Making video games based on or featuring licensed IP is often a costly and complicated process. Funko Fusion, a video game based on the Funko Pop! Universe, features more than 20 licensed IPs on top of the license for Funko Pop! itself. To simplify the licensing process, Developer 10:10 Games worked with Universal for the majority of featured IPs including Jaws, Back to the Future and Jurassic Park appearing in the game, but it’s also cleared deals with the rights holders for IPs such as Five Nights at Freddy’s, Invincible, Mega Man and The Office for DLC updates.  

All in all, this pop culture mash-up has shaped up to be one of the most ambitious licensing feats seen within the video game industry in recent years – but bigger isn’t always better. While 10:10 Games has spoken to multiple outlets about the licensing process for the game, it hasn’t shared any details on budget and costs. 10:10 Games had high hopes for the game, with a significant amount of revenue presumably being going to recoup licensing costs, but a recent report from Insider Gaming cites sources saying the game has been a “complete commercial and critical failure,” resulting in layoffs at the studio. 

The big question now is what went wrong? Reviews for the game were mixed, and while some critics praised the ways in which the source material from so many IPs was integrated into the game, others called out lacklustre combat mechanics and repetitive gameplay, ultimately resulting in a boring experience. 

That said, Funko Fusion’s biggest problem seems to be its target audience. There’s a huge market for Funko’s vinyl Pop! figurines, spanning collectors and die-hard fans of the cult TV shows, movies, books, and comics its figurines are based on. One of the biggest strengths of working with an IP featuring so many franchises is the fact that Funko Pop! figures resonate with such a broad audience of pop culture fanatics, but that ultimately seems to have been the downfall of the game, as this Sixth Axis review illustrates best: 

“I’m still none the wiser who Funko Fusion is for. It’s a kid’s game that’s too adult for kids, with a batch of franchises that only older fans will really appreciate, but then they’ve dialled down the difficulty, presumably to appeal to younger players. The shame of it is, with the right characters, this is a great kids game, and the Jurassic World levels only highlight that. Funko Fusion offers plenty to like, but just like its plastic-melting antagonist, it fuses too many of the wrong parts together to feel cohesive.” 

Ultimately, the mediocre reception to Funko Fusion highlights the challenges of IP stuffing and aligning gameplay mechanics and difficulty settings with the expectations of such a diverse target audience. Was 10:10 Games doomed from the start trying to make a game featuring IP such as The Mummy, The Umbrella Academy and Child’s Play appealing to fans of Jurassic Park, Back to the Future and Masters of the Universe (and vice versa)? 

It’s difficult to take so many diverse IPs with varying target audiences and create a coherent gameplay experience around them. Funko Fusion was an interesting but risky concept, and an experience that might have worked best with a smaller section of IPs that share similar audiences, rather than trying to cover 40+ years of pop culture.

We don’t typically cover licensing in the gambling sector, but given the rise of video game and game-adjacent IPs popping up as branded slots machines, we wanted to highlight the fact that licensors can and often do take their IPs into the area. SEGA, one of the most recognizable video game companies in the world, originally manufactured slot machines before it found success in the console space. Its Sega Sammy Creation division still operates a selection of successful pachislots and pachinko games around the world but most notably in Japan, and generated close to $1 billion in revenue according to its latest earnings report. 

In recent years, we’ve seen a surge in branded gambling machines, both across iGaming (online slots) and physical machines (land-based). A must-read 2021 piece in iGamingBusiness explored the value of licensed content in the iGaming space, with online slots based on Gordon Ramsay, Hell’s Kitchen and Tomb Raider ranking as the best-performing games. 

‍Gambling Insider says the success of these games across both areas of gaming might be down to a new audience of Gen-Z players entering the gambling sector. First-time gamblers might have difficulty deciding which games to play, but Gambling Insider says games with recognisable IP can be a “great way to get people to try a product in a new medium they haven’t tried before.”

But where does video game IP set in all of this? Looking at the success of the gambling machines based on the Tomb Raider video games, there seems to be room for more video game IP. This might explain why gaming giant Konami sees the space as a major business priority, with Metal Gear, Silent Hill and Castlevania being licensed into pachinko and pachislot machines – Japanese gaming machines that are often used for gambling. 

While Japan remains one of the biggest markets for iGaming due to its pachinko and pachislot machines, Japanese companies are expanding into overseas markets. Last month, Konami expanded its relationship with Mexico’s PlayCity Casino to include the delivery of real-money online slot games themed on its IP, while the recent launch of Brazil’s regulated online gaming market presents a major opportunity for video game licensing teams at companies such as Konami. 

According to Eduardo Aching, VP of International Gaming Operations at Konami, “Konami´s goal is is to become one of the major providers of the Brazilian regulated iGaming market,” according to an exclusive interview in GamesBras. 

At Layer, we’ve noticed a growing number of enquiries coming through the Layer Licensing Marketplace from iGaming and land-based slots companies looking to license a broad range of licenses across film, tv and video games into their games. While the success stories of video game companies such as Konami and SEGA and various rightsholders across the world of entertainment demonstrate this is an established market, we believe this is a relatively untapped market for Western IP, especially as the market evolves and attracts a new generation of players. 

So how does all of this work? Royalty rates are often calculated based on gross receipts to the licensee (e.g., players put in $100, $88 goes back to the players and the royalty applies to the portion of the $12 that is kept after other expenses are deducted). Minimum guarantees can typically be higher than categories that don’t involve real money, often starting upwards of six figures, but games often have a shorter lifespan and licensees typically get the rights to make multiple games with the IP within their contract period.. 

If you’re a licensor interested in exploring the gambling sector and have IP that’s the right fit (this sector isn’t for everyone!), our advice would be to start exploring the space now. If you need help finding the right partners, check out the Layer Licensing marketplace.