Game Changing Deals: A Conversation with Tim O'Brien | Entertainment & Technology Summit - video Dailymotion

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Variety returns in-person for its annual Entertainment & Technology Summit, presented by City National Bank. This one-day event will explore advancing technology’s impact on TV, film, gaming, music, digital media and consumer brands.

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00:00So, Tim, thanks for joining and I wanted to get in with you on Scopely, which for those

00:09who don't know, let me just set the stage.

00:13This is the biggest mobile game company in the US.

00:17We're talking about a business that reached 500 million Americans in the last six months.

00:23That's, you know, 40% of the population had some exposure to some of the games that we're

00:29going to be talking about, $10 billion in lifetime revenue that they reached this year.

00:37So this is quite a growth story and intellectual property is a big part of that.

00:43You have been instrumental in the deal making, I believe nine deals over the last six years

00:52that have been a big part of this growth story.

00:54So let's get into it.

00:58Starting with, on the deal making front, what is the market like right now in terms

01:05of the climate for the kind of deals that you do?

01:08Is it conducive to deal making?

01:11Yeah, thanks for the introduction.

01:15I would say that, you know, the company is 12 years old, about a year and a half ago

01:19we were acquired by Savvy Games Group for about $5 billion.

01:24And up until that point, as you mentioned, we had done nine M&A deals to kind of continue

01:29to grow the company through, you know, product game launches as well as M&A and bringing

01:34new, you know, world-class talent into the ecosystem.

01:38But I would say for us right now, it's a pretty incredible opportunity actually, because the

01:44power of Scopely and Savvy Games Group is that, and Savvy announced this, that they

01:48had $38 billion to deploy.

01:50Just a little bit.

01:51Just a little bit.

01:52A few dollars.

01:53And what, and I think in the last year after, you know, partnering with Savvy, they've realized

01:59that our corporate M&A team and our kind of organization is the right place to deploy

02:03that capital through.

02:04And so in terms of the gaming market and the assets we're looking at, it's very attractive

02:08because ultimately you could join a business that's privately held.

02:12And so unlike the pressures of being a publicly traded company, you could come here, your

02:16creative talents, you're going to have tons of resources, global distribution.

02:20And so it's, it puts us in a really unique position to capitalize our market up to's

02:25right now.

02:26Now, I know you're not going to reveal your acquisition wish list, right?

02:29I'll give you the list right now.

02:30Sure.

02:31Okay, sure.

02:32Well, let's break out the spreadsheet.

02:33It'll appear on the screen.

02:34But if you could give us a sense of like, what are pockets of opportunity for Scopely

02:40as you look at acquisitions?

02:41Yeah, I think, you know, we're looking for world-class game development talent.

02:46We're looking for evergreen franchises.

02:49Franchises are extremely stable and ideally growing and at scale.

02:53You know, when you're doing multiple billion dollars of revenue, you can, and you have

02:57global kind of resources and infrastructure, you can add a lot of value to game teams that

03:02are either earlier on the process or that have already released, you know, large franchises.

03:09And I think that, you know, because of our marketplace condition and the launch of Monopoly

03:15Go, which we launched last, you know, April in 23, which was the biggest mobile game launch

03:20in history, I think that that's put us in a very unique place that, you know, most development

03:28talent, if you're looking to exit or partner up to go even bigger, we're the right place

03:33to be.

03:34Now, you mentioned Monopoly Go.

03:36This has launched, I think it was last year and has since generated about $3 billion in

03:42revenue.

03:43Hasbro CEO, Chris Cox, recently likened it to, you know, having like a blockbuster movie,

03:50although I think it would be more like two or three blockbuster movies if we want to

03:54be accurate about it.

03:57You've been working with them a while.

03:58You've got a lot of partnerships that are sort of long term.

04:03How do you structure deals to be conducive to that?

04:06Yeah, I mean, the Hasbro, I mean, you know, when we started the company, we wanted to

04:12make sure that we had a diversified portfolio of games.

04:16We didn't want to just be one genre, one game.

04:18It was very important for us as a business.

04:20And also, we had a unique advantage being LA based and, you know, a few of us coming

04:24out of Disney and having spent a bunch of times in our career working on IPBs games

04:29that we thought that that market opportunity had been underutilized.

