5 Contracts Every Game Developer Needs
February 15, 2020

The gaming industry is an incredible frontier to explore as a developer. Creativity thrives and creators can share their immersive worlds with engaged audiences. Despite this, game architects must remember that development involves numerous business decisions. These include ideation, publishing, marketing, and other forms of public relations. That’s not to say the gaming business is a zero-sum game. A healthy partnership may be the edge your game needs to reach its fullest potential.

If you’re looking to earn revenue or enter into a partnership, it would be wise to consult with legal experts. As an indie developer, protecting your interests and intellectual property is crucial. Smart agreements can even boost your creative freedom. Drawing up these key documents will help things run smoothly. Note that some of these agreements may share common elements.

1. Independent Contractor Agreements

Indie developers and freelancers working alongside an external team will often enter into a contractor (or contracting) agreement. Essentially, these define general working terms for both parties. They commonly cover various development milestones, confirm preferred compensation, and delivery dates for key assets. Since these contracts are temporary, the independent contractor agreement (ICA) will outline the duration of your working relationship – including the possibility of renewal. They may even detail services the other party expects you to perform.

This contractor agreement also contains clauses regarding conflicts of interest. You may not be able to provide services or similar assets to competitors over the duration of your contract. Your working relationship may end if this happens. This is similar to a non-compete clause, which may endure for some time after your contract ends. Keep in mind that companies cannot always enforce these terms after you leave, especially if they prevent you from earning a future living. Independent contractor agreements may also include confidentiality agreements and non-solicitation agreements. These prevent you from sharing trade secrets or intellectual property and also prohibit you from poaching clients or employees from your partner.

That said, most ICAs are pretty harmless and are nothing to be too concerned about. They’re a great way to solidify your own terms and ensure accountability for all.

2. Work-for-Hire Agreements

Employers often include these within independent contractor agreements, but many work-for-hire (WFH) agreements stand alone. If you’ve ever negotiated copyright terms, trademarks, or patents, a WFH agreement was likely involved. This contract formally explains how IP ownership transfers upon delivery of work. Say you develop a predetermined collection of digital character designs. Depending on your arrangement, these may become the sole property of your partner. This may be perfectly fine, but you may also be hesitant to surrender some assets. Clearly defining what belongs to who helps avoid surprises.

You’ll ideally hope to strike a balance between what you retain and what you surrender. Your assets probably mean a great deal to you; after all, they required numerous hours to create, and may also be quite valuable. Making mutually-beneficial arrangements will satisfy all parties involved. The terms of this agreement may be especially important if you’re building a public portfolio to showcase. Work-for-hire agreements also prevent you from submitting unoriginal work found elsewhere. Finally, contributor credits may be outlined 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. Notoriety is important in the gaming industry.

3. Option Agreements

Option agreements primarily center on 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 certain IPs. Option contracts also involve scheduling. For example, some time may elapse before a gaming asset is eligible for purchase. As a developer, you can dictate which dates are suitable for this transfer of property. These agreements are thus transactional.

Just because a party has a right to buy or sell does not necessarily mean they’re obligated to do so. Either party can withdraw their interest at any time. Option agreements are something of “good faith” agreements in this regard.

You’ll want to have a firm idea of what your gaming assets are worth to you, and be prepared to walk away if you cannot forge a suitable deal. Your game might become the next big hit, which is why options also include exclusivity clauses. You may choose to grant a game publisher or third party exclusive rights to your content for a set period of time. This means they would have the sole right to publish your game during this period. Once that expires, it’s open season.

If publishers need to work with your development assets for an extended period prior to launch, you will want to arrange a defined payment plan. This will give you a cut of the purchase price in the meantime. This investment encourages publishers to move more aggressively to bring your game to market. Options may include 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.

4. Exclusive and Non-Exclusive Publishing Agreements

We’ve touched briefly on this regarding options agreements, but exclusive and non-exclusive publishing agreements determine 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.

Multiple platforms may be involved in your game is a major title. The publishing agreement plays an essential role 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 (AKA “profits”) in their future may seek exclusivity. This can give you leverage. Keep in mind that exclusive agreements can impact the size of your game’s player base. You’ll want to consider how much that exposure means for you – 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 cousins. Porting agreements outline how companies adapt your game for varied platforms. This includes consoles and secondary hardware like PC and mobile. Your development cycle probably favors your preferred platform. However, portability necessitates those core components to play well with multiple systems. This flexibility facilitates a wider release, which you’ll want to happen on your terms.

Porting agreements decide a lot of things: when your game is 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. Porting introduces your title to different gamers. This clout can be quite profitable and game developers should seek a fair cut for ultimately bringing the game to life.

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’s some helpful advice:

Do…

  • Sign a copy of your contract for both your partner and yourself, and keep a copy for reference later.
  • Consult with a legal expert, and any connections in the gaming industry, when inspecting a new contract. These individuals will scrutinize the crucial details that you may miss.
  • Confirm that key information like rates, ownership, and timelines match what was previously agreed upon. Beware of bait-and-switch tactics.
  • Ensure that 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 just how much you and your publisher want to get a deal done, and how quickly.

Don’t… 

  • EVER sign a contract without reading it or walking through it, no matter how trustworthy a partner seems. Preferably 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.
  • Walk-in without a goal or exit strategy, nor let your emotions steer your decisions.

Game Development Doesn’t Have to be Intimidating

This list may seem overwhelming. However, hiring a media-and-gaming lawyer will simplify the process. This can become expensive rather quickly, so work within your means. Lawyers typically command hundreds of dollars per hour for their services, and some boutique firms may charge as much as $300-600 hourly for contracts. You’ll want to weigh potential profits against these expenses to determine their viability. Luckily, legal companies offer free templates with needed sections for a sound contract. You must simply edit your terms and conditions.

Negotiating terms can take time. You may reach an immediate consensus with a publisher, yet it’s not unheard of for larger deals to take months. This can lead to “deal fatigue,” so it’s important to keep talks moving while mentally bracing yourself for extended talks.

Protecting your creative and financial interests is crucial, however; this experience is also useful for future negotiations. Proper agreements can help you work efficiently and harmoniously with others. Respect that companies have their own interests. Remaining patient and flexible will make it easier to form lasting business relationships. 

Game development takes a fair amount of cooperation, but the payoff can be tremendous.

If you’re a developer in search of funding, consider submitting an application today.

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