How Warner Bros beat the rest in video games

By Christopher Palmeri: Batman and Gandalf are fighting flying monkeys in Oz. Suddenly, Scooby-Doo comes to their rescue, racing down the Yellow Brick Road in the DeLorean from Back to Future. No, it’s not some gamer acid trip, just the latest toy from Warner Bros Interactive Entertainment. Lego Dimensions, which hits stores September 27, lets players send dozens of characters including Superman, the Ghostbusters, Doctor Who and Wyldstyle, the Ninja from The Lego Movie, on a quest across 14 themed lands to stop an evil mastermind. The characters can use props from a similar mashup of films and TV shows — Warner Bros even struck deals with rival studios like Universal and Fox, which lent The Simpsons characters to the game. “It’s all about surprising combinations,” explains Jon Burton, the game’s 46-year-old designer. “People love cameos.” Lego Dimensions is the latest entry in the hotly contested “toys to life” category, which combines video games with real-world collectible figures. It’s the largest investment yet for Warner Bros Interactive at a time when the 11-year-old, Burbank, California-based business is becoming a major revenue generator for its parent, Time Warner. Even before the release of Lego Dimensions, Warner Bros Interactive was the top-selling video-game publisher in the US in the first half of this year, Time Warner executives said on an August 5 conference call. Titles such as Batman: Arkham Knight and Mortal Kombat X helped triple game revenue to more than $500 million in the second quarter. “Every game they do is a phenomenal success,” said Michael Pachter, an analyst with Wedbush Securities Inc. “That’s highly unusual in the industry and highly unusual for media companies.” Movie and TV producers have a dreadful record in video games. Viacom reported a loss of more than $260 million on its investment in Rock Band, a music-based game it sold in 2010. Walt Disney endured almost $1.7 billion in losses in its interactive unit before a downsized version finally turned a profit last year. Even Time Warner’s predecessor, Warner Communications, had its troubles, losing $500 million on Atari before unloading the business in 1984. The key to Warner Bros Interactive’s success is that its seven video-game studios make independent decisions about which games they make and aren’t forced to stick to movie scripts, according to David Haddad, the veteran gaming executive who runs the unit. “The best ideas come from the creators,” he said. Last year’s Middle-earth: Shadow of Mordor, for example, is based on the works of JRR Tolkien yet has an original story. It features a new protagonist, the ranger Captain Talion, and takes place between the events that unfold in The Hobbit and The Lord of the Rings films. “It gives players a chance to play outside the lines that were so established by Tolkien,” said Andy McNamara, editor-in-chief of Game Informer, a magazine for enthusiasts. Other movie studios are licensing their characters to Warner Bros, which made Lego: Jurassic World, based on this summer’s Universal Pictures blockbuster. It was the top-selling game in the US in July, according to researcher NPD Group. Disney, which has out-punched Warner Bros’ DC Comics at the box office recently with Marvel films, licensed its superheroes for games such as Lego Marvel’s Avengers, due out in January. Getting a top score in the “toys to life” category could be much harder, however. A $700 million business in the US alone, the niche is a lucrative one for game makers because they get to sell toys in addition to software. Customers spend an average of $131 on the games and figures, according to NPD, twice what the typical game disc costs. Lego Dimensions is entering a crowded field, one plowed early by Activision Blizzard and its Skylanders franchise, which has sold more than $3 billion in games and toys worldwide since its 2011 debut. In addition to the latest version of that game, Lego Dimensions will compete this Christmas with Nintendo’s Amiibo line and Disney’s Infinity 3.0, which features Star Wars figures for the first time this year. The games work in a similar fashion. The companies sell software and figures, which pop up on a computer screen when physically placed on a base. Warner Bros is charging $100 for its starter kit, which includes three figures and the platform that connects them to consoles from Sony, Microsoft and Nintendo. Disney is charging $65; Activision, $75. One reason Warner Bros charges more is the Legos, according to Burton. The initial Dimensions kit includes 269 bricks that are critical to the game. Players who advance to certain levels can reconfigure their Lego Batmobile, for example, to include a ray gun or a blaster that, when placed on the game platform, unlocks additional powers on the screen. Source: