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Game Law: So, What's the Dealio?
 
 
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  Game Law: So, What's the Dealio?
by Tom Buscaglia [Business]
12 comments Share on Twitter Share on Facebook RSS
 
 
October 23, 2008 Article Start Page 1 of 3 Next
 

[In his latest Game Law column for Gamasutra, veteran lawyer Buscaglia discusses how developers should work with publishers on a contract for your game - urging active, intelligent negotiation at all times.]

The proper negotiation of a contract is a process that is too often ignored by developers, especially those eager to get a deal. I suspect that part of the reason for this is that the stereotypical game maker neither likes nor enjoys the process.


The harsh reality is that many, if not most, publishers are so used to developers being passive about the negotiation process that they have become arrogant and unwilling to actually engage in a meaningful negotiation dialog with developers.

Instead, they too often become rigid and inflexible when it comes to their contract negotiations. And I suppose this attitude comes in part from, among others, the following factors:

  • An overwhelming financial advantage held by publishers in the relationship
  • Publisher risk aversion
  • The perception, at least, that there are more developers than deals
  • A failure by developers to have or communicate a long term vision for their studio
  • A lack of appreciation of the "process" of contract negotiation
  • Developer fear, rather than appreciation, of being exploited

These factors are certainly not present in every deal dynamic, nor do they apply to every publisher or developer.

Moreover, with the vast array of innovative approaches to succeeding in the industry, even the traditional developer-publisher model is hardly a standard for the way we do business.

However, there may be some value to just accepting the stereotyping for the moment and proceeding with the discussion to see where it takes us and what we can learn in the process... so, shall we proceed? 

Publisher Financial Advantage

Sure, the publisher has the money. And lots of it. And the developer needs the money to make the game and build their studio. What possible leverage can the developer have in a situation like that?

Well if you look at it like that, it may actually make sense to take whatever deal the publisher offers and just "take your beating like a man." But, I don't think so. 

Step back a little and consider what it is that the publisher sells... games. And what does the developer have that the publisher does not?

A game. And all the money in the world is useless to a publisher if they have no games to sell -- unless they want to open up a bank. 

Oh yes, they want and need your game. If they didn't, they would not be talking to you. The old Steve Miller song, "Your Cash Ain't Nothin' but Trash" comes to mind.

So, while the developer may desperately need to dollars, the publisher needs the games. I sense the makings of a mutually beneficial business relationship.

 
Article Start Page 1 of 3 Next
 
Comments

JeanMi Vatfair
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The real problem is that the developer is passionate about his job, while the publisher is passionate about money. You rarely become an independant studio with the purpose of making money. The ability to make a living of his passion is too often a sufficient reason to create a studio.
To have a balanced negociation, both should be aiming for the money. The video game studio really needs to have that approach if it wants to survive.

j kelly
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Yes, Jean, that is absolutely correct. I think there was an article on Gamasutra recently that dealt exactly with that issue. Design cannot be law if the design is solely for one game developer to "just make a game that only *I* want to play."

To survive in this business, you have to be damn sure what you are making will be fun for others to play. The rest will fall into place after that!

Lindhart Grant
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I have to disagree with you, JeanMi.

Developers should focus on making great games, publishers should focus on marketing those games. A great game will generate money if the marketing is done properly.

Darius Kazemi
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Lindhart: sure, a great game will generate money. But FOR WHOM?

Lindhart Grant
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Darius:
Yea, there's got to be a little thought about money, especially when negotiating a deal, but that's one of the reasons dev studios have lawyers for, isn't it?

JeanMi Vatfair
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To Lindhart Grant : Don't misunderstand. What I'm trying to say is, studio managers are too often creating their business with passion as their motive. It's really hard to have both passion and eager to grow your business. And managing a studio IS a business.
I'm myself employed by an independent studio, and I know how this badly impacts our salaries.
What I'm afraid of is that the developer is too often treated like a child that only thinks about games. And eventually this unbalance in the negociation is part of the publishing business model.

Lindhart Grant
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ahh, i understand now. thanks for clarifying :)

David Sassen
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A pretty confusing article from the start. You say in "Publisher Financial Advantage":

"And the developer needs the money to make the game and build their studio. What possible leverage can the developer have in a situation like that?"

You then provide your answer to what leverage they have:

"And what does the developer have that the publisher does not?

A game."

I don't think anyone with a fully-functional, sellable game is wringing their hands over negotiating with publishers. If the publisher doesn't have to pay for the development of the game, negotiations are going to be pretty durned easy.

Stephen McDonough
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There's more to it than that David. It's just a succinct way of putting things in perspective. If a publisher is willing to come to the table with a development studio, clearly the developers have something the publishers want. The physical reality might only be a prototype, but the publisher is investing in the ability of the studio to create a marketable game. That's why they're at the table.

It's like any new product. If it's feasible and possible and prospective investors can see profit, they'll want to make a deal. Just because what you have isn't a reality yet doesn't mean the investor should have all the leverage in the bargain. It'll never be a reality without the co-operation between both parties, and if you look at it like that, money is everywhere, the next big thing isn't.

Clark Stacey
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I think David's point is nevertheless sound in the majority of game development contracts, which are work for hire deals based on IP the publisher already owns or controls. I think it's most common for developers to be negotiating as contracted providers of development services, not auteurs dangling the next big thing in front of the publisher.

Peter Kojesta
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Mr. Dillan,

Perhaps a bit of history to take into consideration: http://en.wikipedia.org/wiki/Gathering_of_Developers


This article scratches the surface of this process in a way that is meaningful to anyone not familiar with it, and I want to extend my thanks to Mr.Buscaglia for writing it.

Jason Bakker
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Thanks for this article - it puts creating an original-IP startup into a perspective that isn't horribly depressing and scary for the developer. On the other hand, you keep expectations for what the developer needs to provide the publisher realistic (ie. pitching a game the publisher actually wants, and being able to ensure to the publisher that you are capable of creating it).

Cheers!


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