15 ways to incorporate gaming into your music strategy

A guide by Cherie Hu

Last updated on November 20, 2020

This document is a labor of love and will be free forever. If you’d like to show some financial support, you can either give directly to Cherie via Venmo (@Cherie-Hu), PayPal or Buy Me A Coffee; or support Water & Music, a publication founded by Cherie that focuses on trends at the intersection of music, technology and money.

TABLE OF CONTENTS

Introduction

Gaming as a business model

1. Direct content licenses with game developers

2. Blanket licenses with user-generated content (UGC) platforms

3. Exclusive partnership deals with UGC platforms

4. Live, in-game events

5. In-game digital goods and microtransactions

6. Performances and syncs at competitive esports events

Gaming as a talent and audience opportunity

7. Collaborations with gaming influencers and streamers

8. Investments in esports leagues and brands

9. Label imprints and management arms focused on gaming and esports

Gaming as a creative tool

10. Hardware: Creation using game consoles

11. Software: Creation using interactive mobile apps

12. Hardware/Software: Creation using mixed-reality tools

Gaming as a branding and narrative architecture

13. Album release campaigns with games

14. Album release campaigns as games

15. Parasocial artist-branded games

Conclusion: Concerns about the future of music and gaming

Introduction

2020 has been a watershed year for music and gaming partnerships. A small, non-exhaustive handful of examples:

* Travis Scott’s strategic creative partnership with PlayStation and groundbreaking show in Fortnite

* Fortnite’s expansion into non-combat Party Royale mode, featuring exclusive premieres and performances from the likes of Omar Apollo, Anderson .Paak and BTS

* Ava Max and Lil Nas X hosting events for fans in Roblox

* Countless promoters hosting festivals in Minecraft

* League of Legends expanding its investment in its virtual K-pop group K/DA

* Swae Lee investing in the esports culture company XSET

* Sony Music hiring game designers for a new immersive media department

* 300 Entertainment hosting a Twitch stream to raise funds for the first HBCU eSports league

* Logic signing an exclusive deal with Twitch

* Major rights holders signing (some) deals with Facebook Gaming and Twitch

The motivations behind this new wave of collaborations run in both directions. Major game developers like Epic Games and Riot Games — as well as game-adjacent social platforms like Twitch and Discord — are looking to expand into more full-fledged pop-culture brands, and in the process are looking to outside entertainment partners to build up trust and cultural capital among their user bases. Meanwhile, as the pandemic has ravaged the live-events industry, artists and music companies are looking to diversify their digital revenue, tap into the power of highly engaged online communities and experiment with more interactive and immersive technologies.

As the end of the year approaches, now is a good time to zoom out and try to make sense of all this heightened activity. What shapes exactly are music and gaming partnerships taking on today, and where are some of the biggest opportunities for experimentation and growth going into 2021?

In the following pages, you’ll see the framework I’ve created for myself to understand the wide variety of roles that gaming can play in the music industry today. After several years of tracking and research, I’ve tallied up at least 15 different kinds of music and gaming partnerships, each of which falls into one or more of the following umbrella categories:

* Gaming as a business model

* Gaming as a talent and audience opportunity

* Gaming as a creative tool

* Gaming as a branding and narrative architecture

I think what is most exciting to me about this framework, and about the music/gaming landscape in general, is that these partnerships are no longer limited just to soundtracks, sync licenses or even in-game “concerts.” They also encompass digital goods, talent collaborations and wholly new paradigms for creativity, marketing and audience development that allow artists to tap deeper into themselves, their personalities and their storytelling.

Let’s dive in.

Gaming as a business model

When people in the music industry think of partnerships with the gaming industry, the first thing that comes to mind is usually the commercial impact of games.

