Why do games cost so much to manufacture? Because everybody wants a slice of that licensing pie.
By Patrick Vuleta on April 3, 2014 at 1:42 pm
Games publishers pay all sorts of people to bring you the games you play. More than just developers and marketers, publishers have to budget in payments to musicians, payments to arms manufacturers, payments to celebrities, and even payments to porn stars (if your game is Saints Row 4).
We talk product placement advertising as if it’s some sort of bad thing, but just about everything you’ll see in game is owned by someone—and often that someone is not the developer or publisher. And often they demand money. And often they insist on how their property can be used in the game. Today we’ll be looking at where your money goes when you buy a game, and how it influences what you see and hear when you start playing.
Licensing fees, not royalties
The first thing worth noting is that in general, these costs are not actually royalties. Unlike movies, where artists get paid performance royalties for when the movie is shown with their song in it, games publishers have managed to weasel out of such an expensive cost. Instead, most artists and other asset owners are instead paid a flat licensing fee.
Whether this is a good thing really depends on perspective. A flat fee is good if you just want a quick buck and exposure. However, if something suddenly becomes a hit, royalties are much better for the artist.
Consider our latest MMO darling: The Elder Scrolls Online. When I first loaded up the game, there was that familiar riff: Da-da-dun, da-da-dun, da-da-dun, da-da-dun, da-da-dun, da-da-dun, da-da-daaaah. Sing with me. Anyway, this was probably composed years ago by Jeremy Soule for what would be a pittance these days. Publishers didn’t pay artists much money back then.
Jeremy has probably been paid a fair bit more since then for its use in the more recent Elder Scrolls Games, but this can be directly contrasted with Stan Jones, who in 1948 independently wrote Ghost Riders in the Sky, a song that’s been covered by about a million others since. For every cover and performance made of Ghost Riders, Stan got paid. He could have lived off that one song. You won’t see the same happening for even the most successful game music composers.
Trademarks and product placement
Next to music licensing fees, the next big cost is trademarks. These can range from everything to guns, to celebrity likeness, to movie rights. The agreements to use these will involve both a cost on the publisher, as well as some agreements as to how the thing is used. But what’s more interesting is how these agreements also serve as product placement to govern how the trademarks can be used.
For example, Barrett Firearms Manufacturing is pretty insistent on people paying to include the Barrett 98B rifle in games. The gun’s a trademark. Barrett’s licensing terms also prohibit certain uses of the guns – for example, you can’t put the Barrett in the hands of the bad guys. Even though FPS players like playing with real guns, to get those real guns in the game requires a form of product placement. UPDATE: EA, however, has never paid and openly flaunts this.
The 2010 reboot of GoldenEye also saw this. While GoldenEye 64 starred a pixelated Brosnan, GoldenEye 007 had Pierce’s likeness scrubbed from the franchise, Kim Jong un style. There can only be one Bond.
The takeaway point is that product placement is happening all the time, even if it’s not there on some big billboard. Many things you see in game have their own little restrictions on how they can be used.
Can you just dodge trademarks?
So what happens when a publisher says “I don’t want to pay!” Well, it happens. Games use several tactics to avoid trademarks.
The first is to just make it all up. Most easily done when you can invent all sorts of crap about mass drivers and intergalactic travel and rainbow space lasers due to owning your own franchise, but it also happens with real world things. Despite being bankrolled by Nintendo, GoldenEye 64 took interesting liberties with its guns to avoid trademark issues (and licensing fees—they were already paying enough for Bond, after all). Bond’s signature PPK became the PP7, and the FN-P90 became the RC-P90. And it was made of wood. Everyone who’s seen Stargate knows it’s really polymer.
Nintendo didn’t get sued, so this apparently worked, although it’s possible the arms companies would have had a case. To avoid trademark infringement, the trademark has to be so diluted that it’s no longer distinctive and can’t be recognised. But PP7? Come on. That’s just replacing one letter! For a while I even thought the real gun was named PP7. This confusion is what trademark law is meant to stop.
The last approach is to argue trademark law does not apply because you signed a contract. This happened recently with EA Sports using the images of thousands of American college sportspeople in its games. All college players sign a contract with their governing body (the NCAA) that prevents them from using their game for money—keeping them as amateurs, essentially. The NCAA and EA took this as free reign to just shove whoever they wanted in their games.
To cut a long story short, some former players sued, and the NCAA recently announced they were leaving the video game business as a result. The case hasn’t been fully resolved and involves many complex issues, but it does illustrate just how widespread potential trademark infringement can be in games. So the next time you play, think about all the subtle product placement going on—and who is getting screwed over to make it happen.