04:33And so Hasbro is a great example of an early partner.

04:37We licensed Yahtzee back in 2015, and it was a tremendous success, made more money

04:43than they'd ever made on the board game in the history in the first year of its existence.

04:49And that led to a license with Scrabble.

04:52And I think that the education process and the learnings from those two games together

04:57enabled us to evolve the relationship into something like Monopoly Go, which, you know,

05:03it was not an easy task, seven years in development, millions of dollars in development.

05:09Most IP holders probably would have given up because I think the old way of thinking

05:13for IP licensors and media companies was let's get the largest MG we can and give it to them

05:20for the shortest period we can.

05:22Now, not all were thinking that way, but a lot of them back in 15, 16 were.

05:26And I think the evolution with Scrabble and Chris's team was that ultimately it's more

05:30of a profit share model, which enabled us to spend a tremendous amount of money on marketing

05:34develop and gave us the time to produce something that, like you just said, made $3 billion

05:39in its first 15 months of being live.

05:41And by the way, we're just getting started.

05:44It's a live operated business.

05:45It'll go on for 10, 20 years.

05:48And the game that's playing, the game today, a year and a half later, has significantly

05:52better KPIs than when it launched.

05:54And so, you know, these are live services.

05:57We're operating them every day globally.

05:59And it's a pretty exciting time if you're an IP partner of Scrabble, yeah.

06:05There was an announcement today about a Monopoly Marvel crossover.

06:10So, you know, some of the IP you work with, like Star Trek, it's not even games.

06:16It's just straight Hollywood great IP.

06:20How does the outlook for those kind of deals look going forward?

06:27Well, you know, I mean, to be super clear, when I guess CBS at the time gave us that

06:33license in 15, they probably should not have given us that license in 15.

06:37We had one mid-core game and it was highly competitive, but they were a fantastic partner.

06:42They actually were forward thinking and putting a deal in place that made sense to be able

06:47to build a free to play live game.

06:50And that game's made over a billion in revenue, I believe larger than all the movies combined

06:54ever released for Star Trek.

06:57And it's live operating every day.

06:59I mean, if you're a Star Trek fan and you're waiting for the next movie or the next TV

07:03show, you know, you can go play Star Trek anytime, new universes, all the IP added into

07:10the game.

07:11So, they've been a, they've actually been one of our best partners, actually, in terms

07:15of forward thinking, leaning into enabling us to do things in the game that traditionally

07:19you maybe have not been able to do in games, mixed universes, mixed storylines.

07:23And so, it's been a tremendous success for both of us.

07:27More broadly speaking, I'm just curious to get your outlook on just the state of games

07:32today.

07:34The industry is an interesting time.

07:36It's in growth mode, but there's been a lot of turbulence and layoffs and such.

07:40But the marketplace seems like it's got a pretty bright outlook.

07:45Yeah, I think that like many industries, the games industries had a number, a large lot

07:51of layoffs in the last couple of years.

07:54We're very fortunate that we have not.

07:55In fact, we've been growing at an accelerated rate.

07:59And I think that the, you know, the forward thinking, more sophisticated gaming businesses

08:06that are set up that already have scale have a unique advantage.

08:09And then us having scale, global infrastructure, and 30 plus billion dollars in capital deployed

08:16to continue to consolidate world class game teams gives us a really unique advantage in

08:21the marketplace right now.

08:22And so, I think that we're just a, you know, we're a melting pot of talent right now coming

08:28into the business.

08:29But overall, I think games are here to stay.

08:31I mean, people continue to underestimate the size and scale and the amount of time spent

08:36in games.

08:37And just by giving you the Monopoly Go numbers, you can see the revenue kind of numbers coming

08:41from the most successful games in the market.

08:43So it's, I mean, I feel like I couldn't be in a better industry right now.

08:47I know there's a lot of great industries, but we're in a really great place right now.

08:52And you yourself are in a great place when you think about a owner who says, hey, here's

08:5838 billion dollars, which doesn't necessarily all go to Scopely, but it gives you a lot

09:05to do.

09:06Is there like, but still, is there a discipline that has to come with really putting that

09:10money to work in the best possible way?

09:13Yeah, I mean, it's, there's a lot of discipline that goes around applying capital, of course,

09:18especially when it comes via Sovereign Wealth Fund, ultimately.

