How much is a brand name license worth? Part 2

Pop law abounds in The Lawbringer, your weekly dose of WoW, the law, video games and the MMO genre. Mathew McCurley takes you through the world running parallel to the games we love and enjoy, full of rules, regulations, pitfalls and traps.

My first article on the issues of brand licensing and Bobby Kotick's comments pondering the profitability problems that Star Wars: The Old Republic could potentially have due to the amount of money it costs to license the Star Wars franchise received some nice follow-up emails. Many readers sent in emails about why people hold their licenses to their chests and charge so much, when it would logically be better to get the brand name on anything and everything people touch. After all, more products with your logo on them is good, right? Well ... Not really, and not always.

Last week, I confessed to not knowing the amount of money Lucas was going to be paid for the Star Wars license for The Old Republic, but we could surmise that it would be a hefty fee. Readers pointed to an article by Eurogamer that interviews Michael Pachter, a games industry analyst many people know of. He believes that the cut LucasArts will be taking is around 35% of the revenue split after Electronic Arts makes back all of the cash that it puts into the game itself. If that's true, it's pretty astonishing, since LucasArts has so much faith in EA and BioWare to make this game have some intense staying power.

Where World of Warcraft is concerned, Blizzard lives in a different world where rather than have to choose the perfect partner to make the next StarCraft game, it has to operate as the LucasArts-like party, finding the right people to make everything associated with its brands. Where The Old Republic is another Star Wars product, Blizzard's most popular franchise is a game first and a world of products secondary.

The Lawbringer today is a little different, more focused on my crazy musings as the holidays wind down and a new year comes into focus. Please also remember that when I talk about games like WoW or SW:TOR in Lawbringer, it's not about a good or bad dichotomy -- games are products here on The Lawbringer, not games to be rated. It's just a product as far as I'm concerned, until I put in my login information and start running rampant on my warrior or Jedi Knight.

Merchandising is one of the most important aspects in dealing with your brand. While merchandising has been around forever in some aspect, as we talked about last week, Lucas himself was a pioneer in the realm of movie rights and associated products. Blizzard has done an exceptional job with its merchandising, especially overseas in South Korea and China, weaving WoW products and advertising campaigns into the game in fairly positive ways. Coke promotions, StarCraft gaming leagues, Mountain Dew robots, and celebrity endorsements (with corresponding NPCs in game) are all attempts at branching the brand and hitting more people with the Blizzard message.

We've got two focal points for both licensors (those are the people who grant you rights in a license). LucasArts wants The Old Republic to succeed because it is an ambitious new product in the Star Wars family. Blizzard's focus lies in growing its brands and hoping for successful endeavors out from the original MMO product. Websites and vendors offer goods and services that move product created from the MMO nexus. PrintWarcraft has the art, J!inx has the clothing, and so on. All of these things originate from the Blizzard brand.

Where does money come from?

Money comes from a lot of places and, as you might have already suspected since your parents told you, it does not grow on trees. The smartest money decisions in gaming with regard to merchandising are incredibly hard-to-calculate risks. Gamers in general are picky, quality-conscious consumers. We are the people who read specifications tabs in product reviews and use apps to find us the best price on the fourth box set of the Firefly complete series that we most likely don't need.

Our people don't like crappy products. We're detail-oriented, and when a product isn't exactly how we want it, there is this huge expanse known as the internet where we vent our frustrations at said product. Choosing the right partners is incredibly important for gaming companies.

So why not be cheap with the license?

If everyone could make a World of Warcraft T-shirt, you'd have a diverse array of products to choose from. Competition breeds creativity, correct? Competition also allows the better products to filter their way to the top based on buyer's reviews, lots of different factors, and the whole Who does this best? market Darwinism we've all grown to appreciate in life. Sadly, that's hardly the case.

Cheap licenses don't get made because the demand dries up quickly. If everyone makes a WoW T-shirt, not every WoW T-shirt is going to be purchased. Many retailers making the same thing means that there are just more versions of more products out there. If Blizzard instead just goes with Jinx, putting stricter controls and financial limitations on the license and making a quality product from one venue, then that venue has a sanctioned monopoly to make WoW T-shirts. Anyone who wants to purchase one goes through the licensed vendor. There is no confusion about who makes WoW clothing and no problems with quality since this retailer is known for a certain level of quality.

The problem with throwing your license around is that you also can dilute your brand. Too many poorly made products kill your name. No one wants to buy WoW T-shirts any more if everyone can make them and 80% of them fall apart in the washing machine. The back of my brain just did that thing where it slaps me and says, "But Mathew, hasn't the Star Wars brand done this a thousand times over, much like Sonic the Hedgehog, promising good and delivering poorly?" Why yes, brain, and you've seen that in practice with The Old Republic.

When a license goes bad

Warcraft thankfully hasn't gone bad yet and most likely won't for a long time. When people think about World of Warcraft, many people think about the pioneer MMO that broke the barriers that made people hesitant to start in the genre. People also associate it with Blizzard and a good product, but also the whole addictive nature of the game and the ever-present "LOL look at those nerds" type of sentiment. However, the brand isn't going away because the brand still has a ton of life left.

When The Old Republic was announced, we all instantly flashed back to Star Wars Galaxies, an ambitious MMO way ahead of its time that provided players with an expansive world to explore and some pretty compelling game systems. However, the game floundered significantly after immense updates to the game's systems and a change in direction as to the nature of many aspects of the core experience. BioWare and LucasArts had a rough road ahead of them -- to convince the public that Star Wars Galaxies was not indicative of what a Star Wars MMO could be.

Blizzard almost had to do this as well during the transition between Thrall's Warcraft Adventures and what would become Warcraft III. Many of us in those gaming circles at the time wondered why Blizzard had been developing a point-and-click adventure title when the obviously superior RTS and FPS genres were crashing onto the scene like that infernal at the beginning of Reign of Chaos. Oh, that cinematic still gives me chills.

I think the point here is that every brand has its ups and downs, and managing a brand is a hard, often painful, process of trial and error, vendor selection, and a whole lot of faith in your partners. Geeks see this stuff, even if they don't realize it. Quality is a concern. Merchandising isn't going away any time soon, obviously, so the best we can hope for is that good products come from the brands that we love and that competent people are in charge of those brands.

You've seen the outcomes when a licensee isn't performing well with the brand it's been given. You saw what happened when Blizzard consolidated a lot of its licenses and rights and pulled out from many companies making Blizzard-branded items. Good brands only make good products when they make the right decisions to do so.

See you guys next week, and have a happy and safe New Year's. Drive safely.

This column is for entertainment only; if you need legal advice, contact a lawyer. For comments or general questions about law or for The Lawbringer, contact Mat at mat@wowinsider.com.