This essay was written by Jimmy Stone. Jimmy is a Consultant at Naavik as well as Managing Partner of Alderbrook Companies, which offers strategic finance support to executives, entrepreneurs, and investors.

Source: The Direct

If you’ve been watching tv shows over the past six months, chances are you’ve been spending much of your time with a pair of Disney’s content juggernauts: Star Wars and Marvel. The Mandalorian topped Nielsen’s list of most-watched streaming series in the U.S. in December 2020, while WandaVision and The Falcon and the Winter Soldier both landed squarely in the top ten during their respective runs.

All three series continue or expand on storylines from their respective content universes, telling new stories that further the narrative of that universe. Each is an example of transmedia storytelling (often abbreviated as “transmedia”). Transmedia storytelling was first described by USC professor Henry Jenkins, who defines it as “a process where integral elements of a fiction get dispersed systematically across multiple delivery channels for the purpose of creating a unified and coordinated entertainment experience. Ideally, each medium makes it[s] own unique contribution to the unfolding of the story.” Put simply, transmedia is telling stories across platforms.

Before going further, it’s important to clarify what is and isn’t transmedia storytelling. Transmedia is not simply “more” – it’s not telling the same stories, or non-canonical stories, in other media forms. For example, when Netflix’s hit The Witcher series started streaming, The Witcher 3 video game (released in 2015) saw an all-time high player count on Steam, and the thirty-year-old book series returned to the New York Times Best-Seller list. The audience plainly wanted more – more Geralt, more Yennefer, more outrageously catchy coin tossing songs. But the Witcher television series, books, and games were not telling discrete parts of a unified story: they were simply exploiting the Witcher IP across platforms, often telling the same stories repeatedly.

Transmedia storytelling endeavors to go further – telling discrete parts of stories on different platforms, causing voracious audiences to track down every part of the story and, ideally, driving audience love for the IP involved. The “three C’s” of successful transmedia storytelling have been described as characters (the importance of story), convenience (getting the right content to the right people at the right time), and community (the importance of connecting and rewarding fans). By blending all three effectively, IP owners get something beyond the ability to exploit their characters on different platforms: they can use that synergy to personalize the story for audience members, driving interest in and engagement with the IP. 

Proponents of transmedia storytelling like Matthew Ball, former Head of Strategy for Amazon Studios, view transmedia in gaming as the “final frontier” of storytelling.  He envisions IP holders telling stories across gaming and traditional television series, allowing audiences to watch Iron Man each week on TV and then join a live event playing alongside Iron Man himself (played by a real-time motion capture hero) – allowing the audience to insert themselves directly into the narrative.

Characters – Intersections of Transmedia and Gaming

The most ambitious transmedia effort involving gaming to date was attempted by the Matrix universe in the mid-2000s. Alongside the hit trilogy of movies, The Matrix told its story through The Animatrix (a series of nine animated films that provided backstory about the Matrix universe), two collections of comic book stories, and several video games. The most notable game was The Matrix Online, a massively multiplayer online role-playing game that directly continued the story of the Matrix films. The story progressed in real-time, focusing on live events in which a group of developers took control of main characters in the Matrix universe to perform live speeches, meet with factions, and provide clues about the game’s mysteries. The Matrix Online was not a success story: live events suffered from technical issues and limited staff, gameplay was both middling and bug-filled, player counts were low (ending at around 500 when the game was closed in 2009), and storytelling was largely curtailed after the game’s sale to Sony Online Entertainment. The game may not have been good enough to accomplish its storytelling goals; it also may have been too soon for such an ambitious project from a technology perspective. But the events of the game remain canon in the Matrix universe and are expected to be addressed in the upcoming fourth Matrix film.

More typically, however, games based on IP from traditional Hollywood studios have not involved transmedia storytelling.  While hundreds of games have been based on films or TV over the years – most commonly cheap cash-ins with the occasional hit like Goldeneye 007 and Star Wars: Knights of the Old Republic thrown ins – few have continued narratives from other media or been considered canonical within an IP’s universe.  A recent exception in which transmedia characters were built through gaming is Star Wars Jedi: Fallen Order, a game licensed by Disney to EA that is considered canon within the Star Wars universe. Along with telling a story about a new group of characters, the game addresses some large mysteries within the Star Wars story, including the changes in ship designs from the prequel films to the original trilogy. The game was both a critical and commercial success for EA, played by more than 10 million unique players within six months of launch and called a “breakout title” by EA’s CEO.  On the other hand, while no IP is currently more popular than the MCU, the popularity didn’t save Disney’s recent Marvel’s Avengers, which is a multiplayer-heavy action game (separate from the MCU itself) that ended up a relative critical failure and unable to sustain its player base.

