Business Report: Warner Bros. To Carlsbad, Chick-Fil-A Versus Popeyes, Johnson & Johnson Role In Opioid Crisis
Q: Warner Bros. announced it's looking for developers. This week the company announced plans for a mobile games studio in Carlsbad. When most of us think of Warner Bros. we think of Movies like Harry Potter and Batman. Miro, what does this expansion into games mean for Warner Bros. San Diego?
A: Well, it shows that San Diego is kind of becoming a hub for mobile games. There are a couple of other mobile companies here in San Diego like JamCity or Redemption Games. This is gonna be their 10th location for Warner Brothers interactive games, they're going to focus on free-to-play mobile games. Like you said, it's has franchises like DC Comics and Harry Potter and Game of Thrones. Why they want San Diego is because there's a lot of development talent. It's less expensive than L.A. There's a lot of talent in L.A. that used to be in television and movies that knows long form storytelling which is the basis of video games, and so with the popularity of E-sports and all these online games, San Diego becomes a mecca. And what's great about San Diego is that now we're starting to get little hubs, not just being successful with biotech and life sciences, but we have our little hubs of golf, action sports, now games. So pretty exciting time for San Diego.
Q: This week a judge in Oklahoma ordered Johnson & Johnson to pay $572 million for it's role in the opioid crisis. How significant is this judgement?
A: Wow, at the face of it sounds like it's a huge judgment. The fact of the matter is it's way below what the state attorney general was asking for in terms of a penalty of $17 billion. So it's just 5% of what the state attorney general was asking. Oklahoma is the focal point of the opioid crisis. It's the worst state in the union. The judge even had evidence it showed that in 2015 over 300 million pills were dispensed in the state of Oklahoma enough for one hundred and ten for every adult in the state.
The argument was “am I selling aggressively in terms of efficacy of the product?” or “am I not telling doctors the addictive properties?” And this is a major precedent setting move, because the other thing that Oklahoma does is that most of the $150 billion in lawsuits that are out there right now, the kind of arguments that the other lawsuits are making, are very similar to what was made in Oklahoma. If those judgments are going to be less than what the state attorney generals are asking for that's going to be a big problem.
In fact this past week 10 state attorney generals met with Purdue Pharma which is the maker of Oxycontin, and they pitched $10 billion to settle all the lawsuits at once. That's still an ongoing negotiation. It's a fraction of what it's going to take to take care of these individuals that are addicted.
Q: Lastly, a fun one, Chick-Fil-A vs. Popeyes! There's been an ongoing hilarious online debate about which restaurant has the better chicken sandwich. Which was all fun and games but now Popeyes is being sued by a customer who says the restaurant is guilty of wasting his time and false advertisement because the location he was at ran out of sandwiches. Is all this added attention really translating into sales?
A: Well, for Popeyes, they've launched their first chicken sandwich ever on the menu on August the 9th. It's very similar to the Chick-Fil-A sandwiches; a buttery bun with pickles. For Popeyes, they started a Twitter feud with Chick-Fil-A which prompted more attention. They sold out of their entire inventory. They're expected to sell out this week. They'd bought inventory through the end of September. So they're going to continue this chicken sandwich. And this is a major issue because the chicken wars we talked about this before with McDonald's franchisees really concerned about Chick-Fil-A.
Chick-Fil-A is the number one player in the marketplace with over overtaking KFC and the franchisees of Chick fil A makes $6 million a unit whereas the franchisees of Popeyes make about a million and a half. So Popeyes franchisees have a lot of ground to make up but they have a good sandwich.