CONTRACT KILLER 4: Bad Licence Terms (Time & Territory)
A publisher needs permission from the developer of a game before the publisher can actually publish or distribute that game. This permission is usually provided for in the publishing contract in one of the following ways:
- an Exclusive Licence (the most common way); or
- an Assignment i.e. the publisher buys the intellectual property rights in the game or a % of those rights off you (not ideal but may be acceptable in certain circumstances)
Assignment of IP deserve an entire “Contract Killer” article to itself so this post will focus on licence terms only.
Kill Publish your Game
In non-legal terms a licence is the permission that you give someone to do something. For example, James Bond's “licence to kill" is the permission granted by the UK government that allows him to murder certain people on behalf of the state without legal consequence under English law.
In the context of a publishing agreement the publishing licence is the permission granted by the developer to a publisher that allow that publisher to publish the game on the developer's behalf.
Most publishing licences are “exclusive”. This gives the publisher the right to be the only person allowed to publish, market or promote your game - this would also exclude the developer from self-publishing.
Licences granted to publishers are normally limited in the following ways:
- Term: the length of time during which the publisher can promote and sell your game (usually between 5-10 years);
- Territory: the countries around the world where the publisher can promote and sell your game (this can vary from publisher to publisher); and
- Platform: the distribution channels where the publisher can sell your game e.g. Steam, PlayStation, Switch (these can vary from publisher to publisher).
The widest possible licence could last for an indefinite amount of time, cover all countries worldwide, and all conceivable games platforms available now and in future.
Example of a “Publishing Licence”
Raw Fury made their publishing contract available at the end of last year, and this is what their publishing licence clause looks like:
If you can excuse my scruffy highlighting and underlining then you will see that this example shows a licence granting Raw Fury exclusive rights to publish the developer’s game (and merchandise) during the Term, throughout the Territory, and on the Platform(s).
What can go wrong?
1. Indefinite Term.
If done wrong an exclusive licence can effectively mean the same thing as assigning your IP to the publisher. For example, a licence that continues for a perpetual or indefinite term could mean that you cannot get the publishing rights back for your game unless the publisher is in breach.
There are certain situations where this might be ok – for example, if it’s your first game and you just want to get it funded and into the hands of as many players as possible. However, for established indie developers this is likely to be something that you will want to change.
What does Raw Fury’s contract say? The Raw Fury contract available defines the “Term” of the contract as starting on signature and continuing “perpetually or until such time that it is terminated by [the] Parties…”. In essence this means that Raw Fury will keep the game publishing rights forever but, as noted above, this is sometimes acceptable to a developer and, if we presume the template available is an example only then, this could change on a deal-by-deal basis.
What is a developer-friendly option? If you are thinking about handing your game over to a publisher then you need to give them a fair crack at marketing and publishing your game. The “Term” then needs to be something that represents a reasonable “commercial lifecycle” for an indie game. It is not unusual to see terms of 5 to 10 years either fixed or with automatic extensions of time once that period has ended, or if a game hits certain financial milestones. I would personally prefer a slightly longer initial term with no automatically renewal – but think what works best for you and your studio.
2. Check for Auto-Renewals.
Some publishing contracts might only last for a fixed term initially – say, 5 years – but then automatically renew and extend for a further term unless the developer or publisher has provided notice to terminate before the end of that initial term.
Auto-renewals are common, and not inherently bad, but they do tend to favour the publisher as it is easy for a developer to forget to serve notice before the end of the initial term. This could lock up your game with the publisher for a longer period than you might like.
A lot of publishers want to take "worldwide" rights. This means that they can publish your game in every territory worldwide which, in theory, is great as that gets your game into the hands of as many players as possible.
If your publisher hasn’t told you what its publishing plans are for various territories then it is worth checking with them. There are cultural requirements that need to be considered when publishing games in China, for example. Check to see if your publisher has actually published in all territories, what contacts they have in those territories, and how they plan to drive sales in those territories.
What does Raw Fury’s contract say? Raw Fury’s definition of “Territory” states that they take “worldwide” rights – which is not uncommon.
What is a developer-friendly option? Giving a publisher “worldwide” rights is not necessarily bad. They are likely (or should) have contacts in all territories, and they should have a plan to drive sales in all territories. If a publisher is clear that they have no intention to market or sell your game in, say, Asia then consider carving those territories out from the licence. You can then either self-publish in those territories or find another partner that can help you.
Thanks for reading. The next instalment of Contract Killers will continue looking "Bad Licence Terms" that developers should snuff out.