Due to fundamentally different approaches to monetization and product development, the music and gaming industries have had polar opposite experiences with digitization in the 21st century. While gaming revenue has been growing consistently year-over-year for at least the past decade, annual recorded music revenue has been increasing only since 2015, before which it was struggling with a years-long decline in the wake of piracy and peer-to-peer file sharing. In 2019, the global gaming industry generated nearly $150 billion in revenue — more than three times that of the recorded- and live-music sectors combined ($20.2 billion + $27.9 billion = $48.1 billion), according to figures from Newzoo, PwC and the IFPI.

Today, the majority of articles being written about the gaming industry paint a picture of thriving in the midst of a pandemic, as people spend more time at home and are seeking more immersive and escapist forms of entertainment. Unfortunately, it could not be more opposite for the music industry, especially in the realm of live events. All of the pre-existing reasons I mentioned above for why music companies want to invest more in gaming — diversified revenue, engaged audiences and more interactive and immersive fan experiences — have been drastically amplified thanks to COVID-19.

When I think of “gaming as a business model,” I think of ways that artists and music companies can make direct revenue from video games and their surrounding content ecosystems. A lot of the tactics discussed later in this piece are certainly related to an artist’s business model (e.g. performances at esports championships, investments in esports leagues, game releases alongside album releases) — but the first four tactics listed here arguably have the most commercial potential.

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1. Direct content licenses with game developers

This is the perhaps the most “traditional” model, as music is baked into the history of video games. The first bespoke original soundtracks (OSTs) came out alongside the birth of the mainstream video game industry in the 1970s, spearheaded by developers like Atari, Taito and Sega.

Today, aside from developers commissioning composers to write OSTs on an in-house or freelance basis, an increasingly popular approach involves licensing already-existing content from record labels. Games that adopt this practice range from those that actually center music in their core gameplay (e.g. Just Dance, Guitar Hero, Rock Band, Beat Saber), to action and sports franchises like FIFA, NBA 3K, Tony Hawk Pro Skater and Grand Theft Auto.

In all of these instances, music and video games are treated as symbiotic promotional vehicles for each other, driving visual music discovery in the same way that old-school broadcast media channels like MTV used to do with music videos.

[Pictured: Screenshot of the music-powered VR game Beat Saber, whose developer was acquired by Facebook in November 2019.]

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2. Blanket licenses with user-generated content (UGC) platforms

This approach is more unique to the 2010s and 2020s. Unlike direct deals with game developers, these kinds of blanket licenses can help power the lucrative secondary media ecosystem around games, allowing everyday players and professional content creators to include music legally in the gameplay videos that they upload or livestream on the Internet.

In terms of deal flow (or lack thereof), the most prominent platforms in this regard include Facebook Gaming, which announced licensing deals with major labels and publishers in September 2020, and Twitch, which is still in licensing talks with major rights holders and is currently facing thousands of DMCA takedowns every week from the RIAA.

So many of the cultural and commercial opportunities in music and gaming partnerships will not be able to realize their full potential without a more streamlined, flexible music licensing framework for UGC platforms. Such a framework would help facilitate freer creative collaborations among musicians, gamers and other influencers, and essentially lead to free marketing by enabling players and fans to spread the word about their favorite partnerships without fear of getting penalized.

[Pictured: Screenshot of Soundtrack by Twitch, a small and incomplete but nonetheless significant step in improving access to licensed, claim-free music for game streamers.]

3. Exclusive partnership deals with UGC platforms

This is a separate tactic from blanket licensing deals because they are normally done directly with individual artists, rather than with labels and rights holders as a whole. Major examples in this group include Twitch’s seven-figure deal with Logic and Caffeine’s exclusive deals with Offset and Drake.

From the artist’s perspective, the key motivations behind doing an exclusive partnership with these kinds of UGC platforms include not just the significant upfront check, but also the opportunity to expand their reach to more engaged and diversified audiences, and to have the creative freedom to produce other kinds of media aside from just music.

[Pictured: Screenshot from the rapper Logic’s live release party on Twitch for his latest album No Pressure. The stream was the first as part of his exclusive content deal with Twitch.]

4. Live, in-game events

This tactic involves staging live, synchronous performance or viewing expe