Music and Games Partnership Strategy Beyond the Comfort Zone
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The 20,000 Foot View: Music companies are flocking to explore partnerships with games companies. Seeking a foothold in a fast-growing market, music companies are often looking for easy wins that fit traditional licensing models that monetise consumption. These however, typically do not align with the games industry’s spend-centric worldview. The traditional licensing approach can deliver, but it is only a fraction of the total games opportunity. Music rights holders need to design proposals that help games companies grow their success, rather than simply seeking a share of it. Music companies need to become ‘business-critical’ partners to the gaming industry, innovating deal structures that help the games industry unlock its most important growth opportunity: in-game spending. In turn, games companies need to look for music partners possessing a suitable combination of: catalogue size, popularity and relevance, along with willingness to align KPIs, and the ability to move fast.
Key Insights
- The commercial of music companies and games are misaligned, with music KPIs and games KPIs spend-centric
- Labels’ traditional and set-up is geared to consumption-centric licensing partnerships, which offer incremental value to the games
- As a games companies view consumption-centric licensing as a nice-to-have, rather than need-to-have
- At games are three times more likely spend hours per week streaming fuelling further labels’ push for approaches
- Music rights want to expand the reach music in games more than companies need it
- Global in-game accounted for of global games in 2020 billion), expected to billion by 2027
- Cosmetic in-game will reach billion in 2021, to billion of total global music revenue (retail values), presenting transformational revenue opportunity for music
- In-game spending labels a unique opportunity to fandom, on top of consumption, thus break out of the of the attention economy-driven velocity
Companies and brands mentioned in this report: Apple, Appstore, Epic Games, Fortnite GTA, League of Legends, Riot Games, Roblox, Rockstar Games, Sony, Spotify, Warner Music Group, YouTube