How Scopely Turns Hollywood IP Into Videogame Gold

a specialty of adapting from one medium to another. To discuss how this alchemy is achieved, we've got Scope Lee CEO Walter Driver here. Thanks for coming in. Walter, so tell us first about Scope Lee. How big is the company got? When did it start? Thanks for having me? Um. Yes, Scope is uh is about eight years old. We founded in Los Angeles, UM and it's now a very global business with operations all of the world. UM and yeah, we've built up publishing platform too, you know, transform digital

free experiences into long term businesses. And we've adapted some well known pieces of intellectual property and some universes that people cared a lot about and give him an opportunity to engage within a new medium. UM companies seen really

significant growth over the last few years. We grew revenues over fifteen x and sixteen quarters from the beginning of two thousand and fifteen to UH the Q one of two thousand nineteen, and it's publicly known that revenues are in the north four million dollars at the beginning of this year. UM. And we've done that by a launching, you know, a diverse range of products, as you mentioned, uh, some of some of the pieces of in electoral property.

But we've created games also in partnership with the w w E, UM with Looney Tunes UM, and we've created these across a wide range of of gaming experiences, from massively multiplayer online strategy game like Star Trek to an asy grenois multiplayer board game like Yazzi. So we've had really a unique record of the last few years of of launching successful games across a wide range of categories.

How do you figure out, though, what partners or licenses to go with, because when you start talking about Looney Tunes in w w E, it's all over the map. And so I'm curious, how do you figure out what you want to make into a game? What makes a good game? Yeah, So I guess at the core what scope LE is is A is a platform for personalized software based entertainment, right, And when we say that, I think, you know, for uh, you know, listeners of a variety.

I think we believe that, um, you know, a huge amount of entertainment time, energy, and and revenues is going to move from passively consumed experiences to interactive ones. And one of the really powerful things about interactive experiences is that they can be personalized by each individual user and UM and also the creators of those experiences can can build technology and tools that help adapt that experience on

a per user basis. So UM, depending on how you're playing the game, we can adapt things to pair you with people at your skill level or your stage in the life cycle of your experience inside of that game, UM and really customized the experience in a way that's

more engaging for you. So we start with that publishing platform, and then we built content strategies on top of that, where we think, what can be a decade long plus UM thriving business that's gonna have really high levels of user engagement and monetization over a long period of time. And you know, we start with that concept and then we look at what are the opportunities and mobile gaming and the types of gameplay that we think we're best suited to pursue UM. And also we look at what

brands really resonate with UM those types of players. And sometimes it starts with with an I P and a partner who comes to us and says, you know, we think we could you could do something great with Yatzi, which is the case in our partnership with Hasbro because we had already had success making dice games with Dice

with Buddies. In other cases, we've approached you know, I P holders and said we have a great plan for what we could do with your brand on mobile, which was sort of how the Star Trek conversation started happening

with s as interactive UM, and both methods have been successful. Really, what we're thinking about is, you know, what can what can people still be enjoying doing ten years from now UM, and how can we get buying that and create a world class you know, digital experience, you know, in that universe. I'm curious about the nature of the deal making with

the CBS interactives of the world. I mean, like who's paying and who here are you just sort of you know, creating a service for them or is the value of the other way? Yes, So I think this the thinking around this has evolved a lot over the last few years, because, first of all, I think free to play games in the Western world are a very new business, right. This is really in the last decade this is UM started

to happen. And so originally I think people thought of mobile game licensing is sort of an ancillary revenue stream for for traditional I pholders. And over the last you know, even five years, I think that thinking has evolved dramatically.

