Game development requires equal parts business savvy and creativity. Publishing, marketing, and public relations are equally important to character design, weapon mechanics, and worldbuilding. For small to mid-size developers, one of the most crucial business decisions you can make is to expand your game’s reach through partnerships. The proper agreement can be the key to unlocking more creative freedom and avenues of success for your game. But before you enter into any partnership, consult with legal experts. As an indie developer, protecting your interests and intellectual property is crucial. The following guide will break down the most essential contracts every game developer needs to know. Some of these agreements share overlaps, but each has a distinct purpose worth learning inside and out.

1. Independent Contractor Agreements

Game developers recruiting freelancers to help on projects often draft independent contractor agreements (ICAs) to define general working terms for both parties. ICAs typically outline:

• Development milestones to meet
• Preferred compensation
• Delivery dates for key assets
• Expected services provided
• Duration of the working relationship and the possibility of renewal

ICAs may also include clauses concerning confidentiality and exclusivity, such as:

• Conflicts of interest. The contractor may be unable to provide services or similar assets to competitors for the duration of the contract.
• Non-compete clause. The contractor must refrain from entering into a similar agreement with a competitor for an agreed-upon amount of time, sometimes lasting longer than the contract duration.
• Confidentiality agreements. The contractor may not share trade secrets or the employer's intellectual property.
• Non-solicitation agreements. The contractor may not poach clients or employees from the employer.

Generally, most ICAs are harmless and outline the expectations of both the company and the contractor. For indie game developers, ICAs are a great way to solidify your terms with freelancers and ensure accountability for all.

2. Work-for-Hire Agreements

While some employers include work-for-hire (WFH) agreements within independent contractor agreements, many WFH agreements stand alone. You’ve likely seen a WFH agreement if you’ve previously negotiated copyright terms, trademarks, or patents. A WFH agreement formally explains how IP ownership transfers upon delivery of work. Imagine an artist who develops a collection of digital character designs for a game developer. Depending on the arrangement, these may become the sole property of the developer. While this may be fine in some agreements, the artist may hesitate to surrender some assets. Clearly defining what belongs to who helps avoid surprises. You might want to pay special attention to this agreement if you’re building a public portfolio to showcase. Work-for-hire agreements may prevent you from submitting unoriginal work found elsewhere. Contributor credits may also be a factor in these contracts. If you’d like your name associated with your work, it’s best to hammer out those details with your business partner. A WFH agreement aims to strike a balance between what you retain and what you surrender. Your assets likely mean a lot to you, especially if they require multiple hours to create and are valuable. Establishing mutually beneficial arrangements will satisfy all parties involved.

3. Option Agreements

Option agreements primarily concern financials. Both parties will dictate terms for the sale (and purchasing) of certain project assets. These terms also grant a party the right to obtain specific IPs. The scope of the option typically includes:

• Scheduling. Some time may elapse before a gaming asset is eligible for purchase. As a developer, you can dictate the dates suitable for this property transfer.
• Exclusivity clauses. Your game might become the next big hit, so options may also include exclusivity clauses. You may grant a game publisher or third party exclusive rights to your content for a set period where they would have the sole right to publish your game. Once that expires, it’s open season.
• Defined payment plans. If publishers need to work with your development assets for an extended period before launch, you may want to arrange a defined payment plan to give you a cut of the purchase price in the meantime. This investment encourages publishers to move faster to bring your game to market.

Options involve plenty of negotiation, so have an expert in your corner. Meetings can include discussions on rights, merchandising, and overall creative control. Furthermore, options agreements may include both publishers and producers. You’ll want to have a firm idea of what your gaming assets are worth and prepare to walk away if you cannot forge a suitable deal.

4. Exclusive and Non-Exclusive Publishing Agreements

While discussing options, we briefly touched on exclusive and non-exclusive publishing agreements, determining who can publish your game. You may grant a company exclusive rights to release your content. Conversely, a non-exclusive arrangement may allow you to divide publishing rights between publishers. The publishing agreement is essential in deciding which consoles support your game. We see this often with PlayStation and Xbox. Each offers exclusive titles and cross-platform games. A publisher that sees immense potential (or profit) in their future may seek exclusivity, which can give you leverage. Remember that exclusive agreements can impact the size of your game’s player base. You’ll want to consider how much that exposure is worth, especially if you’re an emerging developer. Naturally, handing publishing rights to one party gives them greater power to determine timetables and rollout. Negotiate these terms to your advantage, as some publishers may otherwise proceed slowly.

5. Game Porting Agreements

These contracts share similarities with their publishing counterparts. Porting agreements outline how companies adapt your game for varied platforms, including consoles and secondary hardware like PC and mobile. Your development cycle may favor your preferred platform; however, portability necessitates those core components to play well with multiple systems. Porting agreements decide many things: when your game will be ported, on which platforms, and whether or not transformative rewrites are permitted. Porting can alter the functionality and performance of your game. Ideally, you’ll work with publishers who favor quality over urgency, as this can reflect on your reputation. The main benefit of porting is that it introduces your title to different gaming audiences. This exposure can be profitable, and game developers should seek a fair cut for impacting more gamers with their products.

General do’s and don’ts

Negotiating legal contracts can be tricky. As an individual developer, your negotiating partner (often a company) will typically present these contracts to you based on earlier discussions you’ve had. You may also decide to offer your own drafts with the aid of an advisor. Whichever route you take, here are some simple do’s and don’ts for negotiation: Do…

• Sign a copy of your contract for your partner and yourself, and keep a copy for reference later.
• Consult a legal expert and any gaming industry connections when inspecting a new contract. These individuals will scrutinize the crucial details that you may miss.
• Confirm that crucial information like rates, ownership, and timelines match previous conversations. Beware of bait-and-switch tactics.
• Ensure all contracts, even with large publishers or established studios, employ balanced language that respects your legal position.
• Take ample time to review a contract outside of your meetings.
• Pursue deals that pay you upfront to avoid weakening your negotiating power (especially if disputes arise).
• Assess how much you and your publisher want to get a deal done and how quickly.

Don’t…

• Ever sign a contract without reading or walking through it, no matter how trustworthy a partner seems. Preferably, make sure you have legal representation present.
• Allow a publisher or producer to appropriate your hard work without a legal obligation to credit you.
• Accept net profit agreements without specifying up-front payment in writing. These agreements let publishers pay you (or not) after recouping miscellaneous costs and fees. Seek deals involving gross receipts, where your cut is straightforward and guaranteed.
• Enter negotiations without a goal or exit strategy.
• Let your emotions steer your decisions.

Game Development Doesn’t Have to be Intimidating

While this list may seem overwhelming, hiring a media and gaming lawyer will simplify the process. Lawyers typically charge hundreds of dollars per hour for their services, so you’ll want to weigh potential profits against these expenses to determine their viability. Luckily, legal companies often offer free templates with needed sections for a sound contract, making it simple to edit your terms and conditions. When you’re ready to find publishers and investors to help support your game’s success, or if you’re interested in learning about more funding opportunities, submit an application to Xsolla Funding Club to get started. Create an account today to start and forge partnerships to take your game to the next level. Originally published on October 10, 2021
Updated on June 21, 2024