What have been the most successful licensing deals in the history of the video game industry? It's easy to identify individual success stories: Rare's GoldenEye is the classic example, and some licenses like Lord of the Rings or Star Wars have produced a solid number of hits alongside several flops.
For truly consistent success, though, you usually have to turn to sports licenses. EA’s long-standing partnership with FIFA, now gone, takes the cake, having lasted nearly 30 years and sold hundreds of millions of games, but also of note is Mario & Sonic at the Olympic Games, a six-game series spanning the Summer and Winter Olympics from Beijing in 2008 through to the delayed 2020 Tokyo Games.
Using a license from the International Olympic Committee and developed and published by a once-unlikely partnership between Sega and Nintendo, the games were by no means a challenge to the commercial success of something like FIFA, but they sold fairly well nonetheless and were remarkably successful and well-received considering how complicated this license is to work with.
The fact that they only occur once every four years and encompass a huge variety of different sporting events (some of them fairly unknown to most people) makes the Olympics great television, but it also makes them much harder to adapt into a fun, well-made video game than any individual popular sport like football, basketball, or hockey.
However, there will be no Mario and Sonic tie-ins for this summer's Olympic Games in Paris.
The IOC decided to abandon an unusually successful partnership in pursuit of a fad
There’s a little-promoted PC and mobile title, Olympics Go Paris 2024, which is a free-to-play title with the usual array of in-app transactions; and if you backtrack a bit from the statements and descriptions above, you find a lot of focus on the proposed ability to unlock Olympics NFTs through gameplay.
The emphasis on this aspect was confirmed by a Eurogamer report this week. The IOC appears to have lost interest in its partnership with Sega and Nintendo because it wanted to do something with NFTs (and esports), though ultimately it appears to have done neither of those things.
So, to sum it up: a 12-year, six-game partnership with two of the most respected gaming companies in the world that produced almost miraculously successful and popular games from a very complicated license was cast aside in favor of the buzzword of the moment which, a few years ago when these decisions were made, would have been NFTs.
That timeline offers some explanation, if not justification — falling for the NFT nonsense in 2024 would be unforgivable — but it’s easy to forget how many supposedly sensible, serious people in the industry were fooled by the NFT craze just a few years ago.
The end result, however, is that the IOC decided to abandon an unusually successful partnership in pursuit of a fad, and ended up without a console title of any kind launching alongside the Paris games.
This isn't to criticize NFTs (that's a well-known topic by now), but to emphasize that when these kinds of fads sweep through the industry, they impose real costs and damage that can last for years.
It's all very well to roll our eyes when scammers rip off and gullible people fall for the latest fad, but we often treat these things as an outbreak of stupidity that is essentially victimless. However, opportunity cost is not just a business school theory; it is a genuine cost imposed by bad decisions made around these fads, and the repercussions of which can be felt for years.
Resources like investment capital, development time, skills and licenses are finite. Spending them on dead-end fads means other projects don’t move forward, and while this is often a pretty vague hypothesis because who knows how successful an alternative project might actually have been, we can sometimes see a clear case study: a proven, valuable product withering away because some of the decision-makers involved got distracted by something new and shiny.
The IOC's stupidity in being taken in by NFT delusions (regardless of any other considerations that may have been at play) is one such case, but there are many, many other situations still playing out in the industry where the ripple effects of the few quarters of NFT madness are still being felt.
Tens of millions of dollars, at least, of venture capital investments were poured into clearly absurd NFT projects during that time, a period when developers with stronger ideas and proposals struggled to secure funding.
In many cases, money is still being quietly thrown at bad investors who can't accept the idea that the money they invested in NFTs and crypto-based games just vanished, and they continue to keep many dead-end projects on financial life support.
Speculative investments by venture capitalists are not public information, but they are relatively easy to track. It is almost impossible to calculate how much time, money, and skilled manpower have been invested in similarly doomed projects by publishers who tried to jump on the bandwagon, let alone what difference those resources might have made to other projects in development that were shelved in favor of following a passing fad.
The point here isn’t to bash NFTs (that’s an all-too-familiar topic by now), but to emphasize that when these kinds of fads sweep through the industry, they impose real costs and damages that can last for years.
In many ways, an inherently high-risk business like video games is one that is governed by opportunity cost calculations. That's why the investment climate has become so challenging in recent years; the opportunity cost of capital is very different in a high-interest environment, where you can earn 5% essentially risk-free, compared to the low-interest environment of years past, where uninvested capital was basically stagnant and slowly eroded by inflation.
But while investors and executives are generally very good at making that calculation, the balance between established, successful, if perhaps a little boring, business models and new, untested, exciting models is an opportunity cost calculation that seems much more difficult to many people.
After two years of layoffs and downsizing that have spanned a long time (and are still ongoing, as this week’s mass layoffs at Bungie sadly demonstrate), it should be clear that the industry’s understanding of the balance between risk and reward needs to be updated and improved. Unfortunately, it’s not often the people who have miscalculated those risks who pay the price when things go wrong; it’s far from clear that the right people are learning the right lessons.
“Don’t ignore or neglect your proven, successful products and approaches in order to pursue a brilliant new idea that you don’t fully understand” seems like a simple enough principle to follow, but it may take many more examples where the opportunity cost is extremely clear for that simple lesson to really take root.