A Comprehensive Guide to Video Game Licensing

From licensing deals to product collaborations and brand partnerships – companies are diving headfirst into licensing, turning franchises like Pokémon, Minecraft, Sonic the Hedgehog, Animal Crossing, Mario Kart and more into global empires. From consoles to consumer products and clothing racks, these games have transformed into massive global brands, with giants like Sony and Microsoft leading the charge.

But how does video game licensing actually work? How do developers protect their copyrights? What’s worth licensing, and what’s better left untouched?

In this guide, we’ll break it all down – what brand licensing is in the world of gaming, why it matters, and how it shapes the games we love.

Whether you’re a gamer, a game publisher, a game developer, or just curious about how brands sneak into your favourite digital worlds, this is your ultimate explainer. Read on.

Video Game Licensing: A Definition

Ever wondered how Batman, Ferrari, or even a can of Red Bull end up in video games? That’s the power of brand licensing.

It’s why FIFA has real sports teams, Marvel superheroes show up in fighting games, and brands like Warner Bros have expanded their movie universes into interactive gaming experiences.

Licensing in games works both ways. Game developers can feature real-world brands, logos, and characters in their games, while gaming franchises extend their intellectual property (IP) into merchandise, film franchises, and collaborations.

Ultimately, this allows studios to add authenticity with real athletes, cars, or fashion brands, while consumer companies tap into gaming audiences for exposure, relevance and impact.

The Benefits

Whether bringing brands into games or taking games into the real world, licensing creates huge opportunities for both industries.

Ultimately, by integrating well-known brands or bringing beloved characters to life, games can create richer, more immersive experiences, attract bigger audiences, and unlock new revenue streams. Here’s why it works:

1. It attracts more players.

When a game partners with a well-known brand, it instantly grabs the attention of that brand’s loyal fanbase. This means the game reaches people who might not have otherwise turned the other way – boosting its visibility and player base. It also allows the brand to benefit from the extra exposure – boosting brand recognition and brand awareness. It’s a win-win for both parties.

2. It enhances gameplay and storytelling.

Adding branded content like recognisable characters, famous locations, or iconic products can make a game world feel even more alive and engaging – especially when it taps into nostalgia or personal interests.

Fortnite is a prime example of this – players can step into the shoes of beloved characters from Disney, Marvel, or even exclusive Sony franchises. Seeing familiar faces or places in a new context makes players feel more connected to the game and eager to keep exploring.

3. It creates exciting cross-promotions and activations.

One of the best parts about licensing is how it paves the way for unique promotions, special in-game events, and limited-edition items. Ultimately, these collaborations keep the game feeling fresh, exciting, and full of possibilities.

Crucially, they also help to generate buzz across social media and marketing channels – sparking conversations and engagement. We all know how exciting it is when two of our favourite things come together – whether it’s your favourite TV show, comic book character, or film showing up in a game.

4. It drives revenue.

Brand partnerships are a goldmine for generating extra revenue. Why? Because players are often drawn to exclusive, branded content – like special skins, limited-edition downloadable content (DLC), or collectibles tied to a brand they love. This exclusive content not only makes the game feel more personalised, but it gives players something unique to show off.

5. It builds credibility and trust.

When a reputable brand is linked to a game, it instantly boosts the game’s credibility. Think about it: players are more likely to trust a game that’s partnered with a brand they already know and love.

That partnership acts as a stamp of approval, signalling that the game is high quality and worth investing time or money into. This connection helps build trust with the player base, making them feel more confident in their decision to play the game. Ultimately, a game with strong brand associations is often viewed as more reliable, giving it a better reputation in a crowded market.

Successful Video Game Licensing: Case Studies

Video game brand licensing is a powerful way to expand franchises, attract new fans, and create exciting partnerships across industries.

Here are some standout examples that show how it’s done:

1. LEGO x Star Wars

LEGO has mastered using popular film franchises like Star Wars (not to mention Harry Potter, Batman, Jurassic Park and more) to create video games that fans of all ages love.

