WB Games to lean into free-to-play, may license out Batman, Superman IPs to other publishers

Comments from Warner Bros. Discovery executives indicate that we could see more F2P games roll out soon, and that WB Games could license out key properties like Batman and Superman to third-party publishers.

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WB Discovery has had huge success with its games division. According to company CEO David Zaslav, WB Games has been profitable for the last 15 years. The division has produced multiple best-sellers, including the Batman Arkham titles, and more recently with Hogwarts Legacy, which generated over $1 billion in revenues since release.

Despite these milestones, WB Games has had some big misses. Suicide Squad: Kill the Justice League failed to meet expectations, and the game's underperformance actually led to some interesting comments from WBD executives.

In a recent Q2'24 earnings call from August, WBD executives JB Parette and company CEO David Zaslav strongly indicated two things could happen with new games in the Warner Bros pipeline: 1) that more free-to-play games could be in development, and 2) the company could license out popular mega-hit IPs to third-party studios and/or publishers in a bid to reduce risk, not unlike how Disney licenses out Star Wars and Marvel to publishers like Electronic Arts and Ubisoft.

Bear in mind that nothing has been officially confirmed so far, but Zaslav has also hinted that a new Superman game could be in development at some point--which is only logical considering the powerhouse billion-dollar pull of these high-profile properties.

Below we have a transcription of the Q2'24 call in regards to gaming.

JB Parette (Jean-Briac Perrette), President & CEO - Warner Bros. Discovery Global Streaming and Games

In a world where the gaming industry, launching brand new franchises is getting harder and harder for a number of reasons, including IDFA deprecation and more challenges with marketing and customer acquisition. And that franchises, like the ones that we have, are in high demand and can help in launching games.

Now, you still need a great game. The reality is we've had the unfortunate...in the short period of 12 months, we went from having the record year that we had in 2023 with Hogwarts Legacy, to unfortunately having the opposite side of that spectrum with Suicide Squad.

It is still a hit-driven nature of some of that business, but one of the areas that we are particularly leaning into is the free-to-play space.

The player-first deal was really about strengthening our capabilities in that space, because we do think we are subscale and that we have more opportunities to grow in that space, which is a big part of the market.

And when we do, that it will help also provide some more balance to our games business from the inevitable cyclicality of more console based releases, which have a three to four year time horizon and a little bit more lumpiness, even when you do get it right.

So we continue to be strong believers in the game space. We want to continue to see and figure out how we lean into it and get bigger in that space, and we'll certainly tell you more about it as time goes on.

David Zaslav, CEO, Warner Bros. Discovery CEO

One of the strategic advantages of owning all of our IP is, as the world has changed, it used to be you launch a movie or you launch a TV series and then you do a game. But one of the reasons that Hogwarts Legacy was so successful and the number one game last year is that you went to Hogwarts Legacy and you entered the game and you were able to become part of that world. And that ultimately, I think, is a big piece of where this industry is going.

It will create a movie, whether it's Batman or Superman or Harry Potter, and then maybe there'll be a TV show. But the ability to go into that world and have that experience of spending time with all the characters is something that we still own.

We have 11 studios here and we have a lot of IP, and there's also a lot of interest among others in coming to take advantage of some of that IP for gaming, which we're looking at. Because as JB said, we need to get bigger, and the IP that we own and the value that it has in the gaming space, is something we're looking to take advantage of.

WB Discovery Q2'24 earnings, as they pertain to gaming (source):

• $4.860 billion in content revenue

• The decrease for the six months ended June 30, 2024 was primarily attributable to a 66% decrease in games revenue due to the performance of Suicide Squad: Kill the Justice League compared to Hogwarts Legacy in the prior year,
• Content revenue decreased 6% for the three months ended June 30, 2024, primarily attributable to a 27% decrease in
• television product revenue and a 41% decrease in games revenue, partially offset by a 19% increase in theatrical product revenue.
• The decrease in games revenue was attributable to the weak performance of Suicide Squad: Kill the Justice League, which
• was released in the first quarter of 2024 as compared to the strong performance of Hogwarts Legacy, which was released
• in the first quarter of 2023.