How not to fall into a trap of publishing deal

Hiring a publisher may be beneficial for many reasons. Firstly, you may take advantage of marketing power the publisher has for publishing and promoting your game. 

However, there’re plenty of obstacles you have to overcome during the negotiation period as publishers tend to provide fix contract terms, which aren’t always attractive for a developer. They often get their contracts executed by lawyers while the developer can’t afford this. Thus, practice shows there’ll be at least several deal points that put the developer at a disadvantage.

Bearing that in mind, it’s better to consider all terms attentively not to get into a trap. 

Entering into a contract

The first thing you should do before ratifying the contract with the publisher is to read it carefully. It sounds like a commonplace to talk about the necessity of reading contracts before signing but it’s worth mentioning every time. Publishers’ boilerplate contracts might contain milestones hard to notice at first sight. Spend your time to look for them and be prepared to offer an alternative. 

Unclear timeframe

Publishers’ contracts often either give them considerable freedom in running their offices or deliberately omit the timeframe clause. Be sure to check these terms are added to the agreement. When you deliver your game you expect the publisher to get to work on it as soon as possible. But having failed to put the deadline in the agreement, you empower the publisher to play for time when he’s overloaded with other projects. If you add the deadline and he misses it, you’ll be able to terminate the contract. 

A time limit is a great possibility to fight against publishers when they are reluctant to publish and promote your game. When they’ve violated commitments, you send a notice of your intent to cancel the contract, which gives them 30 to 60 days to accomplish their work. Then, if nothing is done in time you’ll have the right to take your game elsewhere.

Ownership of a game as intellectual property

When you work for hire you might like to retain ownership of your game, which obviously will cause dissatisfaction from the publisher’s side. Your desire may provoke a considerable dispute if the publisher is funding the development process.   

However, nowadays publishers, especially indie pubs, are more inclined to agree with developer’s claim. Though, allowing you to do this they might ask for concessions:

  • A right not to publish sequels, expansions etc. 
  • A right to use the trademark
  • A right to use the game intellectual property such as software code, etc. for their own games

The major matter of argument is the ownership of tools and technology. Every developer usually has his own set of tools which let them save time on the development of future games. No one prefers to make follow-up games from scratch.  As the most treasured piece of intellectual property tools and technology should be either excluded from publisher’s grant of rights or you’d better outline the scope of their use. You can go different ways:

  • Allow the distribution only in connection with the game
  • Limit the use of games based on the game intellectual property
  • Grant limitless intellectual property rights

Plus one more important issue you should pay attention to in your publisher-developer relationship. 

Approval procedures

The approval process is a real time bomb. The publisher naturally wants as long time to approve the project as possible while the developer is losing money on the deal. 

On the publisher’s side, especially when he’s overloaded with work, that’s an excellent opportunity to postpone your project.  This goes against developer’s expectations since his revenue entirely depends on his ability to reduce the period of approval to smallest: the faster the publisher gets into gear, the faster the developer is paid.  Not to go out of budget you’d better take action and negotiate the following things:

  1. Demand the shortest period of approval (5 to 10 working days);
  2. Make the publisher state reasons for disapproval and how it may be fixed;
  3. Agree to regard missed deadlines and silence as approval.

Unfortunately, the developer may try to balk some of above-mentioned points, so be ready to give up something less important to you for greater approval terms.

Distribution of responsibilities

Responsibilities are what you should scrupulously negotiate and put down in a publishing agreement. If you fail to negotiate at the stage of approval, you risk making the bomb detonate the time when little can be done to improve the situation.

Let’s define which particular responsibilities are concerned. For example, when your game is published, you should be aware of publisher’s responsibilities regarding promotion. There might be the following issues: the publication of social media posts, advertisement campaign, funding etc. 

Without proper discussion of future promotion activities, the publisher can think that you put it in his hands. As a result, if he doesn’t have a keen interest in your game, it might disappear from view without appropriate promotion. It may happen straight after the publisher’s cut his losses. Obviously, this situation needs control as it endangers the chance of getting royalties.  

The terms of post-launch game support, for instance, bug fixing, dealing with customers and so on, are to be added to the contract. You need to decide whether you expect being paid for this work or not. The same with the participation in promotional activities; ask yourself whether you’re going to take part in the promotion or not.

Putting down all the above-mentioned in the contract you will resolve the ambiguity.

The matter of payment

Developers sometimes may offer only licensing a game without prepayment to the developer. You will be paid royalties later but whether it’s satisfactory for you as a developer is a big question. Why miss the most advantageous part of working with the publisher such as financial support. 

Agreeing on upfront payment the publisher shows the strong determination to work hard on your project. Don’t skip the opportunity to make the developer have skin in your game.

