Contract Basics

Three things to read before you sign

You've got the offer. You probably don't have a lawyer yet. Here's where to start reading.

Publishing contracts are long. They're written by lawyers representing the publisher. Most of the document is standard mechanics that won't directly affect your experience of the deal. A few clauses will define almost everything.

If you're reading a contract for the first time, here's where I'd start.

Net Revenue

This is the revenue base your split percentage gets applied to. It sounds like a technical definition. It's the most commercially important clause in the contract.

What gets deducted before the split kicks in determines whether the percentage means anything. The standard deductions are platform fees (Steam at 30%, console stores similar), taxes, and refunds. Those are legitimate and expected. The ones to pay close attention to are porting costs, QA, localisation, marketing, and any markup on the advance. If all of those are fully recoverable and there's no cap on some of them, the recoupment pool can be large enough that a moderately successful game never exits it.

Write down every deduction. Run the worst-case sales waterfall. The result is your floor: what you'd actually receive if the game underperforms. If that number is zero for two or three years, you should know that before you sign.

The licence

Most contracts have an IP ownership clause that says the developer retains their IP. That section is rarely the problem. The licence section is where it gets complicated.

The publisher's licence defines what they can actually do with your game, for how long, and on what terms. Is the licence limited to distribution, or does it cover porting, sequels, remasters, merchandise, and adaptations? Is it time-limited with an end date, or perpetual? What are the conditions under which rights revert to you if the publisher doesn't release the game, stops selling it, or goes under?

A developer can own their IP entirely and still be unable to do anything commercially meaningful with it because the licence is too wide and has no exit conditions. Ownership on paper is different from control in practice. The licence section is where you find out which one you actually have.

The cure period

When you're in breach of contract, the cure period is how long you have to fix it before the publisher can terminate the deal. Ten days is not enough. Thirty is the standard. Sixty is better.

This matters more than it sounds because some contracts attach consequences to an uncured breach that go beyond termination. In certain full-service publishing agreements, if the cure period expires without resolution, the publisher has the option to take ownership of your IP for no compensation. That clause has to come out of the contract before you sign, or be replaced with something that involves paying you fair market value if they want to acquire the rights.

One more thing

Get a games industry lawyer to review the contract before you sign: someone who has read publishing agreements before and knows where the problems tend to hide.

The cost of a contract review is a fraction of what you'll wish you'd spent if the contract turns out to be badly structured. I've had this conversation with developers at several stages of their deal. It's a much easier conversation before signing than after.