First, let’s get this right out in the open… No one is going to “buy” your game or pay you a lump sum of money for what you’ve done so far. If you wish your game to see the game store shelves, then you need to partner with a publisher and continue to work with them and eventually get some royalty payments.
Let’s also be very clear about potentials in our hobby games industry. You’ll make maybe $500-$5000 on your game and that’s about it. Most of you will make on the lower end of that. Surely not worth the hours you put in – but that’s not why most of us do this. Again, if you’re looking to make a cash buyout this isn’t going to happen in our industry.
Let’s first get some terms straight…
Developer – The person or team that helps you take your best prototype and make it streamlined, balanced, cost-effective, and marketable. Somewhat subjective but they work for the Publisher you choose to deal with and know how to make a game “better” in the eyes of the Publisher.
Publisher – The person or company that is fronting the money for and handling the logistics of getting your game produced and to the market.
Contract – This is an agreement between the designer and the publisher to produce a game and make payments based on sales within a certain time frame.
License & Sub-license – This is typically referring to the agreement between your Publisher and another Publisher where they agree to allow for your game to be produced by another company. Usually in another country and/or language or even in digital format.
IP – Short for Intellectual Property which refers to any thematic or storyline elements of your game. It does not refer to your mechanics or the physical aspects of your game.
A Publisher will want to have you under a contract where they take ownership of everything (design, IP, name, etc) for a fee or royalty payment. They will want to exclusively own all the IP and rights to the game (at least in specific countries) until the time which they or sales deem it not worth the continued bother.
Publishers all have different ways of dealing with designers and their games. Most will appreciate your continued involvement and stick with the original themes and concepts. But it is not unheard of for entire themes to change or artistic design to go somewhere totally different then you had envisioned. Most Publishers will make minor tweaks as their in-house Developers clean up and streamline the game.
Be aware of who you’re about to “get into bed” with… a larger Publisher offering a smaller % might make you more money in the end but you also might have less control over the final product. A smaller publisher might offer you a larger % but may not have the reach to sell as much product and thus makes you less money, but they tend to be more open to allowing more of your direct involvement in the final product. Remember the Publisher will have final say on everything if you’re not comfortable with that then maybe seek to publish it yourself.
WHO’S YOUR PUBLISHER?
Make sure you understand what type of deal the Publisher wants with you. Ask them plenty of questions before signing a contract:
- Do they want to just run a Kickstarter and call it quits?
- Are they looking for worldwide distribution or just regional?
- Will the represent your game at conventions and will they help you attend them?
- Are they in hobby distribution already or do they plan to only go direct?
- Do they use a company like Game Salute which is rather exclusive curtails deep discounters?
- Do they have an advertising budget?
Just like you should check out the Publisher before submitting your games, they will also be checking you out. Here are some of the things that will keep the Publishers away:
- If your game requires a license of another IP. Publishers rarely pickup game ideas that are based on someone else’s assets. They are hard to attain and costly.
- If you insist on retaining any rights to the IP or artwork this will likely turn away any Publisher. Most will gladly have the rights return to you when they are done marketing and producing your game – but they will not be interested in any deal where they don’t actually own the rights to do with what they want while making the game.
- If you have already run a fundraiser campaign (like Kickstarter.com) for your game you’ll find it nearly impossible to find a Publisher who is interested. The Publisher wants to be first at-bat and if you need their help after a fundraiser then it’s probably not worth their time, to begin with.
- Many, but not all, Publishers won’t deal with a game previously released as Print and Play. The games that do follow this route tend to be the ones there were huge award-winning hits in PnP first and then went to full production.
TYPES OF CONTRACTS
Almost all contract will be exclusive, or at least exclusive to region and language. A Publisher is not going to invest a lot of time and effort to make your game better and get it to market if there is someone else out there also taking a share of that market. They will want to control all such aspects of your game.
There are several times of contracts and everyone is a bit different. But mainly the difference is based on how you’re paid.
- Intent to publish: some companies may not agree to publish your game up front but would like to try to work on developing it further to a point they are comfortable offering you a full publishing contract.
- % of Revenues (wholesale) – typically 5-8%
- % of Sales (MSRP) – typically 3-5%
- % of Earnings (Profits) – typically 15-25% – avoid these kinds of contracts unless you really trust the Publisher. To many games can be played with $.