And we're fortunate to work with some partners who have been really strategic and how they think about UM the digital expressions of their brand and and a lot of those groups are now thinking, hey, you know, if we own something people care about, what is uh, what is the long term digital experience where people can come every day and spend you know a lot of time engaging with this universe and make it really their own personal

experience UM. And so that conversation has evolved much more from a traditional licensing and the revenue conversation to a more strategic partnership oriented one. So we've looked for partners that kind of share our vision around aligned interests of hey, how do we go build the biggest business around Star Trek on mobile together possible? And then we customize the economic relationship to promote you know, long term alignment of

our interests. And so in some cases, um, you know, their primary goals are to uh, to really introduce that brand to new audiences, and sometimes it's to cater to existing core audience. Sometimes it's usually a combination of both, UM and you know, also to uh, you know, to have a very profitable business in its own right, but one that is also synergistic with everything else they're doing

with those brands. I'm curious how you look at entertainment space in general though, in terms of the exploitation potential of all the i P that's sitting there, both current and past. Is it is it is it an over harvested world or is it actually under exploited? Is there a sense of that? Yeah? I think for for people who work in traditional media industries, it's surprising to understand

just how big gaming is. Right. Um, In two thousand and eighteen, you know, gaming was estimated to be a hundred and thirty billion dollar industry, growing you know, double digits uh. And according to the US Chamber of Commerce in two thousand and seventeen, gaming was actually bigger than books, movies, music, and spot services combined. Huge. Um, it's huge, and it's

becoming more and more mainstream every day. I mean, there's two point four billion gamers out there, which is exponentially more than they were even five to ten years ago. Because you know, if you think about it, the gaming audience in the West used to be sort of limited to people who own a console gaming device or people who are PC gamers, and hence that being a gamer was like part of your identity, right it was there

were somebody who did that or you weren't. And now everybody has a gaming device with them twenty four hours a day with with smartphones, um. And so it's a much much bigger industry. And I think people who own things people care about want to have an always on living ecosystem around their brands that people can can come in and engage with and the way that they care

about most. And so I think, you know, it's it's really like one of the most fertile forms of media in terms of how fast it's growing and how many more people are coming into this space and becoming you know, gamers every day. So I get how big the business is, but what I'm curious is is how it relates to

entertainment in terms of the opportunity there. Do you see that there's hundreds of entertainment properties that you could be making into games and these damn entertainment companies just are moving fast enough where it's like, actually, there's not much out there, And well, I think we're we're very selective about our partnerships, right We're both looking for great brands and an audience as that care a lot about those brands, and also where we can create we have confidence we

can create a really world class experience. Um and then we're also looking for partners who you know, have a shared vision of what we're trying to accomplish. And so there there are a lot of those opportunities. They're not hundreds, and it's it's also not like we're at the end of the list of things that would would make a lot of sense. So I think there's a lot of opportunity for us to to continue to bring new uh new I p s into interactive mobile experiences, but we're

also going to create original universes as well. So UM, while we've had more success probably in transforming things people already care about into into digital free to play experiences, UM will also probably create original worlds and we may see those go from mobile first to other forms of media in the future, and it'll be interesting to see

UM that transition. So uh, you know, I'm getting a picture here of the dynamic between you guys and the entertainment industry, But I want to know where the leverage is. In other words, is it companies like yours that are lining outside the studio doors or is it the studio executives lining outside your doors? In terms of getting these games made. Yeah, I mean it's an organic process and

it's happened in both directions. There's certainly people who approach us all the time with ideas and and properties that they would like us to make a mobile game. We we do turn most of those UM down because we are super selective about our partnerships UM and sometimes we see something that an I P holder isn't thinking about or is not top of mind for them. But as soon as we approach them in our you know, articulate our vision for it, they're like that makes a lot

of sense. So I would say the conversations have been pretty easy around the market opportunity, whether people are approaching

us or we're approaching them. UM, there's a lot of receptivity from the traditional entertainment industry around gaming, and I think what what a lot of those executives understand is it's a very different business and while it's also media, it's it's a different business model and requires a totally different set of skills, and so most of them are thinking, hey, we need to find great partners to approach this with UM and scope is really differentiated itself in that regarding me,

we've want six consecutive mobile gaming franchises that will achieve over a hundred million dollars of lifetime revenues, which is pretty unique across a wide range of ips and gameplay. So everyone from Discovery to Netflix in recent months have

signaled their stretching into the gaming business. Do you think that gaming related revenues are going to become more and more central to media companies or is it really no different than what it's always been going back years Because the relationship between entertainment video game companies has been there

for decades. I just think it's changed the law. Yeah, I think traditional media executives are understanding how fast gaming is growing and how mainstream it's becoming, but they're also understanding that in many cases you need to really be hyper focus and specialized on being able to execute on

