What terms are typically found in publishing contracts — a benchmark from Voyer Law
The Canadian law firm Voyer Law has studied over a hundred publishing contracts that indie game developers have signed for consoles and PCs. They shared their insights into what conditions are typically included in such agreements on a specially created website.
Voyer Law divided the publishing contracts into three categories:
1. contract with an advance — the game is developed with financial support from the publisher;
2. contract without an advance — the publisher does not finance the game's development;
3. console contract — the publisher releases the game only on consoles, usually after the game has been launched on PC.
The terms in each category of contracts often differ. For example, in contracts with an advance, revenue is usually split 58/42 in the developer's favor. In contrast, for contracts without an advance, the developer receives 68% of the revenue. In console contracts, developers typically receive 63% of the revenue.
Other Observations by Voyer Law:
- on average, the size of the advance is $674,800. The median advance is lower at $300,000;
- 83.3% of contracts with an advance include the developer's right to audit the publisher's payments. In console contracts, this appears in 69.3% of cases, and in contracts without an advance, in 47.1% of cases;
- in 57.1% of all contracts, it is stated that the publisher will transfer the earnings from the game in several installments. Usually, in the first installment, the game's revenue is split 36/64 in the publisher's favor. In the second, the developer's share increases to 60.2%;
- it is almost always specified in contracts that the IP rights belong to the developer. The opposite is indicated in only 4.6% of contracts with an advance;
- meanwhile, 63.5% of contracts with an advance include a clause on sequel rights. Of these, in 56.4% of cases, publishers require the rights for themselves, while in 43.6% of cases, developers have the opportunity to negotiate;
- in contracts without an advance, the clause on sequel rights appears in 47% of cases. Where it exists, rights transfer to the publisher in 14.3% of cases. As for console-only games, this clause is present in 25% of publishing contracts;
- 85% of contracts are concluded for a fixed term. Of these, 49.2% are automatically renewed if necessary;
- on average, the duration of contracts with an advance is 6.84 years, without an advance is 4.18 years, and for console contracts is 3.7 years.