Warner talks profitability versus market share

Olivier Wolff talks a lot about relevance. And for good reason.

Even when you’re an entertainment colossus as strong as Warner Bros, the games market’s often fickle shifts are hard to avoid.

So when you ask him about Warner Games’ performance amidst a world of change, he’s bullish and to the point.

We are ahead of our goals on a revenue standpoint but even more on a profitability standpoint," the Warner Games international chief told MCV. "Our games are selling above expectations, and because of their quality we have managed to maintain them as triple-A franchises.

"Warner Games didn’t exist seven years ago – five years ago we were more a licensing house. So look at what we achieved in just four years, the growth is phenomenal.”

He’s not wrong. In just five years, Warner has built a hugely credible games operation, buying up talented independent studios, growing its games-dedicated staff across the globe – all of the non-North America teams report into Wolff – and establishing a stable of franchises.

What we are is a company that tells stories – whether we express that in games or films or TV or whatever. The thing we do at Warner is franchise development – we nurture the brands and make them grow in games,” says Wolff.

We are ahead of our goals on a revenue
standpoint but even more on a profitability
standpoint. Our games are selling above
expectations, and because of their quality
we have managed to maintain them as
triple-A franchises. Warner Games didn’t
exist seven years ago – five years ago we
were more a licensing house. So look at
what we achieved in just four years, the
growth is phenomenal.”

Olivier Wolff – International Chief, Warner Games

This Christmas two of Warner’s prize stories take a new twist, with new releases in its prizes series.

First up is Batman Arkham Origins, out next month. This franchise prequel comes from a new studio and adds a host of new features to the popular series.

Then there’s LEGO Marvel Super Heroes, out the following month. Aside from being a licensing lawyer’s dream (LEGO licence, plus Disney-owned Marvel characters, made and distributed by ‘rival’ Warner), it’s hotly tipped. It’s also the only one of Warner’s games to be out on next-gen this year.

We are extremely excited about next-gen and are investing massively in it,” says Wolff, pointing to new titles Mad Max and Dying Light, out next year. But there is great market out there on current consoles, there is a good market on PC, and on mobile. For us it’s about getting the relevant game on the relevant formats.”

He’s not downplaying the power of next-gen, but has a more pragmatic international eye on their potential.

There is definitely going to be lots of excitement, but i think it depends on things like trade-in programs and the like. In markets such as the UK and the US first-adopters will really pick the markets up there. But it will be slower in the other territories.”

Overall though, we are definitely going to be better off in two or three years than we are today”.

The next-gen machines will revive the gaming experience. We really need it, the consumers need it, retailers want it, and the competition between all of the them is great. Even Nintendo – no one is talking much about Wii U, and i think we will be surprised by it. It is great to have all these great console games out there.”

And consoles are not the only way to sustain a brand these days, says Wolff.

He says that to the secret to the long-term health of Warner Games prize franchises comes from working across platforms. We have strategies with mobile, console and DLC all interacting to sustain it,” he says, summing up the firm’s approach as ‘holistic’. This might also be the key to how Warner has grown in the face of pressures which have pushed some companies out of the market altogether.

The next-gen machines will revive the
gaming experience. We really need it,
the consumers need it, retailers want it,
and the competition between all of the
them is great. Even Nintendo – no one
is talking much about Wii U, and i think
we will be surprised by it. It is great to
have all these great console games out there.”

Olivier Wolff – International Chief, Warner Games

I don’t look at the market share numbers, I don’t care about it,” Wolff claims. Because I know how to buy market share. And that doesn’t tell you anything about profitability. And companies with bigger market shares than us have recently gone out of business.”

There’s lots of talk about the squeezed middle, and while Warner Games is no minnow it’s not yet an EA or Activision heavyweight – is Wolff looking at their global footprint?

We could probably have more market share by taking on more distribution deals – we actually have a bigger network for distribution than the big games publishers because we are not reliant on one category of product, and we have direct local presences for many years,” he says. We have a real competitive advantage.

We are not EA, we are not Activision… yet.

Will we get there? I don’t know. We don’t want to be a two-game company, like with just GTA. We need sustainability. What we want first of all is the right quantities of relevant, strong IPs that we can manage at a high quality level whether in a box or digitally.”