What makes for a good game publishing contract? 2

[The GameDiscoverCo game discovery newsletter is written by ‘how people find your game’ expert & GameDiscoverCo founder Simon Carless, and is a regular look at how people discover and buy video games in the 2020s.]

Well, I hope you all had a wonderful Christmas, and are gearing up for a similarly wonderful New Year. (Or at least, as wonderful as it gets in these, uhhh, tricky times.)

We had to pause during the holidays to write this one up, since it’s a complex and interesting subject. Raw Fury (Kingdom, Call Of The Sea, Backbone publishers) has made public its full publishing agreement, including revenue split percentages. Fun, eh? So let’s go…

Inside a publishing agreement!

Firstly, wanted to give kudos to Raw Fury for being willing to put this agreement out in full. (And not just because they link to me at the bottom of the post.) Transparency is pretty much always good, and helps the biz move forward. As they say: “We believe having publisher contracts out in the open helps level the playing field, and allows devs to have a more intimate understanding of the machinations of different deals when they start looking for partnerships.”

The agreement is part of a set of dev/pub resources which also include a sample pitch deck, mutual NDA, outsourcing & content creation sample legal contracts, and various other helpful documents. Again, extremely helpful.

But let’s get to the matter in hand - here’s the contract, translated into a few languages. And needless to say, publishing it it caused a bunch of drama - and plenty of legitimate questions and complaints - on Twitter.

It’s a little difficult to work out the best way to evaluate contracts, beyond ‘what financial terms are there, and are there any gotchas?’ So for the record:

And here’s what Raw Fury notes you get in exchange for this deal, in addition to - obviously - money to make the game, which you didn’t have already and probably needed: “Production support… PR, marketing, sales management, partner/platform relations, IP refinement (movies/tv-series… physical editions, vinyl, merch etc), quality assurance (internal and external), release management, events management, social and community focused work, media asset creation… and so on.” In other words, it’s pretty full-service.

So let’s make up an example here, just laying it all out. You’re somebody who signed a $500,000 USD deal with Raw Fury. This enables you to make your entire game, with their help. You launch your game. Here’s what you would see:

One important thing to note here. I tend to talk about ‘gross’ and ‘net’ in this newsletter as if gross is the ‘total amount of $ people paid for your game’, and net is ‘cost after the platforms take their share’. This legal contract has gross as ‘all the money that Raw Fury receives’ - so basically what I talk about net as - and then net as ‘all the money Raw Fury receives minus marketing/services costs and porting costs’.

This is fine, but just noting that that if you had no platform deals that came as lump sums (like Xbox Game Pass deals), you would need to sell $1.28 million worth of the game to get into royalties on this title. That’s presuming that post-platform net is 61% of gross, and is a composite number based on Steam % being lower and console being higher, and better Steam sales than console. This type of flowthrough is normal. But many people forget!

(Of course, if you get a $300,000 Game Pass or Stadia deal, paid directly without any platform cuts, it significantly winnows down the path to royalties. This is actually one of the bigger advantages of reputable indie publishers nowadays - easier access to these deals.)

The way it extends from there - $2 million worth of the game’s digital ‘retail’ sales with no platform deals would end up with the developer having had all of its dev costs paid for, and an additional $210,000. (Raw Fury would also get $210,000, under this scenario.)

For a bigger hit - let’s say $5 million in raw revenue - the dev will get all its dev costs plus $1.125 million, and Raw Fury will get $1.125 million. (The ‘net’ is $3.05 million on this $5 million in sales.) If your game starts to become a bigger hit, the cut to the publisher certainly starts to mount up.

So really - what does the Internet think?

As is often the case on the Twitter-verse, there was a lot of yelling - some productive, some less so - over the contract reveal. Foremost among the more productive yellers was Jan Willem Nijman (Disc Room, Minit, formerly half of Vlambeer), who commented on it in an annotated document.