- Fee Per Unit – typically equates to something in the % ranges listed above
- Work For Hire – pay by the hour or a flat rate up front – do not sign these
Some Publishers are open to scaling % based on sales volumes. Don’t kid yourself though, most games do not sell more than 10,000 copies ever. In fact, most games sell less than 5000.
Some larger Publishers give advances or signing bonuses ($100-3000). If the publisher you’re working with is not in the same country as you, it would be wise to get some upfront money as it’s nearly impossible to chase down a deadbeat later.
Stay away from contracts that require you to contribute financially to the production of the game. These are not worth it as you have little control over the marketing and execution of the actual game.
Though rare, some contracts will pay the designer in full based on the number of units produced.
WHAT YOU SHOULD SEE INSIDE
Things you should look for in the contract:
- 2-10 copies for yourself of each revision of the game and all expansions and derivative work. The ability to purchase more at 50% off or wholesale prices.
- Typically contracts are perpetual as long as we are actively marketing the game and have X number of sales per year. Some contracts have 5-year terms and require manually agreeing to continue.
- Exit strategy / insolvency / lack of sales – reversion of rights back to you. Typically 5 years after last print run or 2 years after low sales.
- How to handle digital sales. Usually best dealt with by just getting a % of the gross of what the Publisher takes in.
- How to handle sub-licenses for other countries/languages. What is your take off of what basis?
- Expansions & Sequels: Are you a must to be involved or is this not required? Rates for compensation for these should be similar to the base game unless you don’t design it.
- Derivative works & Merchandise: What’s your rate of compensation? Do you have any say in the designers or products?
- Time to market requirement? Usually, a Publisher is given 2 years to get the game to the market or there is a way for you to terminate the contract.
- A clause to make sure your name appears on the outside of the box (hopefully the cover)
- The frequency of reporting and payments? 30 days after the last Quarter is typical. What penalties are there if they fail to meet these guidelines?
- What amount and type of auditing will you have access too?
- Clause for how non-standard sales are handled? Such as a rate for sales at conventions. Are you allowed to sell the games you got a discount at your local conventions? Kickstarter and online direct to customers sales? With so many games being Kickstarted and sold direct to customers, you’ll need to make sure your contract also includes what pay rate you’ll get with direct sales as the publisher tends to make a higher margin on such.
Things you shouldn’t be surprised to see:
- Clause to protect the publisher from any copyright infringements you might have made
- Clause to assume ownership of all your work, art, fiction, design, etc.
- Termination clause
- Constraints on your ability to talk about or share content of the game before release.
- Assignment of the contract to another party.
- Non-Disclosure agreement
- Right to review or select artwork
- Signing bonus
- Rights to produce fiction or other such based on your IP
These are different as they are giving permission to someone to produce your already finished game in another country or language. They are usually between the Publisher and another party. Not something you would normally sign.
Typical % are 8-13% of revenues with an advance. That’s what the PUBLISHER asks of the new company looking to localize your game. You should expect roughly the same percentage of that gross revenue as you’re getting from the gross revenue (not MSRP) of the game sold in its original form. So if you’re getting 5% of MSRP per unit sold, it would be reasonable for you to expect 20% of any gross royalties received by the Publisher for a licensing deal as a designer. Mainly because a license agreement might be a flat fee or some other weird math and may vary from partner to partner – not to mention conversions of currencies and that MSRP will not be exactly the same in each country.
So if you have a $50 MSRP game and it sells to distribution for $20 your normal earnings on that would be $1.20. But if they sold a license for a localization of the game in say German. That licensee would pay usually about 10% of their gross revenues (sales they make to wholesale mainly but sometimes more if they do convention sales) to your Publisher. They, in turn, would give you 20% of that. If your game then sells for 40 Euro game in Germany but they only collected 20 Euro from a distributor, they would pay your publisher around 2 Euro or $2.29 – of that, you get 20% or about .46 cents.
The thing is, your publisher doesn’t do much or take many risks for that localization copy and so they make less on a copy. Instead of $20 where they need to deduct all their costs, they are getting straight profit from the license so they really can’t play any “games” with that amount. So they can pay you based on profit in this case, but they need to give you a larger share of it.
Also note that a lot of publishers also create another rate to be paid for earnings in the Kickstarter as the publisher’s profit will be higher per unit in KS.
Courting a Game Publisher – Do’s and Dont’s
Licensing a game from a designer
Inspiration to Publication – Step 30: Board Game Contract
Game Industry Reports