Developers commonly make mistakes in publisher relationships that negatively impact the deal terms. Some of the top mistakes include not being properly organized before signing a deal, failing to specify game features and milestones upfront, misunderstanding intellectual property ownership, and not planning for various termination scenarios. It is important for developers to get their business in order with the right legal and financial advisors, clearly outline the game's scope and development roadmap, retain rights to underlying technology where possible, and negotiate protections like kill fees in the event the publisher ends the relationship. Properly addressing these issues upfront can help developers avoid being taken advantage of in publisher agreements and set themselves up for success long-term.

1. Top Mistakes
Developers Make in
Publisher Relationships
(And suggestions to correct the mistakes!)

2. Why Do We
Make Mistakes?
The top three reasons a dev studio may be doing it wrong

3. Desperation
• They need the publisher’s money
• Studio is passionate about the project
and will do it at any cost
• Studio is only as good as its options

4. Optimism/Relative Inexperience
• Publisher gives a false sense of security (“This
is the first of many projects we hope to do
together”)
• “Of course nothing bad will happen!”
• This may be the studio’s first deal. Unsure of
what is “market value” or “normal.”
• Over-promising to impress the publisher
• Not continuing to “shop”

5. Games as Art vs Business Opportunity
• More interest in “winning” the project
• Not looking at the business realities

6. Other Reasons
• Miscommunication/Differing expectations
• Agreeing to terms without fully understanding
the meaning or the impact
• Failing to consult the right people (e.g., agent
or attorney)
• Assuming the publisher is looking out for the
studio’s best interest (Hint: they are not)

7. Mistake #1: Not
Getting Your
“Ducks in a Row”
Before the Deal

8. Why Being Organized is Important
Publisher needs to be able to trust the studio
with the resources they are investing

9. Organizing your Business
• Choosing a business entity type (LLC, S-Corp, C-
Corp)
• Getting organizational documents in order
(operating agreement/bylaws, ownership and
equity, assignments)
• Detailed budgets, outsourcing and staffing
plans, etc.

10. Organizing your Business Team
Your team should include:
• Agent/Business Development person
• Lawyer
You may also want to include:
• Accountant
• Staffing/Recruiting solution

11. How This Affects Your Deal
• May help you actually GET a deal (in the case
of the agent)
• Bolsters credibility with publishers and
investors
• Puts you in a better position to negotiate a
more favorable deal (clear “base-line” of your
capabilities + visibility into market landscape
& competitive deals)

12. Mistake #2:
Specifications
and Milestones
Why “Money first, specs later” is a
very bad idea

13. Create your Development Roadmap
• Lay specs out ahead of time (as much as
possible)
• This should include a plan for live ops, ongoing
content, DLC, etc.
• Identify any licenses required for development
(tech, music, etc.)

14. Feature Creep and Approvals
• Assume some delays in milestone delivery,
acceptance and payments (budget cash flow
accordingly)
• Have “change order” language in your
agreements for flexibility
• Aim for objective milestone approval
guidelines

15. Other Benefits to “Speccing” Early
• Puts you and the publisher on the same page
as far as the game’s scope
• Which hopefully=less review time and quicker
approvals

16. Solutions
• Where possible, avoid language where approvals are
subjective or totally at publisher’s discretion.
• “Each Milestone delivered to Publisher by Developer will
be subject to Publisher’s approval, in its sole discretion”
• Instead, strive for something more objective:
• “Publisher’s review of the applicable Milestone
Deliverables shall be based on technical compliance with
the Specifications set forth herein and shall not be
unreasonably withheld or delayed.”

17. Combine with “Change Order” language
“Any change to the Specifications or any Milestone Deliverable requested by
Publisher must be submitted in writing to Developer by Publisher (“Change
Order”). Developer shall evaluate such Change Order as soon as reasonably
possible, but no later than ten (10) days following receipt thereof. Developer
shall make a good faith reasonable attempt to accommodate the Change
Order at no cost to the Publisher. However, if such modifications (in
Developer’s reasonable judgment) materially increases the amount of
Services necessary to develop the Game or materially accelerate or delay the
timing for completion of the Game, and provided further, that Developer has
the uncommitted resources available to accommodate increased
development time or staffing requirements, Developer and Publisher shall
negotiate in good faith with respect to a revised Milestone schedule and
additional monies which may be required in order to accommodate such
Change Order.”

