Stay Cool This Summer

Getting Licensed

by Andreas Walters on March 19, 2020

Since Hyper Light Drifter: The Roleplaying Game is pretty fresh and we’re actively trying to get a lock down on another IP license, I think it would be a good opportunity to talk about acquiring IP licenses. With only one license under my belt I’m no expert on the matter, but at least the things that I’ve learned along the way could be useful for those who are looking to license an IP property one way or another.

My Licensing Story

I’ve been wanting to license a video game IP license for quite some time, and there were a few games that I really wanted to make a tabletop RPG for. This included games form studios both big and small, with games such as Diablo, Elder Scrolls, Destiny, Shovel Knight, Darkest Dungeon, and Hyper Light Drifter. I sent emails out to these studios over the course of the last two years and had mixed successes.

Honestly, some of it came down to timing, luck, and others came from having the right contact.

Got an email exchange with the licensing director at Activision who put me in contact with Bungie’s licensing lead (Bungie was in process of seperating from Activision though wasnt public information at the time, and didn’t have capacity).

I was able to get ahold of Yacht Club (Shovel Knight) but they weren’t open to licensing at the time (they had a few licensed projects in the works).

Heart Machine (Hyper Light Drifter), was intrigued at our pitch and was interested in licensing, though the process took about a year to finalize.

So a few things that were important about my effort:

Everything I was doing was pretty much a cold-call email. I knew no one in these respective companies, so there was no way I had a warm entrance to these converstaions. That said, doing your research really helps. For example, for the larger studios, doing research on who their licensing leads are can go a long way. For example, the reason I was able to get ahold of Activision was because I was able to find the email to the Blizzard Merchandise Director in a press release. This was an awesome step into the door, as with my introducotry email he put me in touch with both individuals in Blizzard and Activision who were responsible for licensing. Unfortuntly Blizzard didn’t respond at that point, though now I can follow up with that contact, and Bungie was in the process of seperating from Activision (before it was public), so they told me perhaps later when things smoothed out.

My outreach to other companies (typically smaller ones), like Red Hook, Yacht Club, Heart Machine, Shiro Games, I just got their contact from their website (though I did look for more specific email addresses to avoid a spam filter). There, I was more often than not going to get a reply, as smaller studios are a big more open on communication. Companies like Red Hook, and Yacht Club did get back to me, telling me that they weren’t interested in licensing at the time: Red Hook, working on Darkest Dungeon 2, and Yacht Club, working on numerous projects as well as had a board game license they were working with.

The Bigger the Company/IP

Now, I’m not going for a big Hollywood IP, like Altered Carbon, though if you do go for such a thing, you definatly need a pitch deck and a IP licensor to help secure that license (I can follow up with my buddy Ivan about that). For larger IPs this is the only way to even get close to the the IP.

Pitch Deck

If you’re looking to talk to other companies for partnerships or licensing, you definitely need to have a pitch deck! A pitch deck is essentially about your company, and why your company is the best equipped to handle this IP and license, referencing your creative team, your strategic partners, your media reach, as well as industry experience. For those who do research into startup, this would be essentially the same thing as a start-up pitch deck.

Now, when you reach out to people, you shouldn’t share your pitch deck right away. I’d recommend to say that you have a pitch deck, that you can send over, as when doing cold calls you don’t want to share too much at once. Just note that you have a company deck that you’d be able to share if they’d like to see it, or talk about the possibility of licensing with you.

Smaller Companies

This is honestly the best place to look for IPs. Smaller companies are more likely going to respond to requests, and be more open to licensing. In addition, it’s far easier to get a person-to-person connection. Whether it’s novels or indie video games, these are great starting points to build up your portfolio and professional relationships. That said you should still have a pretty solid company portfolio before you try.

When to License

If you want to start licensing, you absolutely need a successful project track record under your belt to even appear as a legitimate publisher. By the time we started reaching out we had several successful Kickstarter under out belt and numerous project and awards to show off (great stuff for your introductory email to give a semblance of quality and professionalism).

Cost of Licensing

So due to NDA’s I can’t share the full details of my licensing arrangement, but from my research and conversations with other ttrpg developers who have licensed properties, I’ve got a pretty good idea on the base costs of trying to

License Fee: This is an upfront cost to license (this is normally non-refundable). Typically this is anywhere from $500 – $5,000.

Minimum Guarantee: When the contract term has passed, how much do you promise to have paid your licensor. When this term has passed and you haven’t paid out the total, you owe this difference. This can really depend on the license, typically its a good idea to affix a royalty per year, and bake that into your calculations so at $1,000 per year for a 4 year contract, you’d be looking at a Minumum Guarntee of $4,000.

Royalties: How are you sharing revenue with your licensor, is it just for physical goods? for digital goods? In addition, it’s not bad to include a royalty % for funds raised on Kickstarter (if you are crowdfunding). This is very variable, and it can depend on how many assets and how much involvement you have received from the licensor, I’ve seen anywhere from 5-20% on both physical and digital goods (rates for both sometimes differing).

Payment Term: How often are you paying, typically payments are made quarterly (spreadsheet is usually the best way to send)

Payment Method: Direct Transfer? Check? Paypal? this is something good to know as an international bank transfer can cost you $35 per transaction.

Assets: This is really important, as it will guide what sort of assets they’re legally obliged to provide you, that you can use.

Schedule: What is the planned schedule for development and reveiw

Review & Approvals: When will reviews be submitted to the licensor? How much time is given for review?  What happens after the time period passes with no response? What about final review?

Samples: How many copies are you providing to the licensor

Right of Purchase: If the licensor wants to sell copies of the licensed product, what is the rate they can buy product at?

Terminations: How can his contract be canceled? What happens to the minimum guarantee? How much time do you have to sell inventory (and at what rate) prior or post contract termination.

Ownership and Use of Assets Created: Who owns the new assets created? Can the licensor use them? and if so in what capacity?

Renewals: When the contract term ends, what is the process for renewing the contract? Is there a continuation clause? does it need to be renegotiated? does it renew automatically?

Anyways, I hope this helps out or is informative to you all. I’d be happy to answer questions or expand on any piece of this, as it took awhile to create and I hope I got all my thoughts down in a cohesive manner. It was definitely a much larger topic than I had anticipated and I hope it was worth the wait for this post.

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