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Negotiating Contracts That Protect Your Title and Team If You Build It, Will They Come? Even the best game in the world will not see it's full potential without a well-organized marketing campaign. If possible, you may want to negotiate a set marketing budget into your contract. This number can be part of the advance in the contract or can be an addendum to the contract. Once a set number has been agreed upon you should receive a package outlining the publisher's strategy and the channels they will use in order to market the game effectively to the public. You should have this package submitted to you prior to the completion of the contract. Always verify exactly what the publisher will need from you in order to do their job effectively. They will most likely need art assets, demos, and the unique selling points of your game. Once the marketing campaign has begun, check in with the marketing department to verify they have everything they need and ask for the costs and samples of the material. Be certain your company's logo is printed on the box as well as included as an .avi at the beginning of the game. This brand building is as important to your company as it is to the publisher. When it comes time to negotiate your next game, you'll be able to point to the store shelves and have people recognize your work. With time some developers build the same brand recognition that publishers have. Id Software and Blizzard are prime examples of this. What
Is The Market, and Is It Covered Properly? If you have signed a worldwide deal with a publisher or a contract that spans multiple territories, make sure that the territory is being supported through marketing and sales. Having a clause in your contract that sets a time limit on the release of products in these secondary territories gives you the option of taking the rights and selling them on your own if the publisher has not located a suitable partner. Your title should also be properly localized into all appropriate territories. Keep this in mind from the very beginning of the development cycle. By submitting a localization summary to the publishers with your proposal you can help them know if the game will be a viable choice for them. For example, your game should be able to support the double-byte characters used in Asia and other parts of the world. By not supporting this, you will alienate a large market and potentially hurt your chances of getting a deal. As a general rule the publisher should handle the translation and the development team should integrate the translated text and voices. It is very important that you make certain your title is properly handled in all of the major territories. If your game is not being actively marketing, the rights should revert back to your company. Cross Collateralization If you are selling more than one title to a publisher at a time, you need to aware of the implications of cross collateralization. By allowing the publisher to cross collateralize your titles you are allowing them to apply the sales of one game across to the next. In other words, if your break-even point is 400,000 units sold and one sells 300,000 units while the other sells only 50,000, you will not see a royalty check. However, if the break-even point were set at 200,000 units per title, you would already be seeing a royalty check for one of your titles. Make sure that each title you sell to a publisher has it's own contract and terms. This will make sure you do not lose revenue on one title due to poor sales of another. Intellectual Property Rights Unless you have been contracted by a publisher to develop a game based on one of their existing licenses, the work you've put into creating the characters and world in your game should be yours. Unless the publisher is willing to pay an additional fee to purchase the rights to this IP you should retain these rights. Important rights to cover in your contract are:
Many publishers
will be adamant about acquiring these rights. If you do grant these to
them, make sure that your team will be the ones responsible for developing
games based on this IP. Term Of The Contract You should
be certain that you keep the term of the contract realistic. Too much
time can result in confining situations where you have revenue opportunities
down the road that you cannot act on. Too little time does not give the
publisher a sufficient amount of time to run through the life cycle of
a game. Today's games can stay on store shelves for many years with the proper support from a publisher. Typically life cycles are as follows:
There is little need to take the next step in the process until sales from the last version have begun to taper off. For this reason, the time period in these life cycles will vary from title to title. Generally a three to five year term is acceptable. Engine Rights If your team has spent the last two years making the next great engine, there is no reason to sign those rights away with the first title based on that technology. Superior technology is one of the greatest keys to securing a publishing contract so publishers will attempt to take an exclusive on a particular engine to prevent competition. This engine has the potential to create extra revenue for you in the future. Epic, Id, and Monolith all generate revenue from the license of their engines that were initially created for their own projects. In preparation for this, make sure that your engine has the proper documentation that you will need in the event it is ever licensed to other developers. If the publisher does demand some form of exclusive on the game's engine, make sure the terms are realistic. If you are developing an RPG, don't let the exclusivity cover all games in a certain time span, especially if that engine can be used to create shooters, or RTS style games. Movies, Toys, Backpacks... Pencil Sharpeners Ancillary rights are an important part of the industry today. Go in any toy store in your local mall and you will see a nice collection of toys based on the franchises in the industry. The Tomb Raider movie is in development and there is even talk of a Perfect Dark television series. The game industry has been acquiring licenses for years based on books, television shows, and movies, but what happens when the opposite is true?
Some rights are just not worth the trouble. The margins you will see in the end compared to the time spent licensing out these rights do not work out. As a general rule on a successful franchise you should look to books, toys, television shows, and movies. Concentrate in these areas first. Starcraft licensing in the Korean market and Pokemon around the world are great examples of stellar licenses, but these are only two of the thousands of games released since 1998. You should seek an equal split for the advance and royalties on these rights. It's Done!! Now What? It's time to start looking at sequels and add-ons. Building a good relationship with your publisher is the key to a long-term franchise that is beneficial to both parties. Publishers will want the rights to add-ons and sequels. Make sure your company will be developing these products or at least have the first opportunity to do so. Secondary platforms are another case. It is becoming more and more common for one publisher to handle PC rights, while another handles the consoles. A general rule is to offer your primary publisher an exclusive period of time to decide if they would like to do the secondary platform. If they do not want to pursue this you are open to shop the game to others in the industry. What if your next title has nothing to do with the first? Unfortunately at the time you are signing your contract you will know very little about how it is to work with the publisher. If at all possible, keep titles irrelevant to the contract out of the contract. If you have a great relationship with the publisher the opportunity will be there later for you to pitch this title and pursue a deeper relationship.
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