How licensed IP can help your free-to-play mobile game succeed

by Lewis Leong on Apr 24, 2018

Standing out in a crowded app market remains one of the biggest challenges for mobile app developers today. Even after the App Store redesign in iOS 11, finding apps is still a major problem and banking on being featured by Apple isn’t a good strategy. Instead, we recommend doing user acquisition, even if you’re on a tight budget. But another way you can stand out from the crowd is by licensing an IP.

Eric Seufert, platform lead at N3TWORK and author at Mobile Dev Memo, took to the stage at GDC 2018 to talk about how mobile free-to-play (F2P) games can succeed with licensed IP. In this talk, Seufert went over the challenges and rewards of partnering with a licensed IP holder. Here are the main takeaways.

Why license an IP in the first place?

The biggest question you have to ask yourself before deciding if licensing an IP is worth it for your mobile game is: What will partnering with this IP allow me to do? If you have a specific demographic that you want to chase and the IP will bring you that, then licensing makes sense.

One might think that licensing an IP in the first place will help app discovery and UA costs, but the reality is that neither of those things are guaranteed. Discovery could be aided if the contract between you and the IP holder requires them to push the app via their various marketing channels, but that’ll be up to your negotiation. UA costs won’t decrease either, as you’ll still have to invest in UA to get your game in front of as many people as possible.

If you’re expecting free UA when you license an IP for your mobile game, you’re going to be in for a shock. UA will always cost money and UA costs can potentially increase with a high-value IP due to the more competitive space you’re playing in. Having a licenced IP might increase click-thru rates on your ads from fans, but you still have to pay to reach people.

What licensing an IP does help with, according to Seufert, is bolstering your unit economics. This means you can increase the lifetime value (LTV) of a player and reduce the churn rate of your game with a licensed IP. The reason why “cheap” UA is bad is because it will negatively affect LTV if you acquire users for a low price, but they don’t convert. In fact, you can expect a high-value IP to increase the cost of UA.

Finding an IP that fits

Once you’ve decided that licensing an IP makes sense for your game, it’s time to decide what IP best fits your game. Is your game a match-three, strategy, shooter, endless runner, simulation, platform, or something else? Does it make sense for an IP to have a game in that genre? Does the IP have an audience that you want to reach?

With that in mind, you’ll have to ask the following questions about your game’s mechanics:

  • Is the game cheap/easy to distribute with UA?
  • Is it tonally consistent?
  • Does it activate an existing audience in a way that makes them eager to spend money?

Here’s where the Power Triad of Resonance comes in.

Power Triad of Resonance

If your game fits within its mechanics, tone, and theme, you have a good demographic fit. But if you don’t, you may need to reconsider if the specific IP is right for you.

Challenges with licensing an IP

If you decide that licensing an IP will be good for your mobile game, the first hurdle you’ll have to overcome is figuring out how to pitch an IP holder. What’s in it for them? License holders may not care about your success or even understand the importance of mobile, and mobile studios may not understand how an IP appraises its value. Be prepared to explain how your mobile game can help increase their brand recognition or other KPIs they want to meet.

Once you and the license holder agree to partner, the next challenge is drafting a contract that is fair for both parties. The big thing you’ll want to consider is how you’ll split the marketing costs. It’s a good idea to ask for a recoup clause, which lets you split and get reimbursed for marketing expenses before revenues are split. In order for the game to be successful, the game must be marketed, so make sure you have a recoup clause that takes this into account.

Angry Birds Star Wars II

Depending on your contract with the IP holder, you may not get any media coverage at all. Licensed IP isn’t new and many consumers don’t care anymore. Even if a brand has a big social media presence, their coverage of your game’s launch will not help with organic installs, because organic social media reach is at an all-time low. You’ll have to pay for Facebook and Twitter ads in order to get your game in front of many users. This means you’ll also have to negotiate how often social media is updated and if they’re going to be boosted, who will pay?

On the creative side, you’ll have to negotiate for art guidelines, rather than having the license holder approve of your art each time. But if you agree on content outlines, you’ll be able to iterate much faster to launch earlier instead of burning through resources while waiting for approvals.

For more on what you need to put into a contract to license and IP, check out Seufert’s article on what an IP is worth for a mobile game and his full GDC presentation below.

Lewis Leong is AppLovin's Content Marketing Manager.