CCGs: Exclusive vs. Non-Exclusive Licensing

[Darklord]

Question to Ryan D. and others. Ryan said I should expect to pay out a $100,000+ guarantee to Marvel over 3 years for a CCG license. Is this for an exclusive or non-exclusive license? The WotC license included rights for use of movie photos and tie-ins, right?

Another peer of mine said that he got non-exclusive board game rights during the peak of Xena and Hercules for about $40K for both those PLUS Battlestar Galactica ($40K guaranteed over 3 years, about $13.4K guaranteed per year). Similarly it seems that his Star Trek:TNG and Deep Space Nine licenses were about the same returns. He also licensed Babylon 5 when it was hot. All about the same. All his licenses were non-exclusive. Would that be the difference between his estimates of $30K and another estimate of $100K+?

Lastly, Ryan suggested that Marvel had already licensed a CCG to Upper Deck. I know about this, but I presumed that this was non-exclusive only because FAO Schwarz is putting out the GENIO CCG with Marvel characters right now too. Anyone now if the Upper Deck license is exclusive re: Marvel and/or DC CCGs? If so, how is GENIO getting released. Is it getting classified, somehow, as a non-collectible card game?

Lee

[Guildofblades]

>>Would that be the difference between his estimates of $30K and another estimate of $100K+? <<

Given the licenses you are talking about, I'm about 99% sure you must be talking about the Componant Game Systems company. Given the guarantee amount, I am very surprised the licenses in question didn't come with an exclusive. I can only figure it was because of the popularity of the Herc/Xena property at that time.

The difference between the $30K figure and $100K figure is no exclusivity, but rather one is for boardgames and the other is for the CCG market. While the failure rate of CCG is certainly higher, the rewards for a commercially sucessful CCG are many times greater, and hence, why most companies won't let their CCG license rights get tied up without getting a significant chunk of change for them.

[Darklord]

Originally posted by Guildofblades


Given the licenses you are talking about, I'm about 99% sure you must be talking about the Component Game Systems company.



Um, you must have a good eye, sir.

While the failure rate of CCG is certainly higher, the rewards for a commercially sucessful CCG are many times greater, and hence, why most companies won't let their CCG license rights get tied up without getting a significant chunk of change for them.

Interesting. Just to clarify, do you think a non-exclusive license is going to "tie up" rights. Now, were there no other licenses out there, I'd say it would, because it would prevent an exclusive license. But where a company already has multiple non-exclusive licenses for the same product area, they already can't give out an exclusive license.

I did appreciate your comments differentiating CCGs from Board Games.

Thanks for the comments.

Lee Valentine

[Guildofblades]

>>Interesting. Just to clarify, do you think a non-exclusive license is going to "tie up" rights. Now, were there no other licenses out there, I'd say it would, because it would prevent an exclusive license. But where a company already has multiple non-exclusive licenses for the same product area, they already can't give out an exclusive license. <<

Thats a tough one to say. I'm sure it would depend on the property, the owning company and whats its relationship is with the company or companies already with licenses for CCGs for the property. If, say, Mattel or Hasbro or some other significant player who is known for licensing lots of things was one of the license holders and the intellectual propety owner had other properties now or in the future they hoped to license to them, then they may not want to risk poisoning an otherwise good relationship by granting another competitive license.

Another good reason why they may not want to dilute the license any further is, CCGs tend to require a certain critical mass of sales and market penetration to remain active in the market place. Its possible that having competitive products based on the same property on the market at the same time could prevent all of them from reaching critical mass and hence all fail, meaning the licensor never earns anything beyond the guarantee. Whereas alternatively, if a steady selling CCG could crank out 3 sets per year and move 10,000 starters and twice that much in dollar value in booster for each set, that would be roughly $120,000 to $150,000 gross revenues per set, up to $450,000 per year. At a 10% royalty rate over a three license that would be about $135,000 in royalties. In that scenario the licensor may very well be better off selling non exclusive licenses to twp or more parties each with at least $70K guarantee or more. However, if its a strong property the a single licensor has a good track record successfull CCG publishing, or is a larger company with the obvious ability to get placement for items into the mass markets as well as the hobby and the book chains, then perhaps that single company could sell the above numbers several times over at least. Assuming there are no competitive numbers to dilute the critical mass needed to keep the first game from selling steadily at those numbers over the life of the license.

All and all, its my humble opinion that unless you are amazingly lucky enough to grab a semi obscure license that just happens to take off as a game to become one of the top 3 CCGs on the market where most every retailer feels they /must/ stock it, its very difficult for a small company or even a larger company thats new to the hobby market to make publishing a CCG profitable. At least a licensed one, given the normal guarantees required for CCGs. But non licensed CCGs are near next to impossible to get enough sales volume on to make profitable. It really takes an established player in that ballgame, with established distribution for a CCG (both to the hobby market with at least a few in roads to mass distribution as well) to move the volumes neccessary to turn a profit.

[HyrumOWC]

Originally posted by Darklord
Lastly, Ryan suggested that Marvel had already licensed a CCG to Upper Deck. I know about this, but I presumed that this was non-exclusive only because FAO Schwarz is putting out the GENIO CCG with Marvel characters right now too. Anyone now if the Upper Deck license is exclusive re: Marvel and/or DC CCGs? If so, how is GENIO getting released. Is it getting classified, somehow, as a non-collectible card game?

Lee

The Genio Marvel game is being billed as an educational trading card set, not a game. In fact, if you look at it, there's almost no game there.

The UD license is exclusive, for both Marvel and DC, in terms of TCG rights.