Convenience – The Right Content in the Right Place

As games grow increasingly mainstream and allow consumers to spend far more time immersed with a company’s IP, telling stories in gaming is becoming increasingly essential. Along these lines, in 2020, Americans are estimated to have spent 11 hours per day consuming media.  During the pandemic, entertainment consumption time increased 12%, with gaming seeing 30% growth. Younger audiences rate playing video games as their favorite activity.

Alongside this engagement, there is evidence gamers are willing to spend more playing games than engaging with other media formats. At over $150 billion, the gaming industry is bigger than the music and film industries combined. On Twitch, the streaming platform focusing (mostly) on gaming, creators can earn $0.15 per hour watched compared to $0.01 per hour for artists on music streaming platforms. Finally, despite being a free-to-play game, Fortnite’s ARPU (at one point $100) is higher than Google ($27), Facebook ($19), Twitter ($8), and Snapchat ($3) combined.  

People are spending more time and money on games than on other entertainment formats. This makes gaming essential for the “convenience” prong of transmedia – put simply, it’s where people’s eyeballs increasingly are. As a result, media companies formulating a content strategy are highly incentivized to push their IP through gaming.

 Community – Driving Audience Engagement through Transmedia

While licensed hits are becoming somewhat more common, Hollywood still has a video game problem today. Major IP holders are failing to fully execute on the potential of telling their stories through games, leaving most licensed entries as exercises in reaching gamers by wrapping IP in an existing game (e.g. Fortnite) or re-telling a narrative, rather than furthering the story of a content universe.

Where major media companies are succeeding, however, is in creating ecosystems that marry their platforms and IP with platforms and tools that build community – and these are key to the future of successful transmedia.  While companies can drive love for their IP by spreading narratives across media, community building from instant messaging, VoIP, message boards, traditional social media platforms, and creator tools all help audiences engage with transmedia narratives and feel connected to both the IP and each other.  The most significant example this year was likely Sony’s investment in Discord, which Sony plans to integrate into its console experience in early 2022.

While these tools and platforms have a variety of benefits specifically related to gaming – making communication with other players easier and more entertaining – they also create opportunities to further conversations about transmedia narratives and share love for those stories with other IP fans. One example is Pokémon – a leader in gaming transmedia, telling discrete stories in shared worlds across games, TV, movies, and manga – which has 3.4 million members in its primary subreddit; Pokémon-related Discord servers have hundreds of thousands of members, and the franchise has spawned dozens of fan sites, forums, and wikis.  While Pokémon does not use social media itself to tell stories, its devoted fans use those media to share and spread the love for the IP.

Media companies are also finding creative ways to partner with the game platforms where fans of their IP typically socialize. Indeed, games – such as Minecraft, Fortnite, and Roblox – have become virtual gathering places where young people play but also just hang out.

As a result, it’s no surprise to see traditional media companies beginning to figure out ways to incorporate their IP storytelling into these community driven worlds. In the music world, Warner Music Group’s investment in Roblox came shortly after one of its artists, Lil Nas X, performed a virtual concert in Roblox that generated over 30 million views. Meanwhile, Sony acquired a $250 million stake in Epic Games, just three months after Travis Scott, a Sony artist, reached over 28 million people during a virtual concert performance in Fortnite. Investing in the platforms – via equity positions and content creation – where their audiences live and build community is another way traditional media companies are building out transmedia storytelling.

The Future of Transmedia & Gaming

While IP holders are still figuring out how to successfully tell stories in games with consistency, it’s not clear that audiences mind as long as the game is fun. Spider-Man on PS4 – which has sold more than 20 million units – and Spider-Man: Miles Morales – which sold 4.1 million copies in just over a month – were both huge hits for Sony, the latter of which continues to anchor its PS5 lineup. Neither is part of the Marvel Cinematic Universe, but that doesn’t seem to have deterred players. Similarly, the Fortnite X Avengers crossovers in 2018 and 2019 were exceptionally popular, but did not expand on the MCU (rather, they were essentially very entertaining advertisements for the films). So while gaming is a key format for IP holders looking to build upon their stories, there is an interesting business incentive to monetize in the short-term regardless of whether part of a larger story (or any story) is told.  Audiences clearly want more of their favorite IP — as long as they’re having fun playing it.    

