Sega has delved into the Hollywood licensing game, both looking ahead to new film franchises like New Line Cinema's His Dark Materials and digging into the archives with 20th Century Fox's Alien franchise. Scott Steinberg, vice president of entertainment marketing, Sega, took some time to talk about the roles these new Hollywood IPs will play alongside Sega's original franchises.
GameDaily BIZ: With Sega entering the Hollywood licensing business with His Dark Materials, Charlotte's Web and Alien, this is the third Japanese game maker, following Namco-Bandai and Capcom, that's getting into this business. Is this a new trend?
Scott Steinberg: I don't know about a trend. Japanese origin companies in general have realized they have got to get a little more Western with their content, and this certainly has fit the Sega strategy over the last almost three years where we have tried to balance our portfolio. With His Dark Materials, it's New Line as well as Scholastic because these are books, it's a trilogy of books that New Line is making into movies. So, the question is why we saw a time now to jump head long into licensed movie part of video games? Two years ago with the integration of Sega and Sammy, Japan recapitalized Sega and our mission has been to build Sega back up to prominence to a top three or top five leader in the interactive entertainment space. So our goal is to grow the business and we are on a very aggressive product road map that requires us to balance both the stuff we are building from our internal studios, but also goes out and gives us some leeway to buy larger scales licenses. So, we're active and we are getting more active and we've got more in the pipeline and there'll be more new stories in the upcoming months on how we are rounding that out.
BIZ: How big a part will Hollywood licenses play in Sega's portfolio moving forward?
SS: Well, I can't tell you that, but I can certainly tell you what we've noticed with some of the leading companies that are slightly above us on the market share list. It typically ranges from about 40 to 60 percent of the larger companies' line-up being devoted to licensed products. Forget sports for a second, but just the action-adventure side. You've got some companies like THQ that could be a little higher, but that is the working model that we have. We believe from a portfolio standpoint that to win and gain share, we have to have a bigger chunk of that licensing pie than we currently have, which last year effectively was zero. I'll say there will be an aggressive move from the youngest of our Japanese studios, but being more Western-oriented with the development approach.
BIZ: Why do you think there's been this shift to Hollywood licenses?
SS: I think a lot of companies have realized that the Japanese market is a little flat, if not a little bit down, and the growth market and the growth opportunities are in the U.S., in the near term. I think to grow there you have to rely on licensed properties and in a Japanese market sense, relying on your own studio to come up with another piece of content that is created by a Japanese development, odds are it may not be as relevant to the Western audience. I am sure one way to mitigate that problem is to put an American or Western lead license on top of a product and certainly become a bit more Westernized right out of the gate and not have to do a development deal out to an external studio out in the U.S., Canada, or Europe. That doesn't force the Japanese team to find that magic of what's going to work in the West and it's been fewer and fewer games that are coming out of Japan that have worked as successfully in the West then say maybe 15 years ago. I think the reality is that every company is trying to grow and they are looking for what is the recipe for growth in the Western territories and there are lots of working examples of companies doing it via licenses.
BIZ: What role do you see Hollywood licensed properties playing with next-gen consoles?
SS: We are not going to flow with license properties and ebb with our own attempts at building new IP. We are flowing both instances. We do feel that the first couple of years of a new platform is the best time to launch new IP. We have a road map to do that, especially when the new platforms have been kind of slow to build an installed base. We have the capital to do both things, create original IP and leverage the licenses that we do acquire and bringing those over to existing and next-gen platforms. We will be bringing licensed properties to the next-gen platforms perhaps earlier than in prior generations, but we think there is good reason to do it and I am sure other companies are doing the same because they recognize that those properties are expensive and they need to be leveraged over several platforms.
BIZ: Will Sega be targeting kids' properties from Hollywood?
SS: Absolutely, we do have a strong knowledge base with a lot of our kids' properties or younger-skewing properties like Sonic and Super Monkey Ball and licensed games have a slightly better track record against a younger audience then say they do the core 25-year-old, so there is a method behind that. His Dark Materials, as a property is, I wouldn't necessarily say a kids' property in a Harry Potter sense, it is a little darker than Harry Potter. It certainly has a bit more creative vision in terms of the scopes of the books. There is some incredible scale to the stories and they lend themselves extremely well to next-gen. We can do some things with the fiction that just couldn't be done on some of the existing platforms and we'll be launching them on next-gen, as well.
BIZ: Do you have the ability to expand the His Dark Materials franchise beyond the films?
SS: We do; we have even the ability as EA has done with Lord of the Rings, to take the fiction outside of the books and do individual games outside of the three that are the trilogy. So, we see this as a real important property for us both financially, but also creatively. I think there is a lot there we can play with and I think there is a lot there that lend themselves really well to where the interactive industry is going right now. I think it's a nice laying of planets for Sega and for how to leverage the property with new platforms.
BIZ: Will the directors get involved in these games like Peter Jackson did for New Line's Lord of the Rings adaptations?
SS: I don't think they'll be the kind of creative involvement that Peter Jackson had. I think that the development has been working behind the scenes for quite some time, so we are already kind of knee deep in a lot of activities. We have some folks on location in the U.K. out of our London office bringing assets into the game from the movie side. Part of what we thought was so attractive in working with New Line Cinema, and of course, their experience with Lord of the Rings is education for days relative to their knowledge about the industry and what our needs are and how to ensure the game is as high quality as possible. It's not a studio that is completely ignorant or has not followed the space.
New Line has been awesome and I think will continue to be awesome because they get it and they understand the needs of the interactive side and how to best align the movie with the game, which is critical for us, and we have a strong pipeline of content going to the team from on site there.
BIZ: Will you be working with Hollywood actors for these games?
SS: We're evaluating which ones are going to fit in the first game, The Golden Compass, right now. We definitely see the Lord of the Rings, as well as what was done with Harry Potter. Our opinion is the authenticity of a game and movie, creating that connection, we're going to need to have some of that celebrity power behind the game. Depending on what the focus is of the game and who the main characters are, we could have different movie characters in more of a starring role in the game than in the film.
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