09:21But I think that having the success that, I mean, between, you know, signing closed,

09:29we doubled in size when we were being acquired.

09:31And so that and the success of Monopoly Go and our, and I would say the working relationship

09:37between us and Savvy Games Group has been so good that we've been able to put in the

09:41processes in place, build the relationships we need to be able to build trust and efficiency

09:47to go out and deploy that capital.

09:49We haven't announced any large deals yet.

09:51We've done some smaller investments, but you'll hear about some coming up probably pretty

09:56soon.

09:57And, but yeah, I mean, it takes time to put the right processes in place when two businesses

10:01join together.

10:02But I think that, and, you know, and again, not all of the 38 billion dollars will be

10:06deployed through Scopely.

10:08They're also extremely active in the e-sports space, which we're not, and they've made some

10:12acquisitions there, and I would expect them to continue to do that.

10:15But yeah, I think that we've got a great team in place and trust built with our partners

10:22to go out and do some big things in the industry right now.

10:25With those partners, with Savvy, this is sort of like a hands-off, arm's-length thing.

10:30You're free to find the deals that you feel work for your company.

10:34Yeah.

10:35I think that we are, we are for sure the tip of the spear.

10:39So we have a global BD and corporate development organization out talking to game developers

10:42every day in China, Japan, South America, across Europe, and so we cultivate, find deals, find

10:50great teams that are maybe interested in rolling out, schedule investments, and then if something's,

10:55you know, at a certain size, we'll sit down with our partners, have a discussion, show

10:59them the thesis, show them all the financials, and then kind of keep, you know, have almost

11:03like a milestone basis kind of deal track going.

11:08But I think that we're very aligned, we spent a good amount of time aligning on the strategy

11:12of what we want to accomplish, which would be the largest games company in the world.

11:15And you know, we're out going ready to execute that right now.

11:19We talked about IP like Monopoly Go, Star Trek.

11:23Point to another success story that you think sort of illustrative of the company's strategic

11:28focus.

11:30Yeah, I think Marvel Strike Force is, it was a great, ultimate actually game that came

11:36via an acquisition of Fox Next, which was acquired by Disney, as you're all aware.

11:40So after Disney acquired Fox and Fox Next, they, as you're aware in your chart, they

11:48were no longer in the game development and game publishing business and they had evolved

11:53into licensing.

11:55And so we ultimately acquired the team and the asset, and we've grown it pretty well

12:02since then.

12:03Actually, we've grown it, you know, double digit percentage growth since then.

12:06And also it got us into business with Marvel, which has led to other things, i.e. the Monopoly

12:12integration with Marvel IP today, and brought in a really fantastic team that we've worked

12:19with over the last few years to develop that IP.

12:21And so that's a game that, you know, again, you know, you can go see a Marvel movie, have

12:26a great time for two hours, but if you're a hardcore Marvel Strike Force player, you're

12:30playing multiple hours a day, and the storylines, the characters, the outfits, it's all happening

12:36every hour in that game.

12:38So live services are very powerful, and Marvel and Disney recognize that, which is why they're

12:44still in the licensing business now.

12:47We've got a minute left.

12:48Give us a thought about 2025, what that year is going to be in terms of scope-ly.

12:54Well, I hope that we announce at least one, you know, mega deal.

13:02I think, you know, when I say mega deal, I mean, you know, like scale global franchise

13:07doing hopefully at least a billion dollars in revenue.

13:09I think we'll continue to execute on our current slate of games that are live, hopefully continue

13:15to grow those games.

13:17And I think that, you know, ultimately, we want to be an amazing place for talent to

13:25join, and so we make a tremendous amount of investment in the culture and all the things

13:30that are happening at the company on a daily basis, and then some education.

13:34You know, I think that even though I think that we're a relatively young company that's

13:39kind of spent 12 years making ourselves at the scale we are, but I think that there's

13:43still a lot of people that are unaware of our scale and the type of capital that we

13:48have to deploy and the type of deals we're doing.

13:50And so doing things like this, getting to know other people, I think is really important.

13:53So I'm glad you guys invited me here today, and thank you very much.

13:57There you go.

13:58Thanks a lot, Tim.

Game Changing Deals: A Conversation with Tim O'Brien | Entertainment & Technology Summit

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