A big opportunity for small development studios is the possibility of acquiring a publisher who, in addition to publishing the game, will provide financing for its production.
When concluding a publishing agreement, a developer must remember that the publisher is usually an entity with extensive experience and a financially driven contractual advantage, which may result in the developer wanting to impose contractual terms on the development studio. Therefore, it's important for developers to pay attention to the following issues when concluding a contract.
First, it's worth recalling an issue we've already addressed in previous posts: the distinction between granting a license and transferring copyright. If the developer has the option, it's more advantageous to grant a license than to transfer copyright. This way, even if the agreement lacks appropriate exclusivity provisions, the developer will still be entitled to use and dispose of the game.
Another thing to remember is the division of copyright into economic copyright, derivative copyright, and moral rights. Even if the creator agrees to the transfer of economic copyright, they still retain the derivative rights, meaning the right to authorize the use and disposal of derivative works of their work, which could include, for example, sequels to a computer game.
It's also important to consider how the scope of transferred rights is defined in the contract. It's worth checking whether the contract includes a provision transferring not only the rights to the work currently being created, but also the rights to decide on the distribution of the sequel.
Besides copyright, several other aspects are also worth considering. The game production process is typically divided into stages – so-called "millstones." When signing a contract, it's worth negotiating a schedule that includes a relatively large number of them, ideally with the completion time coinciding with calendar months, allowing the funds received to regularly cover team members' salaries.
A development schedule, which is usually an annex to the publishing agreement, details the scope of work for a given stage. Often, during the game development process, it may turn out that, for various reasons, work for a later stage has been completed earlier, while work on an earlier stage has been delayed. Given this possibility, it's worth negotiating the possibility of delivering a later stage within the timeframe of the earlier stage (while simultaneously postponing the delivery of that stage).
Often, in addition to the remuneration paid for completing individual stages of the work, the parties agree on an additional remuneration related to the subsequent distribution of the game, which is usually a specific percentage of a certain amount – usually the net profit generated from the sale of the work. Therefore, it's worth considering what costs will be deducted to calculate this value. It's important to consider whether the publisher will be willing to deduct marketing costs. Therefore, it would be helpful to know the estimated values of such costs.
Another issue is defining the terms under which the developer's audit will take place. It's crucial that the developer be able to verify whether the publisher's reported net profit is accurate. This can be verified by accessing sales reports the publisher receives from specific platforms, such as Steam.
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