Conor
Hey Conor,
I appreciate the thoughts.
You’ve made quite a few assumptions here...
Can I share a few clarifying points?
You may have heard some incorrect things and hopefully I can clear some of them up.
We don’t have an exclusive contract with them and didn’t ask for one. They told us they don’t have the bandwidth or interest in licensing on smaller platforms or with franchises. They can license with whoever they want.
Tactics like the ones you shared are a recipe for short term gain and long term failure. These tactics also work very differently for an individual arcade VS a network/platform.
Content creators may agree to one off deals as exceptions. But on major platforms they have an entirely different calculus. It’s one thing to offer a .02 deal to an arcade... it’s another to make that the standard on a whole network.
We’re also seeing more and more studios deciding not to do ANY direct deals because they are tired of having to manage them and the hassle of negotiating/paperwork/legal for a small number of stations just isn’t worth it for them.
My guess is that going forward the quality content creators will do fewer and fewer direct deals. Already some of them are having to hire full time staff to manage a bunch of licenses. That just doesn’t scale.
Also, saying that “you’ve got volume... so use it” is a bit missing the point. The goal isn’t to go around clubbing studios into submission. The goal is to have long term partnerships with studios that understand LBE and see enough value ($$) in it to continue creating content for LBE.
Last, I take your point about the importance of affordable content licensing / PPM and I don’t disagree with you.
For context, the average price of content on the platform is now 6.4 cents (down from 8+ cents a year ago and we’ve worked very hard to educate content creators on operators business models and the importance of appropriate pricing.
It may be helpful to know that many studios are used to working on the movie theater side of LBE... where the standard revenue split is actually 50%.
In that context, you may be able to see how asking them for 15% or less is a process and requires some convincing. (FWIW, Owlchemy started at even higher at 12 cents. We had several convos and explained in detail how inaccessible that price point was and they agreed to drop to 10 cents. I have hopes that we can get it lower and also get a favorable monthly option.)
Last... on the platform side, regional, monthly and annual pricing is coming down the pipeline which I think will help lower costs!
I appreciate your candor and I hope you read this response knowing that while we often disagree... I respect you and our convos always give me new things to think about!