One of the main questions on the minds of everyone who secretly wants to play Hogwarts Legacy (2022, Warner Bros.) is this - will JKR make money off the game? And I’ve spent some time trying to find out, because I’m also curious about the answer - mostly because it’s pretty hard to figure out exactly how she does make her money.
Now, it’s fair to say that there are a multitude of reasons not to buy Hogwarts Legacy even if JKR wasn’t seeing a single cent off of its sales. Others have made this point much better than me (examples here, here, and here) so I won’t be going into that. This is strictly a look at the business side of things, using the research skills I had to rapidly pick up over several years of business journalisming. Which wasn’t much, to be honest, so forgive me for my rudimentary examination.
Also, rather than link to any Harry Potter-related content, I’m going to just drop in a bunch of music I like to help break up the paragraphs, which are going to get super dense.
First Things First - The Game And The Players
Who exactly is making Hogwarts Legacy? Look at the bottom of the official website and you’ll find four companies listed - Warner Bros. Games, Avalanche, Portkey Games, and Wizarding World.
Warner Bros. Games is an easy one - they’re the games division of Warner Bros., one of the largest media companies in the world.
Avalanche is the developer, though they kick off a weird spiral well before we get to the rest of things. See, there are two Avalanches in game dev - Avalanche Studio, the people behind Just Cause (and the 2015 Mad Max game which wasn’t tied to any of the films, was remarkably OK, and was published by Warner Bros. Games), and Avalanche Software, the developer of Hogwarts Legacy. You might not recognise this second company because their history is a little less stellar - they mostly made tie-in games for Disney movies, and were shut down in 2016 after Disney games stopped selling. Warner Bros. then bought the company in 2017 and set them off making Hogwarts Legacy. They haven’t released another game in that time.
Portkey Games is a publishing label established by Warner Bros. Games in 2017, around the same time they picked up Avalanche, and presumably the same time they said “let’s make a big ol’ Harry Potter RPG”. Portkey Games was established exclusively to publish games that are set in the Harry Potter universe. You might already have played some of them! Remember Wizards Unite, which was shut down after three years of operation? What about Hogwarts Mystery, which was critically slated because the game was designed to make you run out of energy at a time when your character was being strangled to death, forcing you to either wait several hours to recharge or instead spend money? Then there’s Puzzle & Spells, which is making a steady income but didn’t light the world on fire, and Magic Awakened, which was a pretty major success in China before launching in the West.
A quick side note - Portkey Games has stated explicitly, and in several publicly available locations, that JKR is not remotely involved in the venture at all, and any games made under the label won’t be written or worked on by her. Wizarding World are handling all the consultation, which I assume means they’ve been given a lore and tone bible approved by JKR that all developers working with Portkey Games have to adhere to. Anyway…
Wizarding World is a joint venture between Warner Bros. and Pottermore, which handles everything Harry Potter-based these days except the books. So any film, game, digital entity, whatever, is done by Wizarding World. Old-school fans may remember the website Pottermore, where you’d go to get sorted into a House and then… I don’t actually know what. That website became Wizarding World a while ago. The actual company that runs this stuff is Wizarding World Digital LLC, but the Wizarding World is the name of the overall franchise (Harry Potter and Fantastic Beasts combined, basically).
Pottermore still exists! The company remains incorporated in the UK and is essentially the top of this wild and weird pyramid. Pottermore is the digital publishing side of everything, and directly operates Pottermore Publishing, which specifically handles the ebooks and audiobooks and so on. As stated, it’s also a co-creator of Wizarding World alongside Warner Bros.
Following The Money
Now we get to the hard part. We’re lucky in the UK because even private companies have to post their earnings publicly on Companies House, so we can see how much some of these companies generate yearly (though about a year after the fact, which I’ll mention again later) and get an idea of who’s in charge of the companies. But you can still have a whole bunch of different companies and be in charge of lots of them, or own shares but not be in charge, so the money itself gets spread around a bunch of different places.
Pottermore would be the best place to start, since that was JKR’s original company, but it’s difficult to see how much money she directly makes from it. A key thing to note is that she’s not a named director at the company, nor does she appear to be an employee, so none of the £1.08 million the company spent on wages for the company’s 28 employees/directors in the 2021 financial year (FY21) went to her. (That’s an average salary of around £40k.) We can see that cost of sales for FY21 amounted to £29m, and that includes royalties (and commissions, which isn’t explained), so we can assume that a large chunk of JKR’s yearly income comes from there. We can probably assume that “royalties” is purely for the books, since that’s what Pottermore concerns itself with.
Another weird thing. JKR holds at least 75% of the shares in the company. That would be pretty considerably, but according to the FY21 financials, the company paid out £1, the value of the one (1) share that exists in the company. Not an “m” in sight - just £1. This is the same as FY20. So what we can assume from this is that JKR owns every share in Pottermore, and that there is only one share available, and it’s worth a quid. Bizarre.
The really hard part is working out where all the other money comes from. Wizarding World Digital has a UK presence, but it’s not the big cheese of the operation. That would be the Wizarding World Digital LLC incorporated in Delaware, which is recognised in the UK Wizarding World Digital’s financials as the parent company. Why Delaware? The specifics fly above my head, but I think the main thing is that Delaware law usually rules in favour of the company, so it’s really hard to litigate. Also low corporate tax? It’s a confusing thing.
You can access some information about private companies incorporated in Delaware, but it costs actual money, so I won’t be doing that.
Also of note is that JKR is neither a director or a major shareholder of Wizarding World Digital (at least insofar as she is not listed by Companies House), though given that Wizarding World Digital UK didn’t pay out dividends to shareholders in FY19 or FY20 (FY21 financials not currently available), she won’t be making any direct money from the shares. If and how she does make money is nigh-impossible for me to figure out from their financials.
