Warner Bros. Discovery again confirms the massive failure of the Suicide Squad: Kill the Justice League video game.
As a result, WBD is now now considering licensing out their games to other companies.
Games revenue dropped 41%
Warner Bros. Discovery’s Q2 earnings report reveals games revenue dropped 41% from the same period a year ago when Hogwarts Legacy was a big success for them.
“Games revenue declined 41% ex-FX, primarily driven by the weak performance of Suicide Squad: Kill the Justice League this year, compared to the strong performance of Hogwarts Legacy in the prior year,” states the official earnings report.
“We’re looking to take advantage of [licensing]”
Regarding licensing out their games, both Warner Bros. Discovery CEO David Zaslav and JB Perrette, CEO and President of Global Streaming and Games for Warner Bros. Discovery, said they are looking at licensing them out.
Zaslav specifically says:
We have 11 studios here, and we have a lot of IP. And there’s also a lot of interest among others in coming to take advantage of some of that IP for gaming, which we’re looking at. Because as JB said, we need to get bigger, and the IP that we own and the value that it has in the gaming space is something we’re looking to take advantage of.
Perrette answers the following when asked on the call about the “strategic value” of games to Warner Bros. given recent “uneven performance” (via IGN):
We look at the evolution of the storytelling in interactive entertainment as a space and say it’s one of the unique areas in media that is growing, both growing in terms of time spent, growing in terms of engagement, and growing in terms of revenue. And so we still see this as a huge opportunity for us. We know that our franchises, particularly in a world where the gaming industry-launching brand new franchises is getting harder and harder for a number of reasons, including IDFA deprecation and more challenges with marketing and customer acquisition. And that franchises like the ones that we have are in high demand, and can help in launching games. You still need a great game, and the reality is, we’ve had the unfortunate- in a short period of 12 months, we went from having the record year in 2023 with Hogwarts Legacy to unfortunately having the opposite side of that spectrum with Suicide Squad. And it is still hit-driven nature of some of that business, but one of the areas we are particularly leaning into, which is about half of the $200 billion games business, is the free-to-play space.
And the Player First deal was really about strengthening our capabilities in that space. Because we do think we are subscale and we have more opportunities to grow in that space, which is a big part of the market. And when we do, then it’ll help also provide some more balance to our games business, from the inevitably cyclicality of more console-based releases which have a 3-4 year time horizon and a little bit more lumpiness even when you do get it right. So we continue to be strong believers in the game space, we want to continue to see and figure out how we lean into it and get bigger in that space, and we’ll certainly tell you more about it as time goes on.
Zaslav answered:
One of the strategic advantages of owning all our IP is, as the world has changed, it used to be you launch a movie or you launch a TV series, then you do a game. But one of the reasons that Hogwarts Legacy was so successful and the #1 game last year, you went to Hogwarts Legacy and you entered the game and you were able to become part of that world. That ultimately I think is a big piece of where this industry is going. That we’ll create a movie, whether it’s Batman or Superman or Harry Potter, and maybe there’ll be a TV show, but the ability to go in that world and have that experience of spending time with all the characters is something that we still own. We have 11 studios here, and we have a lot of IP. And there’s also a lot of interest among others in coming to take advantage of some of that IP for gaming, which we’re looking at. Because as JB said, we need to get bigger, and the IP that we own and the value that it has in the gaming space is something we’re looking to take advantage of.