By teaming up with Star Wars, LEGO didn’t just bring the galaxy far, far away to a younger audience – it added a playful, family-friendly spin to the iconic franchise. By appealing to film fans and LEGO lovers, the partnership allows both brands to reach new audiences, boost brand visibility and keep customers engaged.

2. Call of Duty x Culture Kings

In 2024, Call of Duty dropped its first-ever streetwear collection with Culture Kings, a globally recognised fashion brand.

Blending fashion and gaming, the collection was designed to celebrate two decades of Call of Duty’s legacy, allowing fans of the iconic game to wear their hobby with pride outside of the digital world.

By tapping into both gaming and streetwear culture, the collaboration struck a chord with fans of both brands – it not only spoke to the gamers but also pulled in fashion fans who were after something exclusive and cool.

3. McDonald’s & Sonic the Hedgehog

McDonald’s has always been good at teaming up with popular brands for its Happy Meal toys, and Sonic the Hedgehog is no exception. Over the years, we’ve seen Sonic-themed toys pop up in Happy Meals more than once.

For those of us who grew up with Sonic in the ‘90s, it’s a trip down memory lane. Crucially, it’s also a chance to share that nostalgia with our kids, and let them experience the fun we had.

Plus, when McDonald’s drops a toy tied to a beloved franchise like Sonic, it’s not just a toy – it becomes a collectible. This not only boosts demand for the product, but adds a sense of special value that benefits both brands.

How Does Brand Licensing Work in Video Games?

As we’ve established, licensing in video games is like giving a game a special pass to use a well-loved brand to make the game even more appealing. The game developers enter into agreements with the brand owners to legally use their intellectual property, which adds credibility and fan appeal to the game.

But when it comes to licensing in games, there are a few factors all parties need to consider.

1. Licensing agreements and contracts

Licensing agreements and contracts are the official paperwork that makes sure everyone is playing by the same rules.

When a game studio (for example PlayStation, Xbox or Nintendo) wants to use a brand, they have to negotiate a licensing deal with the brand owner – for example a film franchise or sports league. This agreement outlines exactly what the game can and cannot do with the brand, the duration of the license, and any specific terms like quality control or creative direction.

Ultimately, no new game should be made without a licensing agreement in place. It’s absolutely essential when it comes to avoiding legal issues and making sure that both parties are on the same page about expectations, rights, and responsibilities when it comes to the licensed IP.

2. Securing a license for branded content

Securing a license for branded content in video games involves a few key steps. First, the video game developer needs to identify which brand they want to use and approach the brand owner with a proposal. If the brand is interested, they’ll begin negotiations to determine the terms of the agreement, such as usage rights and fees.

Once both parties agree on the terms, the contract is signed, and the developer can begin integrating the brand into the game.

Bear in mind: the process requires careful planning and communication to ensure that the brand is represented in a way that aligns with both the game’s goals and the brand’s image.

3. Cost considerations and revenue-sharing models

The cost of licensing varies widely depending on the brand’s popularity and the terms of the agreement. Some brands might ask for a flat fee for use, while others may want a percentage of the game’s revenue, often through a revenue-sharing model. This means that whenever the game makes money, a portion goes to the brand owner.

Costs can also include upfront payments, royalties, and sometimes even performance-based incentives based on how well the game sells. A revenue-sharing model helps ensure that both the developer and the brand owner benefit financially as the game succeeds.

4. Brand control and creative restrictions

When a developer licenses a brand, they don’t get complete creative freedom. Brand owners often set strict rules and guidelines on how their IP is used, ensuring it stays true to its image. This might include approving character designs, storylines, in-game mechanics, and even marketing materials.

If the brand isn’t happy with how it’s represented, they can request changes – or even revoke the license in extreme cases, so it’s vital to make sure that brand guides are requested – and adhered to.