In terms of major media companies, Disney is arguably the current leader in transmedia – successfully telling unified stories about large complex worlds across film, TV, and comic books.  As detailed above, their gaming results are more of a mixed bag, an unsurprising result following their decision to suddenly close their internal studios in 2016 and outsource game development. Still, Disney remains committed to transmedia storytelling in gaming with several projects announced at E3 this year, and Sean Shoptaw, Disney’s VP of Games, recently commenting, “If you look at the products released in the last few years and the ones that are still to come. These are original stories that have been told for the first time in a video game.”

Beyond Disney, Sony seems directly focused on expanding its stories beyond gaming; it describes its upcoming Uncharted movie and The Last of Us TV show as “just the beginning of the expansion of our storytelling into new media and even wider audiences.”  Alongside its investment in Discord and recent test of a PlayStation video streaming service, Sony seems focused on both strengthening its ecosystem and expanding its transmedia storytelling.

Other major media companies are taking a variety of approaches to transmedia storytelling involving gaming:

  • Riot continues to expand its League of Legends universe, both through gaming (recently releasing an auto-battler and mobile MOBA game) and non-gaming platforms; notably, it appears to be leaning heavily into transmedia. Its upcoming Arcane animated series will debut on Netflix later this year, telling new stories in the LoL universe through television. Meanwhile, the company is looking for global heads of live action film and television divisions, suggesting the planned creation of its own cinematic universe.
  • Warner Bros has a solid track record of working with incredible IPs and making games around them — Batman: Arkham series, Middle Earth: Shadow of Mordor, Game of Thrones Conquest, and more. Few companies have Warner Bros rich IP and success in games. The company could improve weaving together stories from across its IP universe — and who knows what will happen to the internal gaming studios as AT&T spins off Warner Bros — but it’s certainly a company to watch.
  • After its failed video game adaptations in the late 1980s and early 1990s – most notably the Super Mario Bros. movie – Nintendo has largely shied away from telling stories outside its popular games. But it increasingly seems to be entertaining that possibility. Nintendo reportedly scrapped planned live action Zelda and claymation Star Fox television series in 2015 when details of the Zelda project were leaked. And Nintendo recently partnered with Universal Studios for a Super Mario World theme park in Japan, which opened earlier this year.
  • Netflix, after making the comment in its 2018 earnings report that “We compete with (and lose to) Fortnite more than HBO,” is taking its first halting steps towards getting involved in gaming. The streaming juggernaut is reportedly looking to hire an executive to oversee its expansion into gaming; its 2019 Stranger Things 3: The Game was the company’s first foray into gaming, but was merely a “note-for-note retelling” of the story from Stranger Things season three.

So what can entertainment companies do to break fully into transmedia? Retaining control over character by keeping gaming in-house allows for greater control over how IP is exploited in games – though Disney’s recent Fallen Order success indicates this may not be completely necessary. Adding strong social and creator components to an IP owner’s entertainment ecosystem – either through acquisition or partnering with a market leader – is a key to build a strong community around its stories.

At the same time, M&A is expensive right now with game company valuations elevated as the industry’s secular growth story and insulation from the pandemic attract investors. Developing games in-house can also be high cost, and Disney’s experience shows that the success of this strategy is not guaranteed. Instead, we expect most media companies to continue to license their IP and strategically acquire minority positions in proven and growing game studios and platforms. We could see more large-scale M&A if there is a meaningful drawdown in sector valuations (or if leadership teams feel mounting pressure to grow their ecosystems), but I don’t anticipate that happening in the near-term.

Transmedia in gaming, then, is fundamentally a story about the future – a story in which growing entertainment ecosystems will need to utilize all of the tools available to them to tell increasingly broad and complex stories. Moving from merely exploiting IP to transmedia in gaming is both ambitious and expensive; including gaming effectively in a storytelling ecosystem requires valuable IP, multiple distribution platforms, and building and supporting community (ideally through platforms owned by or closely linked with the IP owner, allowing greater connection to the narrative universe). For now, it’s possible that “more” is enough.  But the first company to integrate gaming successfully will have the opportunity to create a content ecosystem so robust and popular that it could be able to muscle out its competitors; for that reason, we expect major media companies to extend their stories to video games over the next several years.

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