What is the ‘real’ Value of Music in the World of Digital Games Entertainment?

Posted by John-Paul Greenlock | Oct. 30, 2011 | 3,840 views

TMV had the privilege of being specially invited to the inaugural PRS/TIGA summit at British Music House in London on 14th October 2011. With TIGA representing the UK Gaming Industry the aim of covering the event, set up by the congenial Barney Hooper (Head of PR at the PRS), was again to evaluate how music fits in to the ever expanding ecosystem of revenue streams that entertainment companies are unravelling. We had hoped to get the event report to you earlier, however unfortunately the important breakdown of revenue figures directly attributable into industry coffers (which were not available on the day) have been found to be more difficult to locate than Tom from MySpace.

TIGA/PRS Gaming Meets Music Panel

To provide a bit of background, TIGA’s trade association members include independent games developers, in-house publisher-owned developers, outsourcing companies, technology businesses, universities, individuals and students. They have a vision of making the UK the best place in the world to do games business through lobbying Government at Westminster and Scottish parliaments, something the music industry has not been very good at in recent times when dealing with copyright and technological issues. Conversely the big technology and communications companies seem to know exactly which political buttons to press, apart from BT that is, which seems to be getting constantly mauled by the likes of Ed Vaizey and the now the UK legal system (with a classic example that of last week’s ‘NewzBin2’ copyright infringement decision, which will affect us all in the long term in terms of case precedent).

With regard to the relationship between music and gaming at present, it is clear from recent reports that many of the large entertainment-based companies such as Vivendi and Sony have sizeable electronic/digital games divisions, which are at present compensating for the decline in music product sales. For example the Vivendi owned Activision Blizzard, creator of the World of Warcraft and Call of Duty action series, reported a 10.8 % rise in revenues for the year 2010-2011 to 1.08bn, while revenues for the company’s music business were down by 5% to 881m, (Guardian.co.uk, 2011). Maybe we should all get into making and selling computer games?

However, as mentioned above, the breakdown of revenue streams which come directly from use of music in computer games, has been difficult if not impossible to source from either the PRS, MPA, BPI, or TIGA. On the date of publishing we’re still waiting for a satisfactory reply from anyone.

Sergio Pimentel, Music & Licensing Director Nimrod Productions

The sold-out event had both high level industry support from delegates and invited panel members, including William Booth, Director of Media Licensing at the PRS; Chris Carey, Global Insight Manager at EMI and formerly of the PRS; Patrick Rackow, CEO at BASCA; Sergio Pimentel, Music & Licensing Director at Nimrod Productions; Richard Jacques, the UK’s most successful Composer for digital games; Martin Hewett, Senior Music Supervisor at Sony Computer Entertainment; Steve Holmes, Partner at Baker McKenzie LLP; Lucie Caswell, New Business Manager (Digital) at the PRS; Sam Sawyer, VP Digital Business at Sony Music and Matt Sansam, of the Technology Strategy Board/IC Tomorrow, with the day capably moderated by Semetric/TSB’s wondrous Jeremy Silver, contributing his own wealth of experience. Also offered were the usual standard selection of panels and presentations; with even a few free beers and mini beef burgers being touted to keep our interest until ‘networking time’.

Guitar Hero III It was very positive to hear from TIGA’s CEO, Dr Richard Wilson, in his opening statement that ‘music is crucial to the games industry, and opening up more effective lines of communication between copyright/content creators and owners is the ongoing challenge as global issues need resolving.’ The afternoon’s event was at least a starting point, and with the likes of Singstar, Rockband, and Guitar Hero all selling in the past by the truckload there is obviously big money to be made from a reputed 100 billion dollar industry.

The question is: Are music artists and copyright holders earning a fair income from all rights via the gaming industry (online and offline)?

At present it seems to be on the whole that a ‘buy-out’ is the standard deal proposed by the games companies in terms of acquiring music product, but that these fees range enormously in the same way that copyright holders may try to push up the price as far as possible. Negotiation 101 as I’m sure one of our contributors Clive Rich would tell us. Of course there are now, as we would expect, a range of ‘consultants’ to help us through the process, some of which made there presence known in the room.

However, it seemed between the lines of what the enigmatic Patrick Rackow of BASCA expressed on behalf of the composer, that all was not well in the land of intellectual property management. He advised the industry-packed room that ‘rights in music have a real value, keep that in mind.’ Not the words of a CEO where all is rosy. He expanded this point by pointing out that music in computer games helps ‘to build a brand into a franchise via increased marketing potential’ and asked those present to imagine what the film Laurence of Arabia would be without music: ‘a guy, a camel and some sand.’ Food for thought.

Artists like Lady Gaga, David Guetta, Gorillaz, and Thomas Dolby have indeed built new and exciting experiential online gaming communities to accompany and harmonise with their offline marketing strategy, leading to greater brand affinity and (hopefully) increased sales. We only have to look at the stock values of Zynga and Second Life to notice the size and power of the market, and revenues from all streams (physical, digital or indeed virtual) are vital to all concerned in this brave new world.

Motorhead: TMV Gaming Meets Music However it seems again that only very recently, similar to the advertising and television industries, the gaming world is realising that the only way to survive is to leverage social communities via entertainment product – and a lot of that is via music fans who enjoy playing games. So is the value of Ellie Goulding or The Kooks to John Lewis comparatively the same as Rage Against the Machine and Guns N’ Roses to Guitar Hero III, and Motorhead to Tony Hawk’s Pro Skater?

Richard Jacques, one of the world’s leading composers for the games industry, said towards the end of the day that ‘music has grown up over the last 10 years in terms of games collaboration’ as part of a marketing and overall business strategy. However from the perspective of a few vocal dissenters in the room (some of them senior industry personnel including Ian Ramage, ex-Head of A&R at Sony/ATV Publishing) it still seems to be on many occasions too little being offered by the games industry and sometimes too much being asked by the music industry. One audience member during the event was alarmingly offered only £5k for the use of a track from a major artist with a twenty-year discography.

A work in progress…? Let’s keep an eye on it, and hopefully soon we’ll all have those revenue analysis figures. What is the value of the music to the game and the game to the music?

We look forward to your comments.

Posted by John-Paul Greenlock on Oct 30 2011. Filed under Digital, featured. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

The Joker

November 9, 2011 - 4:21 pm

It’s a shame some people like this guy have nothing better to say, than being critical of the author. I can’t see this typo so maybe Warren has been drinking the loopy juice again whilst listening to his Susan Boyle CD (signed of course).

Question: What do you call a man with a rabbit up his rear end?
Warren