that front. And so I think right now most of our conversations with media companies are about how do they go to direct to consumer and and optimize their direct consumer strategy and scope plays kind I'm operating on a different actor because we think that they're really exciting evolution is going to be providing directed by consumer experiences, and by that I mean that that UM software has disrupted a lot of different industries over the last decade, and

it's disrupting media in a in a pretty straightforward way, as people are using software to deliver traditional media to people in new and exciting ways UM. But I think the next revolution is going to be that the software becomes the entertainment. And if you have UH an entertainment experience that is dynamic, then people can it can adapt to the way people are using it, and the users can direct their own experience, and that allows people to

have a really personalized experience. It feels unique to them. That has a lot of value. And also you can personalize the business model on a per user basis. So all of our games are free to play. UM. You have unlimited access to the game for free. UH. And people choose to invest in their experience, usually by buying virtual currency, which they can use to you know, enhance

their experience in a totally self directed way. UM. And we find that people really like being able to decide how much UH they want to spend it on what cadence they want to spend it on. Well, you talk about virtual currency, and of course the name Fortnite comes to mind. You can't have a gaming conversation of course,

of course out mentioning Fortnite. But I am curious. You know how a company like scope Lee looks at that success and you know or do you guys feel that the business strategy that you're currently pursuing could set you up for that level of success or is that just a completely different thing that Fortnite is doing what Epic

Games is doing. Yeah. No, we're super excited about Fortnite and its impact on on both the gaming industry and UM on players and and people's perception of gaming I think it's been a real, um transformative moment in terms of how you know, gaming being part of the zeitgeist

and and really becoming incredibly mainstream. And I think that's attracted a lot of interest from uh, you know, people in the traditional media as well as investors and and you know other gaming companies who are thinking about, you know, how big the opportunity is here. So I mean, you know, it has catalyzed more interests in the space. We saw twenty two billion dollars of him and A activity and gaming in two thousand eighteen and another five and a

half billion of investment in gaming last year. So um, I think it's catalyzed a lot of interest in this space. And I think what is unique about Fortnite was that it was um cross platform and free from day one, and so it was able to reach users on a lot of different devices. Um and they built a great experience that was really broad and in a new category battle Royale games that is probably a twenty billion dollar

industry this year that didn't exist three years ago. And so UM it shows I think, you know how they're gonna be new categories of gaming that are created in very short periods of time that are bigger than entire segments of media within a couple of years um. And it also shows this convergence of devices and and business models. So traditionally console games used to pay sixty dollars to buy the game upfront and then there would be a

sequel two years later. Fortnight is a free to play game that is available on consoles but also on mobile and and we think the future of interactive entertainment is going to be giving people, you know, the experience they want on whatever device they want, whenever they want, at whatever price point they want. Um. And you know, Fortnite was one of the first products that really delivered on that proposition. So clearly there's tremendous upside to be had

being in the gaming business. But you know, you also seem to think I also seem to think that when I hear about companies that are doing well in the gaming business, that there have been some that they're flying high today and then they fall tomorrow. Becomes sorry, because the trends seemed to change so dramatically and so quickly. So how does the company like Scope ly avoid you know,

being the flavor of the month. Yeah, I think historically when people thought about the gaming space, they thought, you know, is it are these durable, long term revenue streams, right? And obviously in a in a purchase to play environment where somebody is paying sixty dollars for a game upfront, UH, it looks more like the movie business, where there's a lot of money made in the first weekend after after a launch UM, and so the revenues are not as

consistent and predictable. UM. What we've seen is a really transformal, transformational evolution in the business model towards free live services UM. And so those live services are really like living ecosystems where everyday player can come in and different things are happening in the game UM, and new features are being released every few weeks, and the ecosystem is evolving very dramatically. And so these are almost more like theme digital playgrounds

than they are traditional games. And that has created um, you know, much longer term user engagement and so UM we're seeing that. The other reason the gaming is attracting so much investment lately because people have underestimated how durable these franchises are in a live service model. UM. The same way we've seen a lot of software companies going

from from licensing fees to software as a service. You see the same thing and gaming and how it's a really attractive business mode all if you can create a durable um uh service for players that they can pay for over time. And we see it in our products. Um So, our dice franchise Yachtzi and Dice with Buddies is our oldest franchise's eight years old and achieve record

