Risk Aversion and a Clever Diversion
Publishers, as businesspeople, focus
a great deal of attention on risk avoidance. They sometimes even use it as an
excuse to convince developers to accept terms in a deal that are, in reality,
unnecessary or overreaching.
In a deal with a developer the easiest way for the
publisher to minimize risk is to put as much risk as possible on the developer.
So, back-end loaded budgets, long payment procedures and the necessity of the
publisher owning the IP is standard "policy" for many
Well, as a professional negotiator,
I'll tell you what I hear when someone says "it's policy" or "it's
the standard deal in the industry." I hear nothing.
If the publisher
cannot provide a realistic logic-based justification for an adverse contract
provision, make them or don't agree to it. And if the best they can come up
with is "reduction of our risk" be extremely skeptical.
I recently ran into a really clever
ploy by publishers. In order to overcome the objection to IP assignment for
original IP games, instead of demanding the IP ownership in the deal,
publishers are now allowing the developers to retain IP ownership until after
the game is released.
However, the publisher retains an option to buy out the
IP (and in the process the developer's rights to a back-end royalty in the
process) if the game performs above a certain level.
What level, you ask? Well, it is
inevitably some time before the advance recoup point when back-end royalties
would normally kick in if the game is a hit! You really have to admire their
If the game sucks, the developer can keep the IP. But if the game is a
hit, the publisher owns it and the developer gets screwed out of any back-end
royalties in the process!
More Developers than Deals
There is certainly a perception that
there are more developers and games than there are available deals. There
However, that does not apply to the right game at the right
time. Each game is in many ways unique and if you are lucky enough to garner
the interest of a publisher you can rest assured that they believe that your
game will succeed.
It could be unique gameplay, your
team's reputation in the industry or filling the right slot in the publisher's
portfolio strategy. But regardless of why they want your game, once you pass
that threshold, you no longer have one of the many games in the marketplace, you
have the game that the publisher desires.
And, as I already stated,
getting the right games to publish is the whole point of the exercise for the
publisher in order to insure their ongoing success.
So, what does having a long-term
vision for your studio have to do with your negotiations? Initially, the
impression the studio makes on the publisher can make a significant impact on
the course of the negotiations.
Conveying a coherent vision can instill a sense
of competence in the mind of your contact at the publisher -- that the
developers are serious-minded about the long term success of their business,
not just their current game. This level of respect will usually have a positive
impact on the process.
Also, having a long term vision for
the studio can impact the sort of deal that will ultimately be acceptable to
After all, taking a deal that does not provide sufficient revenue
for the studio to survive the development process and stay healthy in the post-release
period is important, especially if the long term goal is to build a great
studio, not just to make a great game -- which should be the long-term goal of