18. Mistake #3: IP
Ownership and
Underlying
Elements
It doesn’t always mean what you
think it means

19. What do you Own?
• Games are Intellectual Property. Value comes from the
rights embodied in the game.
• What you own and what you’ll continue to own depends
on each situation
• What you own and what you’ll continue to own also
depends on the level of funding
• Take a step back and look at the big picture of
roles/responsibilities
• Not just the overall game, but each building block may
be separate IP that has unique value

20. Underlying Tech
• Underlying tech includes engines and
development tools you create or license
• It is common for developers to own their
UNDERLYING tools/tech even if they don’t own the
final game product.
• BUT…the contract needs to “carve that out” so it’s
not caught up in the WFH language
• ANY IP is a company asset. Important for taxes,
valuation and reputation.

21. How this Affects the Agreement
• Holding onto underlying tech rights could be
important! A studio may discover during
development that they have built a better
mouse trap
• Also ties into non-compete obligations.
• Never assume this deal will end well. Always
plan for the worst and make sure you
have/own what you need to continue on.

22. Solutions/Sample Language
“Developer retains and reserves all rights, title, and interest in
and too Developer’s Tools. For purposes of this Agreement,
“Developer’s Tools” shall mean all of the tools that the Developer
owns or controls during the development of the MVP (including,
but not limited to, Developer’s proprietary tools and licensed
tools used for the development of the Product and their related
source and object code) and any improvements thereto.”

23. Non-compete Sample Language
“Unless approved by Publisher in writing, and for a period of five (5) years as
from the expiration of the present Agreement, Developer agrees not to
directly or indirectly engage or assist in the development of any product of a
that Publisher deems to be similar genre to the Game.”
• This deal didn’t have an expiration…5 years from forever!
• Publisher’s discretion
• It was a port of an existing game over to WiiU! Far too much to ask for a
limited porting project.
(Keeping the tools/tech could be undermined by an aggressive non-compete)

24. Mistake #4:
Termination and
Transition
Everything is wonderful and nothing
will ever go wrong

25. Planning for the Worst
• Bad things happen even in the best deals. Be
prepared for all scenarios
• Studios should never assume they will always
be on time, or that the publisher will always be
willing to pay you
• Don’t assume than negotiating termination
provisions will “curse” your relationship or turn
the publisher against you. They are expecting
this, too!

26. Termination For Convenience and Kill
Fees
• This happens more than you think
• Publisher will almost always include a termination
for convenience clause so they can back out
whenever it suits them
• If there is a termination for convenience you need
to fight for a kill fee to keep your lights on!
• Have a real internal conversation about how long
it will take to get a new project for your team.

27. Other considerations: Right of reversion,
option to shop, passive royalty
• What happens to the IP if the deal is cut short
before development is completed? What
happens if it’s terminated after launch?
• What happens to future options (e.g., right to
make sequels, prequels and spin-offs, or the
next project)?
• What happens if someone else develops the
rest of the game? What royalty are you
entitled to after termination? What if
someone else publishes?

28. Termination post-launch: Transition
• Who is responsible for live ops post
termination?
• What are each party’s rights to keep the game
“live” after termination? Differs depending on
the termination scenario

29. How it Affects your Deal
• Plan for every scenario for termination at every
stage of development
• Have a “game over” plan– what will you do
AFTER the deal terminates?
• Planning for the worst doesn’t mean the worst
will happen. Not planning for it will make the
result much harder to deal with.

