It’s no secret that the pandemic has driven a surge in gaming. Research firm NPD Group recently reported that Q3 2020 marked the highest total spend on gaming in US history, to the tune of US$11.2 billion—a 24% increase compared to the same time period last year. Not only are more people playing games, they’re also playing longer and on more devices than ever before, according to NPD. 

In a bid to grab a slice of this pie and chase global success, kidcos such as ZAG, Pocket.watch and GoNoodle are bringing gaming development in house—despite the high cost and time associated with developing gaming properties—as it provides them greater control over the content, not to mention direct access to consumer insights.

But launching a division isn’t easy, says Dmitri Williams, associate professor at USC Annenberg School for Communication. The resources (financial, staff and tech) a production company needs to expand into making video games can vary significantly based on the platform they’re targeting, he says. The high cost and intense competition in the gaming market has led to fewer big-budget (also known as triple A or AAA) titles being released each year, while the market for mobile games has come to dwarf consoles and PC gaming, says Williams. Yet for those looking to break into the gaming category with an in-house offering, she suggests the crowded mobile space may be the best place to test the waters.

GoNoodle gets games moving 

The cost of creating smaller mobile titles can range from US$10,000 to US$100,000, and the process requires only a handful of people. In comparison, big-budget games for consoles often require teams of 300 people  and can cost upwards of hundreds of millions of dollars.

Prodcos expanding into video games usually have dedicated small teams of 10 to 30 people who will design the game, working with an external game development studio for execution, adds Williams.

This is the case for Nashville-based dance and movement video producer GoNoodle, which launched its own in-house gaming division with a small team of developers in March. To kick things off, it partnered with Dubit to leverage the market research/app development company’s tech capabilities and kid insights.

Through that partnership, GoNoodle launched its free iOS and Android app GoNoodle Games, which features movement-responsive games that require kids to jump and dance around to complete challenges. The app has been downloaded around 800,000 times since its launch, says GoNoodle CEO KC Estenson. 

With kids spending more time playing games on mobile devices, a gap has emerged for content that gets them moving, says Estenson.

GoNoodle’s business model is to create both sponsored games and in-app purchases. And going forward Estenson sees opportunity in creating new content, as well as expanding to consoles in the new year. But the challenge will always be making sure it’s a safe experience for kids no matter where it’s available, he adds.

“When you develop your own games, you can assure maximum safety for kids,” says Estenson. “We’re able to build in the privacy safeguards and make sure it’s compliant. Even if platforms like Apple change their rules, our development team is close to the code and can quickly make changes.”

ZAG gets in the game

While mobile games offer a lower barrier to entry for most small prodcos, and video games often require a much larger investment, the category may be too big to ignore. Sales of video game content—including titles and accessories—is up to US$10.04 billion, a 24% increase when compared to last year, which makes this market a tempting place to be.

Following broadcast and licensing success for its various IPs, French animation studio ZAG tapped former CrazyLabs (Jumanji: Epic Run) exec Elinor Schops to launch an in-house gaming division in the fall. Schops joined the company as VP of gaming experience, with a focus of rolling out gaming titles across PC, console, mobile, VR and AR.

Wanting greater control of the content as it was expanded into video games for the first time led ZAG to launch its own gaming division, says Julian Zag, EVP of global operations. The studio also plans on partnering with game developers to create titles for all of its brands, with an initial focus on Miraculous and Power Players. But having talent in house to manage those relationships means the studio can maintain a strong guiding hand across all of the touchpoints.

Launching a gaming division also puts Zag in a better position to innovate new products more quickly, because it will have the in-house expertise and knowledge to design more unique experiences that align with the brands.

“We’re looking for crazy ideas about how to engage audiences to stand out from all the games that are coming out,” says Zag. “And with video games, we can create what we have in our minds for these brands, but couldn’t do in CP and content because of price points and limitations. Through video games, we can challenge ourselves to fulfill the demand for our content in new ways.”

Pocket.watch plays around 

To fulfill its mission of being everywhere that kids are, Pocket.watch knew it needed to get into games in a significant way, says Greg Hayes, VP of games and publishing. The digital media company launched its gaming division p.w Games in February 2019, with the goal of producing mobile and console games featuring its major YouTube brands.

Launching its own gaming division, instead of licensing the rights to some of its creator partners, gave the studio more control over titles and the ability to tailor updates to align with new CP and content. With the launch of mobile games like Tag with Ryan (pictured), Pocket.watch was able to look ahead to what new Ryan’s World products would be hitting retail, and create in-game content (like outfits) that would push consumers back to the shelves and keep them engaged. That level of planning and alignment isn’t possible if you’re just handing over a license, says Hayes.

The pandemic has driven some major growth for Pocket-watch’s titles, and 2021 is expected to be another strong year for the company’s gaming business in particular as it gears up several new launches. Next up on the slate is a mobile dress-up game based on the Love, Diana franchise. Players will be able to make an avatar and dress her up, leaning into the brand’s focus on pretend play. The app will help kids create their own persona that could better connect them with Diana, says Hayes.