Game IP Dealmaking: Translating Between Worlds

I made a couple of posts over the weekend that highlighted my excitement for the coming wave of game-based adaptations for film and TV, and also speculated about the potential of virtual production and game engine based development. However, there are challenges involved in adapting gaming IP - and there are even more ahead of game developers and publishers who want to ultimately skip the middle man and produce and distribute their own entertainment content. To adapt an old adage, gaming and film/tv are two businesses divided by a common language.

Here are just a few of the challenges that one may encounter from a business/legal perspective:

1. Deal Structure. Film/TV and gaming evolved from two different places, and aspects of deals that seems routine and commonplace in one industry may be quite foreign to the other. For example, the default position of a movie or TV studio is to take "all rights" in a property, less only certain delineated reserved rights (which are negotiable and media-specific). As a general matter, game developers and publishers are much more wary of a broad rights grant - which requires a significant level of compromise and flexibility from the parties. This is one of many issues that can complicate a deal when a film or TV studio desires to acquire gaming IP (others may be controls/approvals and reversion). Seldom will one party or the other be able to stick rigidly to every aspect of its "policy" if it desires to strike a deal.

As a result, won't it be easier when game companies decide to skip Hollywood and produce their own movies and shows? Not necessarily! They will presumably still need to engage with traditional talent (and their reps) in order to create quality work - which may mean a steep and rapid learning curve to be able to propose structures that will be familiar and workable. As a general (possibly overbroad) generalization, one reason why people coming from outside of entertainment tend to fail is by underestimating how entrenched existing structures are, and by proposing "innovative" or "different" ways of doing things - which tends to engender confusion and suspicion.

2. Culture and Communication. While film/tv and gaming are both broadly forms of "entertainment," they operate and communicate quite differently. In order for the two sides to be able to collaborate and make deals, it is imperative to be able to translate between those cultures. Something as simple as receiving hand comments to an agreement from a talent lawyer (which happens daily in film or TV), or a refusal to send a document as an editable word version may frustrate a lawyer at the game company. Likewise, game companies may have embraced technology toa greater extent and may be more comfortable communicating by email, messaging or even Google docs. Film and TV business is done primarily by telephone. From a substantive perspective, the priorities of the companies may also be different - and a comment that is received by a representative on one side as being incidental and non-substantive may in fact be extremely important to the other side.

3. Business Structure. The fundamental business structures of the two worlds may also create friction. In film/TV, the line between business affairs/dealmaking is very blurred. In most instances, I negotiate my own deals and then am responsible for also the preparation (or supervision) of the legal documents. This is uncommon in game companies, which are run more like tech companies - with deals often being made by non-lawyers and an absolute division (for the company's protection) from the legal department. In my experience, it is much less common for gaming attorneys to be involved in dealmaking (and in some instances, they may not even be copied on the deal correspondence!).

To illustrate, in film and TV, I talk to agents every day (sometimes with an attorney on the line, but not always) while wearing my BA hat. It's a normal and important part of my job. However when dealing with game companies, I once had in-house counsel get upset when I made a routine call to their “client” (i.e., the business executive) directly to finalize the last few points on a deal. This was presumably because of the importance of the bifurcated structure in game companies, and a lack of familiarity with how film/TV operates.

As a result, film/tv companies that fail to recognize the structure of gaming companies may find themselves frustrated or realize too late that they are seeking to appeal to the wrong party. They may seek to negotiate deal terms with a lawyer but not realize that the lawyer has no authority to close a deal. Likewise, game companies may unintentionally put themselves at a disadvantage if they hold too firmly to the business/legal bifurcation and allow non-lawyers to negotiate without a lawyer present (particularly since the film/tv reps will likely double up). In fact, we experienced talent representatives calling business people at gaming clients without hesitation - which puts the lawyers (both in-house and outside counsel) at a major disadvantage and in risk of being undercut. Put simply, the two worlds play by different rules - and it is incumbent on both sides to seek to level the playing field where possible.