Summary
* Marvel is the new NFL - this deal is good for them * A lot has to go right for Gazillion to cash in on this deal - speculative risk * History is not on Gazillion's side - Brash, Hellgate, etc. * MMO-specific design challenges with licenses * This deal unlikely to change the overall licensing landscape
Analysis
The upside of the MMO business needs no introduction. It is personified in the multi-billion dollar form of the World of Warcraft franchise. While attempts to be the next WOW have not fared well thus far, it certainly hasn't stopped folks from trying (Hellgate, Age of Conan, Warhammer, Gods & Heroes, etc.). Gazillion would appear to be the latest contender for the crown and they are bringing the might of the Marvel universe with them. It is an ambitious play to be sure and, as long-time Marvel comic collector, I hope Gazillion does well with the license. That said, it will be exceptionally expensive to find out if they’re the next Blizzard or the next Brash.
While few specifics of the Marvel-Gazillion licensing deal have been released, the multi-year nature of the arrangement reminds me of EA's recent multi-year lock on the NFL license for Madden. In EA's case, this makes vast amounts of sense as Madden is a proven franchise with known audience and revenue characteristics. While I can see Gazillion wanting the runway to build a long-term business, I think it is safe to assume that they're paying for the privilege in the form of yearly minimum commitments. Marvel is white hot right now and not about to do a back-end only deal with a brand new company with no track record. So, in addition to the multi-million dollar cost of developing a AAA MMO, Gazillion also has the licensing fee to contend with. Should their first product not be a hit, the company’s cost structure will begin to look rather scary depending on how much investor money they have in the tank. They are making a very large, very speculative bet.
There are some design challenges in getting a hit right out of the gate using a license. For example, everyone will want to be Spiderman, Iron Man, and The Hulk while nobody will want to be Ant Man. Many games resolve this issue by letting players create a new character within the license’s universe but not play as the characters they are familiar with – Godfather for example. In the case of an MMO however, it is an open question as to whether or not that is a compelling enough arrangement to entice the player to come back again and again to level up my character. Turbine’s Lord of the Rings MMO may be a somewhat helpful comparison point in this regard.
Overall, I see this deal as great for Marvel as it likely provides a long-term revenue stream at no risk to them. It is a high risk, high potential return proposition for Gazillion. As to its implications for other media companies and/or IP licensors, my sense is that it will be referenced but will not serve as an overwhelming force within the industry as there are very few companies out there willing to make speculative bets this large – especially right now. Gazillion is the exception rather than the rule and a lot of things will have to go right for them to cash in on this license. I for one just hope they find a way to work Moon Knight into the final product ☺
