Sega has delved into the Hollywood licensing game, both looking ahead to new film franchises like New Line Cinema's His Dark Materials and digging into the archives with 20th Century Fox's Alien franchise. Scott Steinberg, vice president of entertainment marketing, Sega, took some time to talk about the roles these new Hollywood IPs will play alongside Sega's original franchises.
GameDaily BIZ: With Sega entering the Hollywood licensing business with His Dark Materials, Charlotte's Web and Alien, this is the third Japanese game maker, following Namco-Bandai and Capcom, that's getting into this business. Is this a new trend?
Scott Steinberg: I don't know about a trend. Japanese origin companies in general have realized they have got to get a little more Western with their content, and this certainly has fit the Sega strategy over the last almost three years where we have tried to balance our portfolio. With His Dark Materials, it's New Line as well as Scholastic because these are books, it's a trilogy of books that New Line is making into movies. So, the question is why we saw a time now to jump head long into licensed movie part of video games? Two years ago with the integration of Sega and Sammy, Japan recapitalized Sega and our mission has been to build Sega back up to prominence to a top three or top five leader in the interactive entertainment space. So our goal is to grow the business and we are on a very aggressive product road map that requires us to balance both the stuff we are building from our internal studios, but also goes out and gives us some leeway to buy larger scales licenses. So, we're active and we are getting more active and we've got more in the pipeline and there'll be more new stories in the upcoming months on how we are rounding that out.
BIZ: How big a part will Hollywood licenses play in Sega's portfolio moving forward?
SS: Well, I can't tell you that, but I can certainly tell you what we've noticed with some of the leading companies that are slightly above us on the market share list. It typically ranges from about 40 to 60 percent of the larger companies' line-up being devoted to licensed products. Forget sports for a second, but just the action-adventure side. You've got some companies like THQ that could be a little higher, but that is the working model that we have. We believe from a portfolio standpoint that to win and gain share, we have to have a bigger chunk of that licensing pie than we currently have, which last year effectively was zero. I'll say there will be an aggressive move from the youngest of our Japanese studios, but being more Western-oriented with the development approach.
BIZ: Why do you think there's been this shift to Hollywood licenses?
SS: I think a lot of companies have realized that the Japanese market is a little flat, if not a little bit down, and the growth market and the growth opportunities are in the U.S., in the near term. I think to grow there you have to rely on licensed properties and in a Japanese market sense, relying on your own studio to come up with another piece of content that is created by a Japanese development, odds are it may not be as relevant to the Western audience. I am sure one way to mitigate that problem is to put an American or Western lead license on top of a product and certainly become a bit more Westernized right out of the gate and not have to do a development deal out to an external studio out in the U.S., Canada, or Europe. That doesn't force the Japanese team to find that magic of what's going to work in the West and it's been fewer and fewer games that are coming out of Japan that have worked as successfully in the West then say maybe 15 years ago. I think the reality is that every company is trying to grow and they are looking for what is the recipe for growth in the Western territories and there are lots of working examples of companies doing it via licenses.