You and/or your teammates have worked your fingers to the bone and thrown your hearts and souls into developing your game. And now, because you’ve impressed a potential publisher thanks to your community recognition and/or during a successful pitch, they’ve offered to give you money and market/distribute your game. Congratulations! But wait. That very long, very complicated contract they just sent you potentially holds many traps for the unwary. If you have been offered a publishing contract for your game or are considering trying to get one, read on to learn about some very important contractual terms that you should consider before accepting.
Note: Many of the principles from my article on music licensing can apply to all kinds of game development-related contracts—particularly the need to carefully define who the parties are, exactly what the subject matter of the contract is, how both parties will perform their obligations, how long the contract will last, and in what locations the contract will be in effect. I recommend reading it if you haven’t already, as it will help you begin to think about contracts in a straightforward, accessible way.
In this article series, I will discuss some of the many things you need to keep in mind when you are offered a publishing deal. While I will be walking you through various terms that are commonly found in these agreements, the process of reviewing, negotiating, and revising a publishing contract is complex, delicate, fluid, and carries high stakes. As conventional wisdom says and as I see from working with my own clients, every situation is different and there are no black-and-white answers as to what contract terms are right or wrong for everyone. There is no “one size fits all” when it comes to any kind of written agreement. So instead of making definite conclusions, this series is meant to help you understand publishing contracts generally so you can start thinking about the specifics of your own situation. This article is for educational and informational purposes and is not intended as legal advice. As always, you should consult with a lawyer before signing one of these or any other contracts. In the meantime, keeping the following points in mind will help to demystify these complex and often daunting documents.
First of all: know what you’re giving away and what you’re keeping.
Even if you have the greatest game, it still needs to reach its intended audience in order to generate revenue and build the brand(s) to which it’s connected. This is where having a publisher can potentially benefit you. The publisher will typically advertise and monetize your work, but to do so they will need to have the legal rights to display, reproduce, and sell it—rights that belong to the owner of the game’s copyright. (In general and very basically, a copyright is created automatically when an original work, such as an art asset or body of source code, is put into tangible form. This can include drawing something on paper or writing code in a text editor. The copyright is then owned by the work’s author with some exceptions. In the case of a video game, a copyright also exists in the game itself.) A publisher will usually obtain these rights from the developer in one of two ways:
1. The publisher acquires full ownership of the game’s copyright. If you already have a positive reputation and a following in your medium of choice, a publisher could approach you before you begin working on your next game. In that case, the contract could be structured so that the publisher owns the game and all ot its assets right from the beginning in an arrangement called “Work For Hire”. Another possibility, particularly if you’re a newer developer who shows exceptional promise, is that a publisher could approach you while your game is already in production and the contract ends up being a complete sale (or “assignment”) of the assets you’ve already made, with all assets created from then on also being owned by the publisher while you finish developing the game for them.
2. The developer retains ownership of the game’s copyright, but the publisher gets the licenses they need to market and sell that game. In this arrangement, the developer does not sell the entire game and its assets to the publisher, but gives the publisher written permission to display the game publicly, create and disseminate marketing materials, and distribute copies of the game. These licenses are exclusive to a certain extent, which means that if you’ve contracted with the publisher to have them sell the game in a certain territory and/or platform, you will be unable to permit anyone else to publish the game in that same territory and/or on that same platform as long as the first publishing contract is in effect. These contracts can also have a limited duration and the option to be renewed.
Describe the game you are actually developing.
This is where you and the publisher will define the scope of work and describe the product you will deliver. A sound description of the game, whether it’s found in the main body of the contract, an attached addendum, or a separate Statement of Work will protect both parties by making sure they agree on what the project entails. Describing the game might seem like an easy task on the surface, but you will need to lay out sufficient detail while not being overly restrictive in case the game needs to evolve over time. A few questions to consider here are:
-What are the game’s core mechanics?
-How will multiplayer work?
-How is the game going to be monetized?
-What is the game’s setting?
-What does player advancement/character progression look like?
Additionally, you and the publisher need to agree on the structure of the development process. In other words, here is where your contract will describe the game’s milestones for purposes of receiving feedback and payment from the publisher in exchange for your performance. How are “alpha”, “beta”, and “release” builds defined, and when are those builds due for review by the publisher? When are design documents due?
Understand what the publisher is promising to do.
Of course, a publisher’s financing of the game’s development and post-release payments to the developer are two of the former’s most important contributions to this contractual relationship. Because the monetary aspect is so complex and so vital to a successful publishing deal, I will address it in Part 2 of this series so I can go over it in more detail.
As I mentioned above, the other benefits to working with a publisher are having the game marketed and sold by another company with the resources to promote and monetize it efficiently and effectively. The following are questions to consider when defining the publisher’s role.
What obligations does the publisher have to market and promote the game? I’ve had game development clients come to me for advice on this because their publishers were not maintaining or increasing their games’ exposure. As a result, their brands were languishing and the developers were not able to collect royalties on game sales. To help prevent your game from sitting in a similar limbo, consider whether your contract sets forth a reasonable duty on the publisher’s part to exploit the game—that is, to make appropriate use of it for the purpose of promotion and sales. What marketing and promotional activities will they perform pre-release vs. post-release?
To what extent does the publisher need to keep you informed of such efforts to exploit the work? Are they required to submit proposed marketing materials for your approval, and how often? What does this approval process look like?
Understand what your own obligations to the publisher will be.
Naturally, the developer’s most important duty under a publishing contract is to develop the game. While one might think that goes without saying, you will specifically be required to complete milestones on a schedule. If the publisher does not approve of the builds you submit when the milestones are reached, what is the process by which you will revise the game to re-submit? How “polished” does the release iteration have to be?
You may also be obligated to accept creative input by the publisher if they decide that the game needs to be more marketable or if they find some content objectionable. To what extent can they ask you to change the game, and what is the process by which you will implement the changes?
Your duties to the publisher might not end when the game is released. What obligation do you have to patch, update, or add additional features post-release like we’ve continuously seen in Grand Theft Auto Online? What does the post-release schedule look like, and can it change based on how well the game sells?
We’ve only scratched the surface of a publishing contract’s intricacies. In the next installment, I’ll be going over more of the terms that are typical of this kind of agreement. Stay tuned for my coverage of dispute resolution, termination of the contract, and of course, the money. The ins and outs of the monetary aspect are of vital importance in a publishing deal, and must be considered extremely carefully. I have decided to save that for my next post so I could discuss it more thoroughly. Thanks for reading and I’m looking forward to delivering Part 2.