30. Benefits of Planning Ahead
• You won’t be caught off guard if the publisher
pulls the plug
• You will have a way to keep yourself going until
the next project comes along
• Depending on where you are in development,
you may be able to hold onto passive income
even if you’re no longer involved in the project

31. Sample Language
“Publisher may, in its sole discretion, terminate the
development of the Title without cause or reason
immediately upon written notice, provided that in
such event Publisher shall pay Developer a fee
equal to the then-current milestone.”
Should be:
• Previously unpaid milestones
• Milestone in process at the end of the notice
• PLUS “X” as a kill fee.

32. Sample Transition Language
“ Transition Assistance. Immediately upon the expiration or termination of this
Agreement for any reason:
(i) The Parties shall cooperate in good faith to wind down operation of the
Game(s) by Publisher, and shall provide commercially reasonable assistance to
one another to pursue the wind down in a manner that does not disrupt the
ongoing operation of the Game(s). The winding down shall last for no more than
sixty (60) calendar days from the date of termination or expiration (the “Wind
Down Period”). During the Wind Down Period, all of the rights and obligations of
the Parties under this Agreement shall continue in full force and effect, unless
specifically stated otherwise.
(ii) At the end of the Wind Down Period, all of Publisher’s rights under this
Agreement with respect to the commercial exploitation of the Game(s) shall
automatically and immediately terminate, and Publisher shall cease to sell,
distribute, or use the Game(s) and return or destroy (at Developer's direction) all
Developer’s materials in Publisher’s possession and shall immediately cease all
marketing and promotion of the Game(s).”

33. Sample “Buy-back” Language
“Developer shall have the right (the “Buy Back Option”) within
one hundred and eighty (180) days from the date of termination,
to buy back the development and publishing rights for the
applicable Product, as well as the source code for the applicable
Product, for an amount equal to the aggregate Development
Costs for the applicable Product (“Buy Back Payment”).”

34. Other Common
Mistakes & Oversights
Keep a weather eye out

35. Everything is negotiable…to a point
• “This is our standard language” is never an
acceptable answer
• Neither is “we won’t do that.”
• Marketing milestones and commitments–
these MAY be core publisher responsibilities.
Hold them accountable in the deal.

36. Pay Attention to the “Boilerplate”
• Auditing– tell the publisher you will audit. Don’t trust someone else’s
bookkeeper.
• Credit– not just in the game, but for portfolio purposes. Easy to negotiate
• Model out the deal-- Most of the time, the contract does not match the
agreed on business model, Net deductions, recoup, etc. The publisher is
doing this! You need to, too
• Mutuality– make the deal mutual wherever you can– confidentiality,
indemnity and warranties, limitations on liability are key points that should
be mutual
• Boilerplate– Not throw-away! Negotiate attorney’s fees, governing law and
jurisdiction, arbitration

37. Sample Audit Language
Publisher agrees that Developer may, not more than once during any
calendar year, audit its books and records for the purpose of determining the
accuracy of Publisher's statements. Such audit rights may be exercised
throughout the Term and for six (6) months thereafter. If Developer wishes to
perform any such audit, it will be required to notify Publisher in writing at
least thirty (30) days before the date it plans to begin it. All audits shall be
made during regular business hours, and shall be conducted on Developer’s
behalf by a certified independent public accountant. Each examination shall
be made at Developer’s sole cost and expense at Publisher's regular place of
business. If Developer establishes as a result of an audit conducted by
Developer that there is an underpayment in the royalty payments due to
Developer, then Publisher shall pay to Developer, upon settlement of the
audit, Developer’s accountable auditor’s fees together with the underpayment

38. Sample Credit Language
“Publisher will provide proper attribution and credit to Developer
on all promotional materials, marketing materials and press
releases. Subject to Publisher’s prior, written approval in each
instance, not to be unreasonably withheld, Publisher grants to
the Developer the right and license to display Publisher’s name
and logo on the Developer’s website in connection with the
Developer’s promotion of the Product. In addition, the Developer
will have the right to display on its website screen shots from the
Product with Publisher’s prior written approval in each instance.”

39. Questions?