Why a failed video game cost Warner Bros. $200 million
Chris Pizzello/AP
- Warner Bros. Discovery reported a $200 million loss on the game "Suicide Squad: Kill the Justice League."
- It's a reminder of how similar the video-game business is to Hollywood: big expenses, big rewards, big penalties for missing.
- Big media companies can't ignore video games. But should they be making their own?
Did you play "Suicide Squad: Kill the Justice League," the video game that came out in February?
Me neither. And the problem for Warner Bros. Discovery, which released the game, is that very few people did, and the ones who did really didn't like it.
And that led the company to take a staggering $200 million loss on the game, which it disclosed in its first-quarter earnings on Thursday.
WBD's chief financial officer, Gunnar Wiedenfels, described the game's results as "disappointing," and the company repeatedly pointed out the impact of the game's failure on its bottom line. Particularly since a year ago it had a massive hit with a different game, "Hogwarts Legacy."
All of which points out something the games industry has been grappling with for some time: It looks more and more like Hollywood. That means it places very big bets on would-be blockbusters, which are increasingly tied to intellectual property that's been successful in the past. When that strategy works, it's great. And when it doesn't …
But even by those standards, "Suicide Squad" is a spectacular dud, in line with some of the worst mistakes a movie studio has ever made. In 2012, for instance, Disney announced it would take a $200 million charge for "John Carter"; a year later it said it would lose up to $190 million on "The Lone Ranger."
All of which might make you question, yet again, if a Big Media company ought to be in games at all. Big Media doesn't have an answer to that question, by the way: Sometimes companies like Disney make really big investments in games, correctly assessing that the people who watch their TV shows and movies also spend a lot of time playing games; sometimes they pivot out of that strategy after concluding that making good TV shows and movies doesn't give them a leg up when it comes to making games.
Warner Bros. Discovery has gone through that indecision in the past. Its previous owners thought they might sell the company's game business, then decided to keep it.
You can see it at other Big Media companies — like at Disney, which has made multiple forays into games and pulled back, and most recently announced a $1.5 billion investment in Epic Games, the company behind "Fortnite." And Netflix started building its own games division a few years ago, though the results seem underwhelming so far, and the company has been rethinking its strategy as well.