Attorney on Game Publishing 'Red Flags'
In a recent podcast, attorney Andrew Thomas advised game developers to be wary of contract terms publishers claim are 'industry standard,' stating no such official standard exists. He identified overly short contracts and perpetual, non-revocable licenses as major red flags. Thomas stressed that royalty splits are a business decision, not a legal one, and should reflect the publisher's actual involvement.
- A common point of contention is the publisher's recoupment of expenses; some contracts allow publishers to recover all their costs, including marketing, from the game's initial revenue, meaning the developer sees no income until the publisher has been fully repaid. - Royalty splits can vary wildly, with a 50/50 split often considered standard; however, for projects with smaller budgets (under $100,000), a 70/30 split in favor of the developer is more common. - Beyond financial terms, developers are cautioned against contracts that give the publisher the right of first refusal on future games or sequels, as this can lock them into a partnership that is no longer beneficial. - The absence of a clear rights reversion clause is another major red flag; without it, a developer's game can be left in limbo if the publisher underperforms or goes out of business. - Some publishing agreements may include clauses that transfer ownership of the intellectual property (IP) to the publisher, which severely limits the developer's future control and monetization of their own creation. - Recent controversies have highlighted the risks developers face, such as publishers allegedly withholding payments, stealing grant money, or even pirating and altering a game's code for distribution on other platforms. - Vague or generic marketing plans can be a sign of a publisher that doesn't understand a game's unique audience or is not truly invested in its success. - A perpetual contract term, meaning it lasts forever, can be highly problematic as the publisher may continue to collect revenue years after they have stopped actively marketing or supporting the game.
