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Warner Bros. tiers its video game agreements

Doing its bit to evolve royalty negotiation in the video game realm, Warner Bros. Interactive Entertainment instituted a tiered royalty system earlier this year, effectively putting the discussion of game quality on the table with its interactive licensees. Critics and gamers alike have traditionally viewed licensed video games as inferior to original games, and the properties attached to poorly reviewed titles have often suffered as a result, says senior VP Jason Hall. The tiered system's mastermind, Hall is looking to put an end to the second-class citizenship of licensed games. Under WBIE's new system, licensees are penalized for failing to devote the same financial and creative resources to developing games based on Warner movies as they do their proprietary titles.
November 1, 2004

Doing its bit to evolve royalty negotiation in the video game realm, Warner Bros. Interactive Entertainment instituted a tiered royalty system earlier this year, effectively putting the discussion of game quality on the table with its interactive licensees. Critics and gamers alike have traditionally viewed licensed video games as inferior to original games, and the properties attached to poorly reviewed titles have often suffered as a result, says senior VP Jason Hall. The tiered system’s mastermind, Hall is looking to put an end to the second-class citizenship of licensed games. Under WBIE’s new system, licensees are penalized for failing to devote the same financial and creative resources to developing games based on Warner movies as they do their proprietary titles.

So if a WB licensed game scores an aggregate review rating lower than 70% (as tracked on websites such as metacritic.com and gamerankings.com), the game’s royalty rate will go up, regardless of its overall unit sales. Says Hall: ‘What we’re looking to stop is exploitative behavior,’ which primarily comes to the fore when publishers slap together a game quickly to hitch a ride on the studio’s huge marketing spend for a film.

As for how the penalties are meted out, Hall says there are a number of variables at play. If a developer/publisher creates a game that’s wholly original and innovative, but critics still pan it, the licensee won’t be fined for attempting to develop outside the lines. Penalties also won’t apply if WBIE fails to deliver on its promises – whether it be handing over scripts on time or supplying voice talent and digital assets. In terms of defining the level of quality he’s looking for, Hall says upcoming games The Matrix Online (in development at WBIE subsidiary Monolith) and Polar Express from THQ are good examples.

Backed by its studio’s weight, WBIE’s system may just work. ‘It’s an interesting way of getting around the issue that everyone faces with game development,’ says licensing agent Charles Day, president of The Sharpe Company. ‘Reviews are so critical to retailer selection. It’s certainly an incentive for developers to make good games. I’m amazed that anyone would sign a deal. But it’s Warner Bros.; it can dictate.’

About The Author
Lana Castleman is the Editor & Content Director of Kidscreen and oversees all content for Kidscreen magazine, kidscreen.com and related kidscreen events. lcastleman@brunico.com

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