JW knows indie publishing agreements well in the abstract (having signed multiple with Devolver, for example.) And while he goes pretty deep on some of specific legal comments, I think his main points are:

I did ping JW to say his prominent comment that 70% dev/30% pub being the ‘industry standard’ royalty, even with an advance, wasn’t what I’ve seen. Recent research by Voyer Law, albeit from a pretty limited pool, suggested that on average, there were “advances of between $100,000 and $500,000: 55/45 split, in favor of developer… advances of over $500,000: 53/47 split, in favor of developers… 71% [average to dev] in no-advance deals.”

But there are definitely many great, more ‘informal’ publishers - folks like Devolver, Finji and others - who I believe deviate positively from Kellen’s research, and towards JW’s wished-for standard. If they like your game and want to work with you, of course.

One well-considered set of comments came from Cassia Curran (Wings Fund advisor & Curran Games Agency founder!), who noted the split disparity too, and commented:

“Raw Fury's agreement feels like it was first written by a lawyer intent on doing their duty in protecting their client, and then modified by a biz dev person to be nicer and more friendly to indie devs. So the terms are on the whole written to protect Raw Fury, not the indie dev…

Which I think is fine, but it means that *you* *must* *get* *a* *lawyer* who is experienced with game publishing to review. And *you* *must* *negotiate* the terms to protect yourself and to get what you want out of the partnership.

I have not seen a 15% markup on an advance before, but I can instantly see why they would do that; it's to incentivize the indie game dev not to keep asking for additional payments. I quite like the idea, but for 115% recoup and 50/50 split the pub services have to be *GOLDEN*.” Agree.

Bonus data which came through as a result of this? The folks at boutique ‘cozy games’ publisher Whitethorn Games (Calico) also shared its publishing agreement, which looks less custom-written for actual game devs than Raw Fury’s, but also less serrated.

It oddly uses gross revenue (actual gross revenue) instead of net for the revenue split, which is very rare, but the agreement is worth perusing. Some friendlier - in some cases surprisingly so - terms: Whitethorn has a 2-year renewable term for publishing agreements, 30-day at will notice to quit the agreement on both sides, and it provides ‘free’ porting to all consoles. (Really? Is all that free porting sustainable? Love it tho!)

All this is in exchange for its 10%-25% gross revenue cut - which is anywhere from 17% to 40+%, if we take previous gross to net rates. Unsure of what triggers what royalty levels, or if it’s title by title. Small boutique publishers can afford to do this, especially for low-$ advance titles, and kudos to them for doing so?

Conclusion - the Goldilocks problem!

In the end, there’s three things to talk about re: the Raw Fury publishing agreement: contract language, intent, and actual financials. So let’s have a quick wander through them, and try to set some kind of baseline opinion:

To JW’s point in criticizing the situation in general, there are many, many more sellers (devs) than buyers (indie publishers) in the market right now. He feels like publishers are taking advantage. I don’t feel that. But I do feel like publishers have their own perspective, and wield some market advantages right now that allow them to set the agenda, and devs should think very carefully about this.

Luckily, this level of transparency allows us to all talk about the problem. And it’s also worth reminding again: self-publishing may make plenty of sense for you, if you can bootstrap or fund without a publisher, and can do the publisher services parts yourself. (Even publishers agree with this!)

But I also see things publishers bring - in particular game funding, and platform relationships, but also a lot of the other pre-launch support that devs are often too busy for or aren’t capable of - that developers absolutely need.

In the end, we often get into some weird ‘Goldilocks’-level problems with dev/publisher relationships. I sometimes hear devs say that either a) they never recoup on their publishing deals & feel neglected or b) they’ve done great and the publisher is getting a large percentage of the net post-launch for doing not much.

Both of these can be legitimate complaints - and actually the heart of why the publisher business model works. (There will always be big hits paying for average sellers or flops - that’s the publisher arbitrage that makes their biz model function.)

But hopefully more deals than not fall into the ‘just the right temperature’ Goldilocks category - ‘we’re a team, we helped each other and we succeed or lose together’. At the best indie publishers, most of them do. That’s the conundrum, though - it’s difficult to get the level of support, the royalty %, and the advance ‘just right’, so that both parties are equally motivated and happy at the end of the day.

So thanks to Raw Fury for getting the conversation started. Where’s it going to go from here? Any more publishing agreements or data anyone want to put out there? Mail me or take to Twitter to talk about it!

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