This week I thought I'd talk a little bit about licensing. We have several ongoing licensed games right now (Dragon Age, DC Adventures, and A Song of Ice and Fire Roleplaying) and in the past we've done books based on properties such as Thieves' World, Black Company, The Nocturnals, and The Red Star. I negotiated all of these licenses, as well as the studio deal that led to us designing Warhammer Fantasy Roleplay, 2nd Edition for Games Workshop. I was also a creative director at Wizards of the Coast a decade ago and dealt with companies like Lucasfilm and Blizzard in that time. I think it's fair to say I have a lot of experience in this arena.
Licensing in our industry happens when one company (or more rarely, one person) owns a media property of some sort (books, movies, comics, etc.) and another company wants to create games based on it. In the early days of tabletop gaming, there was a lot of naivety about trademarks and copyrights. TSR, for example, published a miniatures game called Warriors of Mars based on the Barsoom novels of Edgar Rice Burroughs. They had no license to do so, and sure enough the Burroughs estate contacted them. To avoid a lawsuit, TSR never reprinted the game. This sort of thing was not uncommon in the 70s.
Today licensing is both more common and better understood in the game industry. When I first delved into it, there were lots of folks I could talk to who had done it before and were willing to give me advice. I do the same when people ask me. Such camaraderie is one of the nice things about the gaming biz.
So how does it all work? Well, the first thing you need to do is find out the right person or persons to talk to about licensing. In some cases, this is easy. For A Song of Ice and Fire, I just e-mailed George R.R. Martin one day and started a dialog. For small companies you can usually go to an owner or president. Larger companies will have dedicated licensing people.
Once you have the ear of the right person, you need to make a proposal. This is a document that basically outlines the scope of the license as you see it and what your plans are. One thing to understand is that companies slice the rights up into many different component parts. If you try to get a license for just games, the cost would be absurdly high because "games" is far too broad a category. You need to figure out the type of game you want to do (RPG, boardgame, card game, video game, etc.) and ask for those rights. The more different types of rights you try to scoop up, the more expensive the license will be.
Sometimes a company will have standard terms for a license as far as money goes, but more commonly this is something you'll have to propose and then negotiate about. Typically, a license requires an advance and royalties. The advance is money up front that proves you are serious, and then the royalties are the percentage of your sales you pay to them in exchange for the license. It's called an advance because you are pre-paying the first chunk of the royalties. Some licenses also have a guarantee. That's a minimum amount of money due over the term of the license. Guarantees can be dangerous because if the line does not perform to expectations, you can end up spending a lot more than the royalties due.
Another thing to negotiate is the length of the agreement. Most that I've seen tend to start with two or three years and then have an additional period of a year or two that happens automatically as long as both parties are happy with the agreement. Some also have limits for how many products are covered. For DC Adventures, our license is specifically for four books. We tried to negotiate a broader license, but the advance involved was simply untenable for a company of our size. It is good to know your limits.
You should expect that negotiations are going to take time. There will be a lot of back and forth about the terms and that is something you don't want to rush. Key things to establish include the assets you get access to and how the approvals process is going to work. Of particular value in our business is the ability to use existing art assets. The Red Star was terrific because we got to fill a book with Christian Gossett's amazing art. With DC Adventures we get access to the DC's mammoth art archive. Art assets like this can save you tons of money down the road.
Approvals are a thorny area and one you need to be ready to deal with. Basically, the licensor is going to want to see everything (text, art, ads) you do before you print or release it. Sometimes this process is short and painless and other times it is long and arduous. It is, however, one of the prices you pay for having the license in the first place. Most boilerplate licenses have a clause in them that stipulates that a work is considered approved if no response is given within a certain amount of time. That clause is usually the first thing the licensors ask to remove as part of the negotiations. They don't want things they haven't approved getting out there without their review and it's hard to fault them for that. This doesn't make your cursing any less loud when you find out your GenCon release is now going to be a Christmas release though.
Once you have negotiated a deal that you feel comfortable with, make sure you get a lawyer to review the contract. I have learned to parse a certain amount of legalese over the years, but it's best to consult an expert when your company's future is on the line. You may be tempted to start working on the game material before the contract is signed. You shouldn't. Sometimes negotiations drag on and on and the deal never happens, or the handshake deal never gets to the contract stage. You don't want to sink a lot of effort into writing and designing material that can't be released because you never did get that license.
Once you have the license, you need to maintain the relationship. This means treating your licensors professionally and with respect. If you want to renew the license or get a good enough reputation to get another one, you need to be a good creative and business partner. Don't try to sneak things under the radar, don't throw a hissy fit because your idea got shot down, and don't talk smack about your licensor. Above all, realize that the money you're going to make for your licensor in this industry is not going to be some kind of big payday for them. Now most licensors understand this (and if they don't, you should educate them during the negotiation). Companies license their properties for tabletop games because they think it'd be good marketing, or as fan service, or because they like games themselves. Just remember that you need them a lot more than they need you, so act like a professional, do the best work you can, and be faithful to the property. If you do it right, licensed games can be totally worth it.