Felix Wong is a specialist games lawyer for over 12 years and currently working at Level Up Partners. He has been on the legal team of companies like Epic Games and helped Fall Guys-creator Mediatonic with their explosive rise to fame. He’s been on both sides of the table when it comes to developer/publisher negotiations and therefore has a clear view of the pitfalls in publishing agreements. At IndieGameBusiness Sessions he explains to developers how to avoid these.
“Seeking legal advice throughout the negotiation process is important for understanding contract terms and protecting the developer’s interests. Proactive communication with the publisher is also essential for building a strong working relationship”, says Wong before he jumped on his list of 10 things to be aware of.
Intellectual property ownership: Developers should ensure they own the IP of their game and clarify this in the contract, being mindful of any restrictions imposed by the publisher. “Nowadays I think especially for indie games the starting point should be that you own the IP, so make sure that is clear in the contract.”
Milestone schedules: Clear milestone schedules are crucial in publishing agreements, and developers should plan and communicate their development progress and production timeline effectively. “The key here is to be very transparent and robust with your publisher. Make sure that you really stand behind that Milestone schedule as far as possible. So don’t underplay elements and be frank if you think there are areas which are harder to scope.”
Negotiate the rev share: Negotiating an initial payment upon signing the contract can help with cash flow, and developers should carefully analyze revenue share agreements, deductions, and recoupment terms. “Don’t assume that a publisher is just completely inflexible on this. Very rarely have I seen publishers just slam the door on developers asking or wishing to negotiate the revenue share percentage.”
Limit scope creep: Adding additional features and extended development time can cause problems. Developers should have a strict methodology to prevent scope creep from affecting the project’s expansion. “If we take a step back and we look at the contracts you will only be paid for what’s in the Milestone schedule. So if you choose to voluntarily start adding more features and increasing the months required to develop the game, you won’t get paid for that.”
Review the review Mechanism. Key factors to consider are the time periods for approval, which are typically around 10 business days, and avoiding subjective language in the assessment process. Tying the publisher’s approval to the Milestone schedule helps limit potential unreasonable feedback. “It can be quite tricky because all games are inherently subjective when people play and judge them. So from a developer’s point of view you want to try to limit as much subjectivity in the Publisher’s assessment as possible.”
Align expectations and responsibilities with the publisher through open and transparent dialogue. Clearly communicate and test specific commitments in the contract to avoid unrealistic assumptions. “Having a good relationship with the publishe is the most important thing here. If you have an open and transparent dialogue, then you’re going to dispel any unreasonable or unrealistic assumptions.”
Assess ancillary rights. Evaluate the potential value of transmedia or 360 exploitation of the game’s IP beyond digital entertainment. Negotiate and test the extent of rights granted to the publisher based on the game genre and your goals for IP exploitation. “The exploitation of game IP beyond digital entertainment is a growing trend. Assess the value and potential of these rights based on your game genre and negotiate their inclusion in the contract.”
Understand non-compete clauses and termination scenarios. Be cautious of broad non-compete clauses that limit your freedom to work on other projects. Evaluate termination rights for both parties and negotiate fair compensation if the publisher exercises termination for convenience. Review survival provisions to ensure they don’t hinder your future plans after contract termination. “Research the publisher’s track record and conduct reverse due diligence. Talk to other developers they have worked with to understand their operational approach and reliability. Trust and compatibility with the publisher are crucial.”
Understand the publishing rights and obligations. Be cautious of agreements that grant the publisher the right to publish the game without an obligation to do so. Consider including clauses that compel the publisher to release the game within a specified timeframe. “Test the publisher’s commitments in the contract. If they guarantee a marketing budget, put it in writing. Be specific and clear about the expectations and responsibilities.”
Clarify creative control. While publishers generally don’t interfere with creative aspects, ensure the contract reflects your desired level of control. Focus on selecting the right publisher based on their track record of working with developers. “Understand the publishing rights. Some agreements give publishers the right to publish the game but not the obligation. Ensure there are provisions that compel the publisher to release the game within a reasonable timeframe.”