How do IP strategies need to evolve for video game adaptations?

The back-to-back successes of the HBO series The Last of Us and The Super Mario Bros. Movie are at the forefront of a new wave of film and TV adaptations of games titles coming over the next few years, with publishers increasingly targeting cross-media IP potential. However, this opportunity differs significantly from other forms of popular IP, requiring new strategic approaches to drive growth.

The size of the prize is much larger than production margins alone

Adaptations are a staple for blockbuster films and high-end TV (from Dune to The Rings of Power) giving funders greater confidence, amid rising budget levels, that the end product will find a large audience. These projects also deliver sizable value to IP holders through rights deals, acquisitions, escalating production fees, ancillary income (e.g. merchandise), and original format sales.

Limited crossover in audiences makes games adaptations valuable to both sides

The games sector is growing rapidly, but is yet to find a true mainstream userbase amongst older demographics outside the mobile space – in contrast to TV where younger groups have lower engagement levels. As such, game adaptations represent an opportunity for traditional AV players to attract younger audiences and for games publishers to gain fans from new audiences, which they can monetise more directly through digital content.

The Last of Us saw the benefits of this dynamic – the first episode averaged 40 million viewers in in the US,[1] reaching a larger audience than the games sold globally across a decade (37 million, a stellar figure for a single-player franchise)[2]. This boosted sales of the existing Last of Us games – a 238% week-on-week increase in the UK for the first game[3] – though the true prize may come with the next entry, reportedly a live-service multiplayer game where the size of the player base will be key to success.

The trajectory of games adaptations could match, or even surpass, comic book IP

In many ways, games are following the same path as comic books just 20 years behind, with occasional early efforts in the 60/70s (versus the first videogame films in the 90s) becoming the dominant cultural force by the late noughties. However, the value of games could be even greater given the rich knock-on opportunities and large amount of available IP – 15 gaming companies posted revenues over $1 billion in 2021.[4]

Getting the approach to adaptations right over the next few years will be critical to realising this potential amid significant competition.

No single approach fits all games IP, but the strategic questions are similar

The historically poor performance of games adaptations have made clear that traditional approaches to adapting IP require re-evaluation for games. While different approaches are required for different types of games, common indicators – including fan base, strength of the narrative, and genre – can help understand the relative appeal of IP and the most suitable approaches to exploitation. We tend to think about gaming IP using the framework below, with different approaches needed for different segments.

Another key to success can be vertical studio integration. For example, PlayStation Productions, is able to exploit efficiencies and creative collaboration across Sony’s combined position in games and TV/film.

Given that all gaming IP is different, owners and potential investors need to ask themselves where their IP sits and what approaches apply when tackling adaptations.

Which IP to adapt – where on our matrix does it sit?

Beyond the genre, which clearly has a major bearing on the transferability of gaming IP, those with rich stories and large fanbases might logically be preferred; though they rarely exist – not least because long-running franchises first emerged when games were less able to tell detailed stories due to technological limitations. Such games may also represent a ‘danger zone’, where adaptations risk alienating existing fans, rather than attracting new ones.

The ‘sweet spot’ might be IP with lauded narratives, since this offers a clear blueprint to producers, and quality assurances to commissioners, while the smaller initial fanbases mean there is more potential new audience upside and less risk of disappointing existing fans. Properties with wide recognition but little usable narrative, on the other hand, are a more difficult editorial proposition leading to hit-or-miss outcomes; though the potential rewards of a hit, especially in film, make trying to get this right an attractive route.

How to pick the right format?

Film tends to be a natural home for IP with mainstream fanbases but limited stories, whereas narrative-rich IP is able and perhaps more suited for premium scripted TV series. The latter is the main growth area for games adaptations, with improved budgets and technologies enabling the VFX use needed to adapt the majority of gaming IP, which sits in fantasy/sci-fi or animated spaces. We expect this to continue as more narratively-driven IP is adapted and SVOD premium demand remains high.

New approaches may be needed to capitalise on genres beyond premium fantasy and sci-fi content. This could involve alternative IP treatments, such as the upcoming Gran Turismo film which is a real-world biopic, or more efficient lower-budget productions which focus on technical aspects over on-screen talent.

How to work within or beyond a game’s existing narrative?

Films such as Doom and The Super Mario Bros. Movie have emulated gameplay moments, with some success, to offset a lack of pre-existing story, though more could be done with scripts to deliver lasting narrative engagement. Giving TV/film producers the freedom to explore distinctive ideas using their experience may help to better deliver against traditional viewer expectations, but this should happen within agreed character and world design principles.

In contrast, The Last of Us faces a different issue in what to do when the existing story runs out – most narrative-rich games do not yet have the length/depth of Marvel or Harry Potter. Audience reaction to the final Game of Thrones season showed the risk of extending beyond source material, but games could be a more fruitful space given a tendency for linear, lone-hero stories to build from. Some of the usual rules to successfully adapting IP still apply though, including collaboration across creative partners and testing story additions on a smaller scale first.

Other success factors?

Beyond the editorial aspects of adaptations, a number of factors go into building out a sustainable cross-media IP ecosystem. For games IP, key considerations include: how to structure licensing deals or production units to develop the best ideas and create workflow efficiencies from pre-existing assets; how best to capture the value of new fans, and evolve gaming offers to serve new and existing fans alike; and what opportunities exist to blur the boundary between games and TV/film with new forms of interactive entertainment.

We help leading content companies and investors navigate these challenges

Games publishers that position themselves well to tackle this complexity over the coming years stand the best chance of delivering a step change in both their IP value and market position in gaming. While this may be new and exciting territory for gaming IP, it isn’t a new area; there’s a long history of IP owners moving between media. As well as publishing IP moving into almost all media, there are examples of newspapers into radio, radio into podcasts, and sports into TV. We at O&O have helped all of these and are well placed to help again by providing market understanding, assessing demand, valuing rights, and developing specific product offers.

If you are a gaming IP owner, or are considering investing in gaming IP, please get in touch. We would be more than happy to discuss how we can help you.

[1] Warner Bros. Discovery, THE LAST OF US Finale Draws Series High Of 8.2 Million Viewers […], 2023

[2] Naughty Dog, Reflecting on a big year to come for The Last of Us, 2023

[3] GamesIndustry.biz, The Last of Us Part 1 sales jumped 238% after TV show launch | UK Boxed Charts, 2023

[4] European Commission, The European Media Industry Outlook, 2023