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 Features
Negotiating
Contracts That Protect Your Title and Team
In the game
business, as in life, you don't get what you deserve, you get what you
negotiate. The purpose of this article is to offer guidelines that will
help you negotiate a deal with the publisher of your game. By following
these guidelines you will get the publisher committed to your game, and
protect your team in the event that something goes seriously wrong.
Careful
planning and negotiation will ensure you maximize your revenue and provide
you with protection in the event the project is canceled. It
is very important to have an attorney at your disposal for the entire
negotiation process. Even if you do not wish them to handle the negotiations
themselves, you should not enter any agreement without having the contract
reviewed by a lawyer, preferably one experienced in the interactive industry.
Let's Make A Deal!
Prior to
submitting your game to potential publishing partners, you must understand
what type of deal you want and/or need. The type of deal you are looking
for will often determine the underlying deal terms that you can negotiate.
For most
developers, publishing deals fall into four categories:
- Work
for Hire Development Deals
-- Publisher brings the developer a concept, property or franchise and
the developer creates the game based on the publishers guidelines.
- Early
Stage Development Deal
- Developer pitches a publisher on a game that they want to make and
gets funding from the publisher to create the game
- Completion
Funding - Developer creates a game on its own dime and then at some
stage in the development process brings the concept to a publisher that
finances the rest of the game
- Pick
Up Deal - Developer completes the game with its own money and then
sells the essentially complete game to a publisher
Work
For Hire Development Deals
These
deals will yield the least amount of negotiating power from the four examples
listed. In these scenarios publishers are seeking development talent to
create games based on the publisher's licenses or franchises. It is very
difficult to get a strong royalty in these deals. They are a reliable
form of revenue and generally require a smaller staff. This allows the
developer to take more than one contract at a time and balance their risk
out. These deals are an excellent way to make a name for yourself in the
industry and have a steady revenue flow while planning your original game
and creating the initial demo.
Early
Stage Deals
Offering
more negotiating position than Work For Hire deals, these deals are generally
reserved for teams with a solid track record. Requirements for this type
of deal include a solid design document along with a technology demo running
on the desired platform. When pitching Early Stage deals, you will find
the sale to be much easier if you are pitching a game in a genre where
your team has proven itself previously. The number or prospective publishers
is limited due to the budget requirements of these sorts of deals. Publishers
will potentially be paying millions of dollars for these games to be completed
so they will require a certain amount of control in order to protect their
investment. Since early stage deals are quite risky for publishers, they
will generally require more demanding terms that limit the developers
upside.
Completion
Funding
These
deals offer a good balance of creative freedom and negotiating power.
A great demo that shows full playability and demonstrates the unique selling
points of the game is a must for this deal. Publishers realize that their
risk is less here due to the fact that the developer has funded a percentage
of the game from their own money. This will give you a better negotiating
position when it comes down to the royalty rates and ancillary rights
of the game. The more a publisher can see in the initial pitch, the better
chance a developer will have in securing a contract. Many of the Early
Stage pitches do not see contracts until they reach this stage.
Pick
Up Deal
These
deals offer developers the strongest negotiating position of all the deals.
Under these circumstances, a developer has funded the majority of the
title and a Gold Master date is near. Publishers have very little risk
as they are able to evaluate the final version of the game they will be
buying. With this model you will also have the ability to choose between
a country-by-country or worldwide model. The differences in these two
approaches can give you the negotiating power necessary to land a truly
lucrative deal.
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Let's
Make a Deal
