Brand Licensing: A Valuable Tool for User Acquisition

Brand Licensing: A Valuable Tool for User Acquisition

 This blog appeared originally on the Flashman Studios website.

As everyone now knows, when developing and publishing a game on digital platforms, barriers to entry are low. Gates to platforms have come crashing down (great!) and indie developers have flooded in, only to find that once they are inside the gates, there is endless shelf space with an onslaught of games hitting the platforms every week (not so great for getting your game noticed).

How many games and apps are competing for consumer attention? In 2014, approximately 1,000 apps and games are submitted to the US Apple App Store every single day, with a total of 1.5M+ apps available.  Consumers have downloaded about 100 billion apps combined from just the Apple App Store and Google Play Store alone. Market saturation has created a situation where the average app download earns developers 2 cents on the Google Play Store and 10 cents on the Apple App Store. That isn't too terrible   if you get millions of downloads, but in reality, the average app over its lifetime on Google earns about $1,125 and $4,000 on Apple. But keep in mind, this is just the mean, the median is much lower, meaning that the vast majority of developers lose money on their games and apps.

So, it’s no secret that getting a game noticed and downloaded (user acquisition) is the biggest challenge confronting any developer publishing their games on digital platforms these days.

It is against this backdrop that developers embark on creating and publishing their digital game. Despite all the evidence to the contrary, the majority of developers still rely on a game publishing strategy that centers on "build it and they will come."

In reality, there are several means for getting consumers to take notice of and download your game. Most of these methods are unreliable and takes the decision-making out of the developer’s hands. One method - acquiring a brand and leveraging that brand for consumer acquisition -  can prove to be a very reliable way of moving consumers to pay attention to your game (the rest is up to you, getting them to stay after they download your game for example as illustrated by Erik Harshman’s blog post about retention  http://www.flashmanstudios.com/blog/engagement-the-one-to-rule-them-all/):

1.First Party Promotion

Shelf space might be endless, but your chance of getting an “end cap” promotion from first party given the daily onslaught of games hitting the platforms is statistically close to zero. You are battling every game that gets submitted to first party in the same day or week that you submit your own game. Incumbent developers and publishers with a good track record with Apple or Google will definitely receive a closer look for any new game they are submitting. Fierce competition is not the only challenge faced by a developer. The first goal is making a great game and hoping that Apple or Google will notice you. After that, here are no criteria available regarding the decision-making process at these companies for determining if your game, over the thousands of others, will get promoted. Once you submit, you are in an enormous pitch black room bumping into thousands of other developers, all searching for the same set of keys that will get you into the car.

As with most things in life, timing also plays an important role. God help you if you plan to submit a game between Thanksgiving and Christmas because all of the big players will be doing the same thing to lock in the surge of consumer downloads during this season. Apple and Google also run genre specific promotions, so if you submit a racing game two weeks after they run their racing game focused promotion, this will lower your odds of getting exposure.

At the end of the day, if you have a great game and your timing is right, you may get some first party love for up to a week, but this is a far from reliable user acquisition strategy that is fleeting at best.

2.Consumer Acquisition Campaign

If you are a developer that is venture backed or has had past success with one of your games, you might have a war chest big enough to spend hard dollars on consumer acquisition or be able to cross market from your existing game if you still have daily active users.

As any developer knows, your goal is to get your title moved up into the top 20 (and higher) game rankings so that your acquisition spend is leveraged through additional organic installs that are achieved through getting ranked. However, you will need a lot of money to move the needle at all and if you have a F2P game there is a difference between “quantity” (getting consumers to download your game for ranking purposes) and “quality” (acquiring consumers that will play your game and spend money).

Often the only way a publisher can justify the high costs of consumer acquisition is because they have a network of games from which they can move the consumer across once they have been acquired, thus spreading the acquisition cost across their portfolio. Small developers typically do not have this network of games to leverage, so when they assess their average revenue per user (ARPU) and lifetime value (LTV) for a single game against the cost of acquiring that consumer, the numbers typically do not add up.

There are various platforms such as Chartboost that enable you to trade your consumers for another game’s consumers and cross-market between games, but you need to have a certain minimum success already to be able to have something to offer.

3.Brand Licensing

Acquiring a brand and leveraging the consumer awareness for that brand can be a very good strategy for consumer acquisition. In effect the advance or minimum guarantee (if any) and revenue share you pay the brand holder is your user acquisition strategy.

Why acquire a brand?

When speaking to developers I often see a reticence to work with a license for one of two reasons:

First, some developers believe the only path to success is developing and publishing original IP. While we are a strong advocate for developing your own IP, you can also make a strong business case for having both original IP and licensed brands in your portfolio (one just has to look at all the top publishers over the years that have a balanced portfolio of both licensed and original IP games).  I would also argue that there is a big difference between doing work-for-hire engagements to develop a branded game for someone else to publish, and licensing a brand and publishing a game yourself. Yes, you are building brand equity for the brand holder, but through licensing you are also building consumer awareness for your game and generating revenue.

Second, developers often don’t believe they have access to brands and are unsure of how to approach licensors and the process by which they can successfully acquire a brand.  Although this seems simple, it takes research, time and negotiation to guide the client through the entire process.  In my next blog post, I'll offer some tips on how to choose and acquire a brand to help get you started.