IP strategies have been emphasized in the video game industry in recent years, as Nintendo has been focusing on “expanding the population exposed to Nintendo IP”. What is IP in the first place? Why is it so important?
Following the previous issue of Metaverse, we asked two game writers, Mr. A and Mr. B, both game developers, to talk about “game IP.
IP titles are easy to attract customers and have good sales prospects.That is why game companies are aiming to establish IP.
Mr. A: The game industry in 2023 appears to be very active, with so-called major IP titles such as “The Legend of Zelda: Tears of the Kingdom” and “Final Fantasy 16 (FF16)” becoming hits. More recently, Nintendo has been enjoying great success with “The Super Mario Brothers Movie,” a film adaptation of its popular IP.
In recent years, Nintendo has stated in its financial statements that it will “focus on expanding its IP strategy,” and it seems that more and more attention is being paid to IP titles. So today I would like to ask you about IP strategies of game companies.
Mr. B: The term “IP” means intellectual property. Generally speaking, it refers to copyrighted works such as games, animation, and manga that are known and popular among many people. In the case of the video game industry, IP refers to titles and characters that have become big hits. Zelda”, ‘Super Mario’, and ‘FF’ fall into this category, so you could say they are IP.
Mr. A: Then why is the term “IP strategy” so important?
Mr. B: Simply put, it is because it is easier to attract customers and sales are more likely to come from a series. If you compare a title with the title “Super Mario” and a completely new title, the former has a better chance of selling.
That is why game companies are making efforts to establish their works as IP. IP also has the advantage of earning revenue by expanding into other genres, such as animated cartoons, comic book adaptations, and merchandise sales.
Mr. A: However, looking at Nintendo's most recent financial results, game hardware and software accounted for 1.54 trillion yen of the 1.6 trillion yen in annual sales, and “mobile and IP-related income, etc.” was 51 billion yen. These figures are for the period from April 2022 to March 2023, so they do not include revenues from movies, but even so, it seems that IP revenues are only a small portion of the business results.
Mr. B: That's right. When game companies develop their IP in non-game content, they often rent the IP to other companies and receive a portion of the sales as royalties, so the revenue is not that much. So, they would not be placing high expectations on the sales themselves. What is more important is that we can expect a simple contact effect by developing IP in many directions.
Mr. A: You are referring to the psychological phenomenon in which people become interested in things or people they were not originally interested in after repeated contact with them multiple times, right?
Mr. B: That's right. For example, even people who have never played the game “Pokemon” think “Pikachu” is cute and have a somewhat favorable impression of it. This is because of the success of the media mix, including the animated series.
People who are interested in the characters and the title in this way are more likely to buy the sequel to the game someday. In other words, creating content other than games as IP is based on the expectation that it will eventually return to game sales.
