Understanding Your Video Game Publishing Agreement - Game Lawyer Q&A
Sep 26, 2024
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Zachary Strebeck, a video game lawyer, joins indie publishing expert Matthew Vernace and contract professional Alan Wilson to unpack the complexities of video game publishing agreements. They discuss key red flags to watch for and the importance of negotiation flexibility. The trio dives into how economic shifts affect indie developers and explores trends in budgeting and funding, noting the balancing act between engaging gameplay and visual appeal. Listeners gain invaluable insights into safeguarding their interests and securing fair deal terms in a challenging market.
Indie developers face increased competition and diminished leverage in negotiating publishing agreements due to a shift in the gaming industry's dynamics.
Publishers now enforce stricter recoupment structures requiring full revenue recovery before sharing profits, impacting smaller studios financially.
Recognizing the importance of legal support, developers are encouraged to actively negotiate terms, especially around rights and royalties, to secure favorable agreements.
Deep dives
Current Industry Landscape
The video game industry has recently faced significant challenges, including job losses and a shift in investment priorities post-COVID. Developers and publishers experienced a surge during the pandemic, but as the economy has stabilized, many companies are reassessing their risk tolerance and marketing strategies. Publishers are now more selective, favoring projects that are seen as safer bets, such as sequels to established franchises, leading to increased competition among developers for publishing deals. This changing landscape has affected the balance of power, where developers have less leverage, especially in negotiations regarding deal terms.
Evolving Publishing Agreements
Over the last few years, there's been a noticeable shift in the terms of publishing agreements, with publishers adopting more stringent recoupment structures. Publishers are increasingly seeking full recoupment before revenues are shared with developers, which can place significant strain on smaller studios trying to survive during the game development process. This has led to a decline in the number of favorable deal terms, as developers find it challenging to secure upfront royalties or negotiate fairer terms based on their previous successes. The dynamic of seeking IP ownership rights from developers has also emerged, raising concerns about intellectual property security for those creating new titles.
Red Flags in Publishing Deals
Several 'red flags' can indicate potentially problematic publishing agreements that developers should watch out for. Long response times from publishers during negotiations can signal a lack of commitment or resources for the project, often leading to issues later on with funding and support. Additionally, vague language around marketing commitments and expenses may indicate that the publisher is not fully invested in the game's success, as their actions may not align with their promises. Developers should seek specificity in contracts regarding marketing strategies and financial commitments to ensure that their interests are protected.
Negotiation Strategies for Developers
Developers, especially those new to the industry, often hesitate to negotiate terms with publishers, which can result in poor deals that lack critical protections. Recognizing their value, developers should know it is acceptable to push back against unfavorable terms, such as payment schedules and royalty rates. A key aspect of negotiation is understanding that publishers want to partner because of the game's potential, thus creating an opportunity for developers to assert themselves in discussions. Having legal support during negotiations can also empower developers to clarify terms and advocate for a fair agreement that reflects their contributions.
Evaluating New Publishing Relationships
When considering a new publisher, especially one still establishing its reputation, developers should conduct thorough research to assess the publisher's track record and ability to deliver on marketing and distribution promises. Engaging with previous developers who have worked with the publisher can provide valuable insights into their reliability and effectiveness in promoting games. It's also essential for developers to ensure that any commitments made by the publisher are clearly outlined in contractual terms to safeguard their interests. New publishers may offer flexibility in negotiation, potentially allowing developers to secure better contract terms, but vigilance is necessary to prevent future disappointments.
Video game publishing agreements can be difficult for indie developers to understand, and even harder to successfully negotiate with the publisher. In this session, join video game lawyer Zachary Strebeck, Matthew Vernace, and Alan Wilson to discuss the major issues that come up with most publishing agreements, what to push back on and what to accept, and other tips and tricks for navigating your publishing deal.
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