1. I
t’s never been enough to have a top-selling video
game, or a licensing program that helps transform
that game into a global brand. Eventually, a hit title
gives birth to a sequel (or multiple sequels), and with
that must come an updated licensing strategy. But as a
video game franchise’s longevity increases, both the
licensors and licensees involved face new challenges.
Activision Publishing’s Skylanders franchise
launched three years ago with Skylanders Spyro’s Adven-
ture, and since then it has grown into a commercial jug-
gernaut. Last year, Skylanders Swap Force, the third
console entry in the series, ranked as the No. 1 best-sell-
ing kids video game franchise in the U.S., and enjoyed
partnerships for apparel, building toys, home products,
and more.
This year will see the launch of Skylanders Trap
Team, which looks to be the most ambitious Skylan-
ders adventure yet. At this time, the franchise also has
its most extensive licensing program to date, at more
than 175 third-party licensees and growing. The latest
first-time partners include Crayola and General
Mills—both market leaders in arts and crafts and food
products, respectively.
Skylanders Trap Team features a never-before-utilized
game play mechanism, in which villains can
be transported out of the game using
new Trap crystals. When placed on the
new Traptanium Portal, the Traps act
as prisons, and they light up
and make noise once the vil-
lains are trapped (virtually)
inside them. This new game
mechanic is expected to excite
the series’ fan base, and subse-
quently add to the franchise’s
bottom line. To date, Skylanders has grossed more than
$2 billion worldwide. “The imagination that [Trap Team]
fires within kids—the ability to grab something from
the digital world and bring it to the physical one—it’s
as powerful as being able to bring something to life,”
says John Coyne, senior vice president of consumer
marketing at Activision Publishing.
But as powerful as that creative energy is, from a
licensing point of view, the major challenge is to find
partners that can convey the magic of the new mecha-
nism. While Josh Taub, senior vice president of prod-
uct management at Activision Publishing, would not
name any specific licensees, he confirmed many are
taking inspiration from the new game. “We have part-
ners that are looking at, ‘How do we involve ourselves
in the trapping game?’ ‘How do we create a holder that
allows storing Traps in a unique way?’ So they’re look-
ing at the game and then utilizing it,” says Taub.
He says one of Activision’s best partnerships so far
this year involved Frito-Lay Inc., which hosted a con-
test to name a character in the upcoming game (later
revealed to be Skylanders Trap Team). Along with help-
ing keep the brand fresh in consumers’ minds, he said
it made audiences feel invested in the future of the fran-
chise. Similarly, he lauded the most recent Happy Meal
partnership with McDonald’s, which re-introduced the
Skylanders Swap Force characters through an exclusive
assortment of toys.
The freedom to be selective among licensees is a
notable contrast from only a few years earlier, when
Spyro’s Adventure was still in development. “When
something is unproven in the marketplace, it is, of
course, more difficult than when you’ve got the No. 1
kids’ video game and action figure,” says Coyne. “But
we’ve had partners that have been with us since the
by Phil Guie
32 • The Licensing Book Spring 2014
Taking It to the Next Level
The Relationship Between Video Game Licensors
and Licensees Can Evolve with the Franchise
Video Game Licensing
Skylanders Trap Team Snap Shot figure,
from Activision Publishing

2. first game, and continue to innovate their own cate-
gories with every iteration of our game.”
A Marriage Tested Over Time
On the other side of the looking glass, licensees want
to know that licensors are doing their part to keep the
brand at the forefront as well. Michael Aratan, presi-
dent and CEO of K’NEX, a company that makes con-
struction toys based on a number of different video
games, says the company considers several factors
before entering into any licensing partnership. The fac-
tors include the size of the existing fan base, the amount
of investment planned by the licensor for future con-
tent and expanding the brand’s reach, and whether the
game meshes well with K’NEX’s products.
K’NEX also enjoys longtime partnerships with video
game publishers such as Nintendo, for which the com-
pany worked on a mechansim to replicate Super
Mario’s jumping ability for its building sets. According
to Aratan, keeping these kinds of partnerships
fresh can be challenging. “You must continue to
add innovation, whether that’s different play
patterns, features, or collectibility,” he says.
He adds that the third year of a prod-
uct line tends to be the trickiest, since
the audience will not yet have turned over,
but the initial novelty of the product may
have worn off. However, Aratan says that
with a franchise that has staying power, there
will likely be new characters introduced by
year three, which can become part of the
K’NEX line.
One of K’NEX’s newest video
game licenses is Titanfall, a science fic-
tion-themed game developed by
Respawn Entertainment and published by
Electronic Arts (EA). For its toy line,
K’NEX focused on capturing a key element of the actual
video game: the interplay betwen giant robots, known
as Titans, and their armored pilots. As such, each pilot
can be placed inside the larger Titan.
This past March, Titanfall ranked No. 1 in video
game software sales according to The NPD Group,
which bodes well for the future of both the franchise
and K’NEX’s licensing partnership with EA.
Sharing Means Caring
Over the past few years, video game licensing has
largely centered on a
few major software
developers, though
that has slowed of
late, as both licensees
and licensors have
become more selec-
tive regarding games
to adapt into mer-
chandise. In the
meantime, with the
recent releases of
Microsoft’s Xbox One and Sony’s PlayStation 4 next-
generation consoles, software developers find them-
selves competing on some less-crowded fields. Under
these circumstances, a strong licensing program can
help keep a title on top of consumers’ minds.
Aratan says there is definitely more sharing
between content creators and licensees in recent
years. In the case of Titanfall, Respawn offered
digital assets early in the game’s devel-
opment, and even shared beta tests so
K’NEX’s designers could get an
idea of how the game play works.
“For us to be successful, it has
to look like a natural exten-
sion of the brand,” says
Aratan. “Now we always ask,
‘When are we going to get assets, and
how immersed can we be in what
you’re doing?’”
For its part, Activision also views its
licensing partnerships as assets worth
leveraging. Indeed, Taub says that
whenever a new licensee comes on
board Skylanders, they do so with a
multi-year and multiple title relation-
ship in mind. “I think everyone wants to enjoy the
longevity of the franchise, and they see the long-term
potential,” he says.
And while Activision currently does not have any
deal with K’NEX in place, Coyne’s mission statement
for Skylanders would likely satisfy Aratan’s criteria for
a partner. “Innovation is at the heart of everything we
do with the franchise. It would be relatively easy to just
add more [Swap Force] characters, but we’re really push-
ing ourselves to drive that, ‘Wow,’ factor,” Coyne says.
“That’s what’s important.” ••••
Spring 2014 The Licensing Book • 33
Skylanders Swap Force juvenile valentines, from American Greetings
K’NEX Titanfall:
IMC Atlas Titan Building Set