The prepayment is a part of your future royalties and that’s clear. While it goes well with the prepayment, other withheld costs may lead to misunderstanding, especially, while you become aware of them after signing the contract. The publisher’s deal is undoubtedly a risky one but their readiness to include all expenditure in their cut shows their actual power and reliability. If you hear them say about their unreadiness to invest it should make you think twice. 

Follow-up games

The question of sequels or any other games based on yours is worth separate agreement if it’s possible or at least you may put down in the contract the publisher’s right to refuse from publishing sequels and your right to make them on your own.

This issue is very close to ownership one discussed above and can’t be left out of the agreement.

Advertisement and sales decisions

Decision-making concerning marketing the game is the major responsibility of publishers and the main reason developers turn to them. The professional knowledge, marketing experience, and built-in audience are what each developer expects the publisher to have, as many start-ups don’t have a vast fan base and enough knowledge to market their games on their own. 

Despite the fact that an advertisement campaign and sales are mostly under the publisher’s control, the developer may also be involved in the process to some degree. For example, when you don’t want your game to be sold in bundles as it reduces the price, you may ask for this concession. Though, it’s uncommon for the developer to have the final say on marketing strategies.

Funding for long-term contracts

Funded by the publisher, a game studio faces particular risks in terms of accounting and taxes. It might happen that the publisher invests a big deal of money in the project at the end of the year and your studio risks to pay taxes on publisher’s money due to default accounting. Awareness of how the tax system works, particularly, that the income taxes are to be paid in the following year will protect your company from losing money.

If you aren’t an expert, a reasonable decision will be to hire a tax advisor before signing the publisher’s contract.

Specific provisions

Some publishers impose the requirement of defining a key man in the development process and put the provision stating that the key man has to stay on board throughout the project in the contract. The publisher believes that the key man presence is vital for the project prosperity and his leaving may affect the whole deal up to terminating the contract.

Therefore, this clause needs a careful consideration from the developer’s side. If it turns to be impossible to cross out this clause, make sure there is an alternative for you.

Terms unfavorable for the developer

The agreement templates suggested by publishes are often one-sided with no exit for the developer. It is unfair as publisher’s work on promoting your game is also the subject for scrupulous assessing. If it isn’t fulfilled as the developer expects, he should have the right to break up. 

In practice, most contracts give no possibility for the developer to terminate the agreement unless the publisher breaks the terms. Therefore, while you negotiate, try to agree on termination clauses applicable to both sides.  You may include the following:
minimum of units you expect to be sold or revenue from selling for particular period; 
the condition that if the game becomes unavailable, the developer may regain the right of the game;
concrete period instead of perpetuity, which give possibility to assess the work and decide whether you are ready to continue working in partnership.

The negotiation of terms is challenging, especially if you don’t have a proficient consultant in your team.  But your eagerness and ambition to reach agreement will obviously win you some concessions. Be ready to negotiate continuously. 

Should you confront the publisher?

Find this question tricky enough, since the confrontation may diminish your chances of success? Of course, you should, and even must do this when the contract terms are onerous for you.

Some developers who haven’t experienced success yet are shy to dispute and ready to sign the contract closing their eyes on above-mentioned issues. Doing that, they will hardly succeed either. There’s no approval for shyness and lack of self-confidence when your project and revenue are at stake. 

Respect yourself for what you do

The main thing you should hold in mind dealing with the publisher is his interest in publishing your game. That means that your work or the mutual work of your development studio has value. The publisher has the same natural desire to make money together.

Your confidence in the project and understanding of what you want in the end will gain you considerable advantages during the period of negotiation. Stop underestimating yourself and keep your presence of mind dealing with the publisher.

Equal partnership

The publisher-developer relationship is a partnership, where two sides are equal and are ideally keen on getting the maximum out of the game. The success from this kind of partnership may be reached only due to terms favorable for both sides. Therefore, if the publisher insists on signing the contract without leaving space for negotiation, you’d better question the publisher’s expertise. The ‘take or leave it’ approach must be a red flag for the development studio.

Practice shows that proficient game publishers, it doesn’t matter big and small ones, rarely refuse to make changes to their agreement based on adequate developers’ demands. There are always stuff they won't make concessions to, but it’s just little part of what is possible to improve.

Legal services as the strongest support of game development firms

Now when you are aware of most controversial issues in a publisher-developer relationship, it’s high time to weigh the consequences of not sporting any of them and decide whether you’ll be able to cope with these issues on your own. If not sure, hire an attorney to support you at the beginning. When it’s your first experience, the attorney working on behalf of your development studio will strengthen your position.

Video game development is a specific sphere of business, so try to find an attorney with the experience of work in this marketing segment. A lot of them offer free consultation and are ready to work out the payment scheme that is convenient for you.

Outsourcing is an excellent possibility that many powerful companies use nowadays. The greatest advantage of it is cost-effectiveness and guarantee of quality.  However, if you are confident in your knowledge you may do it on your own.