JKR is the director of HPTP Overseas (formerly HPTP Broadway, the HPTP standing for Harry Potter Theatrical Productions), which doesn’t have any employees and has really confusing financials. From what I can tell, it’s essentially a place for the revenues to go from Broadway productions (and presumably other locations outside of the UK) so that they can be taxed and then given to the various directors. But it’s tricky to work out what all this means, and intentionally so. Indeed, there’s another HPTP listed in Companies House, which is where all the profit shares and royalties go, according to their financials. Again, it’s unclear how much of a stake JKR has in this company, but it’s probably significant as she was a founder.
Confused? Because good god I am.
All this to say - there are so many goshdarn companies that JKR is involved with that pinning down exactly how much money she makes and from which entities is super tough. There’s a mixture of royalties and direct revenues from so many different companies that pulling the exact amounts is really dang hard. And purposely so! That’s just how capitalism works - we know that companies make a ton of cash, but we will never know the exact figures everyone involved makes. Plus shell companies galore. Ugh!
She also probably makes a fair bit of money idependently from things like the Fantastic Beasts film series, where she’s been the screenwriter and producer for the last three films. She can command a pretty high price for those screenplays, I’m sure, and she’ll be making a percentage from her production credits. That’s not going to be an insignificant sum. And let’s not forget her side hustle as a mystery writer under a pen name, which no doubt makes some decent scratch, even if the books themselves have their own problems.
So What Does This Mean For JKR’s Hogwarts Legacy Revenues?
It is impossible to tell. Sorry! It’s safe to assume that because of her various business interests, and an incredibly smart business team running them, JKR will make cash on every sale of Hogwarts Legacy. Even if she isn’t getting royalties from it, she probably got some kind of payout at some point sheerly due to her various business involvements and no doubt a tasty deal with Warner Bros. But there’s nothing listed publicly in any of her companies and there’s been no official announcement of any deal, which isn’t exactly uncommon, but does make it nigh-impossible to determine how JKR would make money from the game, if at all.
I do want to raise another question/clear another line of confusion. At lot of people when asked this question will say “well, as long as JKR owns the IP rights to Harry Potter, she’ll continue to make money from any franchise sales”. But what if I told you that JKR doesn’t own the rights to the Harry Potter IP?
According to the UK’s Intellectual Property Office, the trade mark to the Harry Potter name is owned by… Warner Bros. And that’s the trade mark from 1998, so back when JKR probably trade marked it herself (the IPO apparently doesn’t hold that information for very long, so it’s hard to see who owned it originally). At some point in the last 24 years, Warner Bros. took over the IP rights (again, in the UK, at least). So as much as JKR is still heavily involved in and directly makes money from Harry Potter, it’s not just because she owns the rights. Because, as far as the UK’s IPO is concerned, she doesn’t even own it anymore.
That said… At the bottom of the Hogwarts Legacy website, it has this: “WIZARDING WORLD and HARRY POTTER Publishing Rights © J.K. Rowling.” So as much as she doesn’t have the trade mark, she does have the copyright. But according to the US Copyright registry, that copyright is shared with (you guessed it) Warner Bros.
(Now I will admit that I don’t fully understand how trade mark rights work, and now I’m even more confused - please feel free to help set me straight if you’re an IP lawyer!)
But all in all, as much as we can’t directly point to a sentence that proves it, JKR will almost certainly make money from Hogwarts Legacy. Even if she doesn’t directly make money from it (and she probably will via Wizarding World), the fact that Harry Potter will be back in the public consciousness will mean that books will be sold, and with Pottermore handling all the publishing rights to the books, JKR will make a tidy sum from the royalties. If you don’t think a Harry Potter game is going to lead to a resurgence in public interest in Harry Potter as a franchise, you’re not paying enough attention. Warner Bros. Games are going to put tens of millions into marketing the game, putting the Harry Potter franchise right back in everyone’s faces. And there will always be people who haven’t read the books or seen the films. There’s one born every minute.
BONUS: Who Is Neil Blair?
Any investigation into JKR’s UK-based business interests will eventually drag up the name Neil Blair. Over and over again, you’ll find his name listed as the director of Harry Potter-related companies - Pottermore, Wizarding World Digital, basically every Harry Potter Theatrical Productions subsidiary. He’s everywhere - but who is he?
Blair, according to a short profile on Variety, is an ex-Warner Bros exec who left in 2001 to join a literary agency with a big client - JKR. Indeed, it’s been suggested that he helped buy the film rights to Harry Potter, which actually makes sense in the timeline, since the first film didn’t come out until 2001. So we can extrapolate that he worked with Warner Bros. to take JKR’s rights, and then joined forces with JKR to get onboard her money train. And according to that Variety profile, he also masterminded Pottermore, meaning JKR cut out all the middlemen in her book sales - and Blair probably made a boatload of money himself.
He even created his own literary agency shortly after helping set up Pottermore, called The Blair Foundation, with one client - JKR. Blair is so wrapped up in JKR’s story that he went off to make his own company so that he would get all the agent revenues and not split it with another company. That’s wild. The Blair Foundation, naturally, has a strong relationship with Pottermore Publishing, and it also acts as an agent for a huge roster of writers, including “Chris (Simpsons artist)” who you’ve no doubt seen spread around the internet. So just remember that the next time you see his illustrations online - this guy is repped by the company that was built around JKR!
And now Blair’s all over every part of JKR’s empire, acting as a director for basically every venture she’s involved in. Oh and he really loves Israel - his Twitter page at the moment is just loads of RT’s demonising Palestine. So that’s fun.
Hopefully you learned something from all this! I hope that someone with a better understanding of business does a deeper dive into this some other time, but I wanted to have a crack myself just for fun.