revenues last quarter. So you can see these things growing eight years in um That's something that I think is is new for people as they look at this space and understand that the things that these businesses can grow for a long period of time. And also when you're talking about you know, you use the term experience and it's not just a game. It just makes me wonder whether we're going to see sort of different kinds of

hybrid forms of entertainment and gaming. And there's been some interesting experiments along the way, but you know, you guys are traditionally taking I P from entertainment that's already been out there, but have you thought about what happens of entertainment and the game launched at the same time. I think we'll see all fla verson of that happening moving forward.

And we do talk a lot about experiences because I think the other thing is we don't sell games, right, the games are free, and we don't sell content either. The content is you know, we have unlimited access to games. What we offer people a chance to do is invest in a personalized experience and uh, and that's just a different mindset around around media, is that, hey, we we created this world for you to come in and customize

and and invest in however however you want. And so UM, I think that is leading to lots of new forms of gameplay and frankly blurring the line between what is a game and what is an interactive experience. And we've we've already seen that with you know products and interactive fiction. Right is it is it a story if you're choosing your own adventure and paying to choose different routes, or is it a game? Right? It's it's really blurring the lines.

And I think we'll continue to see more things that are um broader than than traditional console or PC gaming, UM, that are increasingly mainstream experiences for people. Who knows, maybe by ten years from now, we'll see you know, a show like West World becomes an actual kind of product

out there's something that really blurs the real and the virtual. Yeah, I mean I think I think there will be uh, you know, digital interactive versions of things that that people care about are gonna be you know, manifesting themselves in a lot of different formats and will continue to see innovation on that as this becomes increasingly central to people who own intellectual properties overall business strategy. So your usage of t V I P isn't your only Hollywood connection.

You've got some interesting investors from this world as well, So talk about who's in your camp these days and what your investment picture is looking like going forward. Yeah. So Scope Lee is raised two and or sixty million dollars from both venture capitalists and individuals UM and we've start to bring people in that we thought understood our business,

understood where media is headed. And we have a number of uh investors that have been with us, you know, since the early days, like Evolution Media, which has made a lot of investments in digital media space, Great Craft, which is an l a New York based firm that's kind of focused on digital media UM and then we've seen you know, a lot of individuals that are interested in this space that come from UM, you know, traditional

media world. So there are a number of UM executives from from entertainment that have invested personally over the years, and we've kind of sought to bring people in that we thought UM might be good sources of wisdom, you know who from and farther down the path in these other forms of media. As we think about how this landscape is going to evolve, we think probably there will be some key learnings from veterans of other forms of media and these There is something to having your company

here in Los Angeles. I know you've got a new headquarters opening up in Culver City. We do. Yeah, We've been growing really rapidly and we are moving into a new space and the platform in Culver City. Culver City is a very active area right now for high growth companies in the media space UM. And we we are based in l A for a reason. While we have operations all over the world. We have offices in Barcelona on a, UM in Dublin, multiple studios across Europe and

in North and South America. UM our headquarters in Los Angeles for a reason because I think l A is always excelled at creating um you know, cultural phenomenon and experiences that make people feel something, and now we're just using technology as means to deliver that that um you know, cultural experiences. And I think it's been a place where we can attract talent that understands media, technology, gaming, um and how to build things that are relevant to large audiences.

And so it's been a great place for us to be when we frankly, when we started the company, there's a lot of pressure on us to be in San Francisco, and I think at this point everyone sees that we're more advantaged by being in Los Angeles. And in terms of the shape of your company, what's interesting is you obviously you've got sort of your core operations, but then there's sort of this loose federation of other studios working on games, but they're not You're not owned and operated.

So talk through what that is in the logic behind Yeah. So, as I said, the kind of core building block of scopeally was the technology and business platform to turn any digital experience into a bigger business and and to personalize those experiences on per user basis, and then we build these content strategies around which types of games that we want to be making, and then we've just approached it, you know, frankly, the same way a lot of people

and the entertainment industry of approach things, who would be the best people to make this product, both in terms of the scope of the employees that would be participating in that, as well as through partnerships, and so we've struck in through those as as you know, studios that we own a hundred percent of studios that we make minority investments in that make games on our platform UM and in partnership with us or a long term commercial relationships.

