“Nobody gets paid until something gets sold,” said Business Development representative of Reflexive Michael Mei as he set the tone for the panel ‘Negotiation: What to Look for in a Contract’, held on Wednesday, June 28 at the Casuality Seattle conference. A range of representatives from the game industry met to discuss the developer and publisher relationship in the context of contract negotiation.
“Look for the best partner you can find,” started off Rich Roberts, VP of Sales and Business Development at PlayFirst. “Do you want to invest or not? Do you want the publisher’s investment or not?” For Roberts, the partnership comes down to what the developer wants from the publisher, such as conceptual testing, marketing, public relations, or even making a franchise from the IP.
Patricia Mayer, Attorney at Mitchell Silberberg & Knupp, feels that developers should be obliged to develop a product within certain parameters. Developers need to spell out contracts explicitly, so that both the developer and publisher know who is responsible for what.
“The contract is pretty much worth the paper it’s printed on,” interjected Josh Welber, co-Founder of LargeAnimal Games. “But it at least forces you to sit down and figure out the spirit of a project with a publisher.” Nixon agreed that the process comes down to the fundamental relationship between developer and publisher.
Interjecting with a developer's perspective, Director of Publishing at Oberon Media David Nixon stated that he would want to have a good understanding of the publisher and have the work pretty much done before a contract comes into play, but he rarely sees marketing guarantees from publishers. Roberts explained that market guarantee requires the developer to get into details. Sales depend on the number of distribution models.
“It’s very rare for portal promotion to be guaranteed in a publisher contract,” added President of Mumbo Jumbo Paul Jenson. Jenson believes that no publisher can say they are the lead in all distribution paths—online, mobile, and retail. If the game can translate to other distribution needs, Jenson thinks developers should find publishers for different channels based on their strengths.
Mayer jumped in to reference ‘reservation of rights,’ typically used by developers to either grant some or all rights. She emphasized the wording to use for keeping rights: “All rights not expressly granted are reserved.” However, the contract language could be rejected by a publisher who handles all distribution areas.
“We’re one of those publishers,” said Roberts. “We invest as much time into this project with the help of the developer as the developer has.” To Roberts, publishers build a marketplace for the game. He referenced Diner Dash
’s move to mobile and handheld, including the just-announced PSP, Nintendo DS, and Game Boy Advance SKUs being published by Eidos Interactive. “These games last forever,” he said.
Jenson continued to question exclusivity rights. “There are publishers who are strong in different areas,” he said. Although Mumbo Jumbo is dominant in retail, developers need to consider the strengths and weaknesses of publishers depending on the direction of their game. Roberts disagreed. If he is going to bring his product to someone who has licensed all of his competitors and he has to fight for shelf-space internally, he would rather go with one publisher.
Welber stopped the discussion to ask the audience if anyone had signed a contract without changing it. No one raised their hand, which seemed to please him. “Contracts and negotiations are a conversation,” he followed up. He added that if the publisher is not open to a conversation, then they are not the right choice. “Whoever made that contract has a certain agenda in mind, and it’s probably not yours.”
“The contract is just supposed to be a reference,” explained Jensen. However, if a developer is just starting out, they lack a history that publishers can look into, and contracts may be more stringent as a result. “It’s important to have a conversation,” Nixon agreed. Conversations on strategies should relate to the protection and use of IP in particular.
Roberts added that even if new developers understand the contract, there are words publishers will use against them. Both Roberts and Mayer stressed hiring a lawyer, especially when dealing with IP. When games get branded as IP, then platforms can shift into books, movies, and products.
“Yeah, if we’re going to spend a lot of money, yes, we’re going to want to take that property. If you’re going to spend that money, that’s different,” Roberts responded. Although every channel, developer, and publisher is different, creating multiple opportunities, in all cases the developer will probably earn less money than the publisher.
“There are ways aside from giving up rights, like having a history of successful games,” said Nixon. He feels the rights should be discussed based on how a developer pitches the game and paints a picture of how the publisher can make money off of it. Roberts suggested looking not at the percentages, but at the bottom line pocket money amount given to developers.
Welber brought up that the risk isn’t just on the publisher’s side. “If a publisher isn’t willing to prove to you how they’ll make your game a success, then they aren’t dedicated enough.” He feels that publishers have an obligation to prove their efforts to developers. Roberts said he often discusses proof points and data with developers.
“There are 4,000 titles a year, and maybe 400 of them got to the shelf,” emphasized Roberts. He recommended looking at the game itself and doing concept testing and focus testing before approaching the publisher in order to prove the game’s mass market potential.
As the panel concluded, they touched on their strongest points. Both developers and publishers need to have conversations about responsibilities and expectations. Developers can ask for equal rates, but probably won’t get them. Lastly, developers should always have a lawyer to help with the wording of contracts and negotiation discussions.