I've heard (and experienced) plenty of war stories about licenses and licensors. On the surface, licensing a successful IP sounds like a good idea. You get access to an existing audience, a whole bunch of material to base a game on, and some level of guaranteed attention and sales. Depending on the license, you may get artwork or photos you can use, thus saving money on illustrations. What's not to like?

Ah, where to begin the litany of horrors? Just getting a licensing deal signed can be an ordeal, with plenty of negotiations, often with a series of people. You may have to explain repeatedly what your game is and what your industry is like. Then there are the expectations... no, your game won't sell like an action figure or a AAA videogame from a billion-dollar publisher. Often there's going to be some upfront payment for the license, though if you're persuasive (and the licensor is knowledgeable about smaller markets) you may be able to minimize or even eliminate that (I obtained the Witchblade license for no money up front, because I convinced them it would be a good marketing vehicle for their property). You may be faced with some guaranteed royalty payments regardless of sales (so if your game tanks, you will still have to pay a certain amount of money to the licensor). There will be a healthy royalty percentage you'll have to pay, which may be based on the retail or the wholesale price (depending on what you can negotiate).

Getting the materials from the licensor may be trivial or it may be a lengthy process. Comic book licenses have huge piles of artwork to draw from... which means your art director can spend eons of time searching for the pieces she wants, and even more time getting the necessary files from the licensor (who may have to dig to find them). Photos that include actors may require additional clearances from the actor's agent... it can be a convoluted process.

And then there's the approval process, which in some cases resembles the Bataan Death March (at least spiritually). Much depends on the individual licensor and the person you end up working with, but in any case there will be some time (perhaps a lot of time) spent on this process.

In the end, though, you can get a beautiful product that may help your company get into new markets for your other, non-licensed products. A licensed product is a marketing tool you should use to the fullest advantage, to leverage greater sales for your non-licensed goods.

For a small publisher, a license is a good opportunity if you choose it wisely. Be ready to back away if the license is too expensive or too difficult for you to deal with. If you manage to land a license, make the most of it with extensive publicity and marketing efforts.