So we've been more dynamic than a lot of other gaming companies that have tended to only make games at studios that are owned and operated with every you know, uh, you know participant in that project being an employee of the company. And we feel like, um, that's pretty limiting, and this dynamic and ecosystem is as we would like, and so we want to partner with UM teams where they can augment our capabilities and where the combination of the two is more powerful than we would be on

our own. So we do own a quite quite a few studios, but we're also open to minority investments or long term partnerships for us as about creating the best consumer experience as possible with partners we're alygn with for the long term. So if it makes sense, you guys could be acquiring certain properties. It's just not necessarily a big directive, no, we I mean we already are right so.

Um So, Actually, recently we acquired Digit Game Studios in Dublin, which was the studio that we had a minority investment in where we co developed Star Trek Fleet Command, which we launched late last year. It's been an extremely successful, uh first foray into massively multiplayer online strategy games. UM. I mean it's crazy levels of engagement and the average day ex users playing sixty hours a month. Um really really uh. People are very passionate about the game, about

that universe, uh uh. And it's been a very successful partnership with Digit where we were minority investors, and we recently acquired a hundred percent of the company um just a couple of months ago. And so we'll continue, uh, you know, to acquire companies invest in them. Some of those investments may lead to majority um acquisitions, but you know, some some teams want to retain their independs and what would prefer to have a long term minority investment, And

we're open to that kind of arrangement as well. We're relatively agnostic as long as we're working with great teams to produce great products, and we feel really aligned for the long term. Um, you know, with where we're going as a business. You mentioned Star Trek and massive multiplayer, and it seems like you guys are trying a lab, trying out a lot of different genres. Is there a genre of gaming out there that you guys have not gotten to yet that interests you that you may eventually

get to. Well, I think we have a lot of opportunities. When we started the business, UM, we were really focused on what we call casual games, which are really you know, very mainstream, large audience types of games, and really making them more social, collaborative, and competitive, UM with products like YACHTSI, where um, you know, it's you can play you know, head to head against friends, you can compete in tournaments,

you can play against the computer. Uh. And then in two thousand and fifteen, with the launch of the Walking Dead Road to Survival, we we took the sky Bound Walking Dead graphic novel and created a pretty competitive role playing game, UM. And so that was our first what are called mid core games in the industry that are really competitive. UM. You know, that product has been extremely successful.

We estimated on the generate over four hundred million dollars in the first five years since launch, and so we successfully enter that category. And then we did several other role playing games, one in partnership with the w w E and two thousands seventeen and then late last year with Warner Brothers on Looney Tunes UM. And then and then as we mentioned, we moved into the massively multiplayer online strategy game genre last year with with Star Trek

Fleet Command. And so between those three product verticals, we have huge opportunities to go deeper into those categories. So I think you'll continue to see US UM, you know, go deeper into those categories and will probably augment that with one or two other UM product verticals organically. And then we're also looking, UM, you know, pretty extensively at acquiring other teams that have already you know, developed expertise and build product market fit in an adjacent categories where

we can help them further commercialized properties. Last question do you have a very clear vision of where scope He is going to be three five or more years out And you know, is there sort of you know, strategic philosophy or culture that you're sort of breeding at at

Scope Lee that helps fuel that vision. Yeah. I mean we as at the core we see ourselves in an experience company, right and we're building digital experiences, um, for people on on a very large scale, and um, we want to be the best company in the world at creating long term digital experiences are directed by the consumer and puts the power in their hands to decide, you know, where they want to take that their experiences, and builds the technology and tools to respond to to where they're

taking it and and become more personalized over time. And we think, you know, that's super exciting vision to to be the kind of leading directed by consumer media company in the Western world. Well, I to a Star Trek related company. I wish you to live along and prosper. Thank you very much. I'm looking forward to seeing the scope Ley story unfold. Thank you for having me. This

has been another episode of Strictly Business. Tune in next week for another helping of scintillating conversation with media movers and shakers, and please make sure you subscribe to the podcast to hear future episodes. Also leave a review in Apple Podcast let us know how we're doing.