5. Exclusivity and competition

Some licensing deals come with exclusivity clauses, meaning the brand owner agrees not to license the same IP to competing games during the contract period.

This can be a huge advantage for a developer, as it prevents rivals from using the same brand to attract players. This can help the game stand out in the market and create a more loyal fan base, as players know they’re getting something unique.

That being said, exclusivity often comes at a higher cost. Developers might have to pay a premium for the privilege, as the brand owner is essentially giving up the opportunity to license the IP elsewhere.

6. Time limits and renewal terms

Licensing deals don’t last forever. Most contracts have a set expiration date, after which the developer either has to renew the agreement (sometimes at a higher price) or remove the branded content from the game. This is why some games lose licensed features, like sports teams or film characters, after a certain period.

It’s also worth noting that if the brand owner decides to partner with a competitor, it can force the developer to pivot and either adjust the game or replace the licensed elements, which can be costly and disrupt the player experience.

Best Practices for Licensing in Video Games

When incorporating licensing into games, it’s crucial to follow a set of best practices to ensure the partnership is successful, seamless, and mutually beneficial for both the game and the brand. Here are our best practices for you:

1. Researching brands that fit your game’s audience

When it comes to brand licensing in video games, the key is picking brands that resonate with your players. To create a game that grabs their attention (and keeps them hooked!), you need to know your audience inside and out. What are they passionate about? What brands do they already love? What makes them tick?

This goes beyond just their age – it’s about understanding their interests, behaviours, and what motivates them. For example, if your game is aimed at Gen Z, you might want to partner with brands in fashion, gaming tech, or even sustainability.

The key is making sure the brand aligns with your game’s world. Ultimately, the more natural and authentic the partnership feels, the stronger the connection with your players.

2. Negotiating favourable terms with licensors

Getting a solid deal with licensors is essential. You’ve got to know what your game can bring to the table – exposure, engagement, and maybe even a sales boost for the brand.

A good licensing agreement should clearly outline financial terms, the length of the license, how the brand will be used in the game, and any restrictions (like geography or platform).

The goal is to balance the brand’s needs with your creative freedom, and make sure the deal allows for flexibility in case anything changes.

3. Making brand integration feel natural

Brand integration should enhance the experience, not disrupt it. Whether it’s a logo on a character, branded items, or even a whole branded environment, it has to blend seamlessly with the game world.

Ultimately, the brand should feel like a natural part of the narrative and setting, not a distraction. For this to work, the game developers and the brand must collaborate to make sure it feels organic. Done right, it benefits both the game and the brand – players feel like it belongs, and the brand gains positive association with the experience

4. Testing brand integrations with players

Before making a brand partnership official, put it to the test. Run it by a focus group or slip it into a beta version of your game. Real player feedback will flag any awkward moments and confirm whether the integration feels natural. If it doesn’t click with players, it won’t click at all. This step makes sure the branding adds to the experience – not sticks out like a sore thumb.

5. Navigating legal and ethical considerations

When using third-party intellectual property, it’s critical to ensure that all legal requirements are met.

This includes acquiring the proper licenses, following local advertising laws, and ensuring the brand integration does not mislead or exploit players. Protecting both your game and the brand legally and ethically is vital to maintaining a trustworthy and transparent relationship with your audience.

Want to explore more?

Ultimately, brand licensing can expand your reach and create fresh, unique experiences for players. Whether it’s gaming partnerships or consumer products, the right approach connects developers and brands in meaningful ways.

Whether you’re looking to integrate anime, mobile games, or E-sports, the right licensing strategy can elevate your brand to new levels. But, as with any great strategy, success lies in the details –choosing the right agreements, making integrations seamless, and staying legally sound.

At Studio Noel, we’re experts in creating impactful brand experiences and building strong brand partnerships. Whether it’s in-game features, immersive experiences, interactive campaigns, or new platform expansions, we handle the details – licensing, design, and everything in between

Got a project in mind? Let’s talk.