Warner Bros. Discusses "Volatile" AAA Console Games, Will Lean Into Free-To-Play And Mobile

During a recent Morgan Stanley speaking event, Warner Bros. Discovery gaming boss J.B. Perrette discussed some of the company's strategy for gaming going forward, and it includes more live-service, mobile, and free-to-play games.

He said, "We're doubling down on games as an area where we think there is a lot more growth opportunity that we can tap into with the IP that we have and some of the capabilities we have on the studio where we're uniquely positioned as both a publisher and a developer of games."

Perrette said WBD's recent gaming output has focused on AAA games for console, and that's great when a game like Hogwarts Legacy sells 22 million copies and becomes the best-selling game of the year, but this kind of success is never guaranteed in what Perrette said was a "volatile" market. He pointed out that one of WBD's latest big games, Suicide Squad: Kill the Justice League, was a disappointment for the company.

So the plan going forward, he said, is to help reduce volatility by focusing on core franchises and bringing at least some of them to the mobile and free-to-play space, as well as continuing to invest in live-service games that people play--and spend money on--over a long period of time. This will help WBD generate more consistent revenue, he said, going on to tease that WBD had some new mobile free-to-play games coming this year. Also worth noting is that just because WBD may push into new places, that doesn't necessarily mean it will stop making big single-player AAA games.

"Rather than just launching a one-and-done console game, how do we develop a game around, for example, a Hogwarts Legacy or Harry Potter, that is a live-service where people can live and work and build and play in that world in an ongoing basis?" he said.

Perrette went on to say that WBD is uniquely positioned because it has popular brands--he singled out Mortal Kombat, Game of Thrones, Harry Potter, and DC as its biggest--as well as 11 different internal game development studios. He also teased that WBD has a "strategic investment plan" to help make future games more successful, adding that the company just recently brought someone on to help with brand management and sustainability.

If WBD can execute, Perrette said he expects gaming to bring "meaningful growth" to the company in the years to come. But making games takes time, so Perrette cautioned that the company is laying the foundation now for returns that could come in 2025, 2026, and 2027.

Perrette went on to say how he has no idea how the gaming landscape will evolve over time, but he believes owning the IP and studios could help WBD succeed where others might not. He also called out things like virtual reality and "virtual worlds" as places that will "increase in scale and adoption" in the future.

Some of WBD's upcoming video games include a Harry Potter Quidditch game and a Wonder Woman title from the makers of Shadow of Mordor.

WBD's approach to gaming is very different to Disney's. The company, years ago, developed and published games in-house, but now licenses its franchises to other companies. For example, Disney just paid Epic $1.5 billion to bring its franchises to Fortnite.

Disney is also working with a variety of companies, including EA, Ubisoft, Zynga, and Quantic Dream on Star Wars games, and has a deal with Microsoft/Bethesda for Indiana Jones and the Great Circle and Blade.