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- From: HeroSoftware@cup.portal.com (Bits of Magic)
- Newsgroups: rec.games.programmer,alt.msdos.programmer
- Subject: Re: Game Publishing Questionaire (LONG)
- Message-ID: <74451@cup.portal.com>
- Date: Wed, 27 Jan 93 11:21:08 PST
- Organization: The Portal System (TM)
- References: <Jan26.044919.11479@yuma.ACNS.ColoState.EDU>
- Lines: 188
-
- Standard Disclaimer:
- I am not a lawyer. These are opinions only and should not be taken as facts.
- Your mileage may vary. Don't sue me, I'm only trying to help. I can think
- of exceptions to just about every statement or opinion I've offered here.
-
-
- > 1) Currently the game is still in its earlier stages of development. We
- > have not yet decided how we will distribute the game but let's assume
- > that we will publish it commercially. What is the best way to get
- > our game into a market? Should we find a distributor, sell the
- > rights to a company, what?
-
- Generally speaking, in order to get into major retailers, you MUST sign a
- deal with a distributor or publisher. What's the difference, you ask?
-
- A publisher will usually assume responsibility for writing, laying-out, and
- printing manuals, designing packaging, printing of game materials, assembly
- of game materials, warehousing of game materials and assembled product,
- marketing and sales (a short phrase that encompasses a multitude of sins),
- distribution of finished product, and at least some level of end-user
- support.
-
- A distributor will usually assume responsibility for limited warehousing of
- assembled product and distribution of finished product.
-
- Quite a difference, isn't it? What it comes down to is that a publisher
- is going to buy (or lease) the RIGHTS to produce and sell a game. They will
- generally assume all responsibilities for creating that game EXCEPT for
- design, coding, and testing of the software itself. They will generally
- consult with authors as to the CONTENT of manuals and other game materials.
- They will sometimes consult with authors as to the design of packaging and
- other marketing materials. They will occasionally (that's less often than
- sometimes) consult with authors as to the design and content of of sales
- materials.
-
- A distributor, on the other hand, generally buys finished product from you
- and resells it. Perhaps the term reseller would be better than distributor.
-
- The line between publisher and distributor/reseller is not sharp. There's
- fuzziness that can be sharpened up when you negotiate a contract, like
- requiring a publisher to let you write the first two drafts of the manual,
- or requiring you to design the package and get art for it. Almost anything
- is negotiable to a point.
-
- Before you demand complete control over your work, remember:
- 1) Assuming a decent contract, what's good for sales is good for both you
- and the publisher or distributor. If they don't think a package is going to
- attract buyers, they'll probably want it changed.
- 2) The cost of actually manufacturing product can be very high. The risk
- of monetary loss is correspondingly high to the party that has to do the
- manufacturing.
-
- > 2) Assuming that we have decided work out a contract with a distributor
- > to sell our game. What sort of contract should we negotiate?
- > Should we ask for royalties, a flat sum, a combination of both, or
- > what?
-
- If you are serious about doing this, the first thing you will do once you've
- talked to a publisher or distributor and decided between yourselves that
- you want to talk seriously about a contract, is to GET A LAWYER! Unless you
- are a lawyer. A lawyer will do several things for you:
- 1) A lawyer will take your money. Anywhere from $100 - $500 per HOUR.
- 2) A lawyer will make the publisher or distributor take you very much
- more seriously.
- 3) A lawyer will keep you from making simple, easily made mistakes that
- can cost you a great deal of money.
- 4) A lawyer will generally shorten the negotiation cycle enormously, and
- the contract that comes out the other end will be much more to your
- advantage.
-
- To effectively use a lawyer, you must understand the role of lawyer in the
- process. A lawyer doesn't MAKE deals. A lawyer makes CONTRACTS. You will
- be responsible for most of the negotiating (although you may use your
- lawyer as a go-between). Once you and the publisher/distributor have
- agreed on general terms, your lawyer and their lawyer will settle the
- details of a contract. Your lawyer will inform you of the many things in
- the publisher's/distributor's "standard" contract that are not to your
- benefit, and you will between you decide which ones to insist on having
- changed. Sometimes these things are in contracts for no good reason, or
- a small modification to the language will make them very much better. That's
- what a lawyer is for...
-
- Deals. Deals vary widely. What target machine? What type of game? You
- said computer RPG, but nothing about the target machine. Distribution or
- publishing deal? Are you interested in up-front money or long-term cash
- flow?
-
- Straight Distribution/Reselling Deal
- You do everything until you have shrink-wrapped boxes in your hands with
- your game, manuals, etc. in them. You sell them to a distributor for
- $14, they sell them to retailers for $20, retailers list them at $50
- and sell to end-users at $40. Your profit is in however little you
- can make the shrink-wrapped boxes for. Your costs include marketing,
- sales, and end-user support -- all of which you can ignore, but ignoring
- them will lower you sales. You assume inventory risk (by which I mean
- you must PAY for the boxes before someone else pays you for them, and
- you will be required by contract (almost certainly) to accept returns
- and not get paid for those).
-
- Various Publishing Deals
- You create software. They do just about everything else.
-
- 1) A straight royalty deal (no advances -- no money to sign or fund
- development) might get you 20% or more for an IBM game, 10% for a
- cartidge game. But if they have no up-front investment, they have
- little incentive to push your game into the market quickly or hard.
- The vast majority of their risk is in their inventory, which they
- can control easily, so they can go slowly.
-
- 2) An advances against royalties deal (you get money to sign and/or
- develop the product, but that money comes out of your future
- royalties, if any). These vary all over the map, but royalty
- rates for IBM products run 12-15%, for cartridge products maybe
- 5-7%. Advances for an IBM product can run as high as $250,000,
- for a cartridge product as high as $350,000. Generally high
- advances go with lower royalties and vice-versa. Sometimes you
- can get varying royalty rates (X% until advances are paid off,
- Y% after that -- or X% for the first 50K copies, Y% for the next
- 100K copies, Z% after that). Sometimes some of the money paid
- for signing or development is NOT advances but straight cash.
- Sometimes the advances are returnable if the product is not
- published or doesn't sell well. Or they can be applied to
- any other products you do for the same company.
-
- 3) A straight cash deal. These are rare except for conversions,
- but I imagine they still exist. I would think you'd want all
- development costs funded plus some additional amount that could
- be negotiated. I would think an easier way to do this would be
- to go to work for the publisher.
-
-
- Random Contract/Negotiation Thoughts
- Whatever you do, MAKE SURE a lawyer looks at your contract before
- you sign it. Do not believe ANYONE who tells you "we have a
- standard contract and it's not negotiable". If they are serious,
- you almost certainly don't want to work with them. Don't do
- extensive work for someone without at least a letter of intent
- (if you're just doing your own stuff on your own product, it's
- ok, but don't implement their "suggestions"). Don't sweat a
- First Option clause, but be very concerned about a Right of
- First Refusal. Everything is Negotiable to a point, but
- everyone concerned here has to make a profit or everybody
- loses over the long run.
-
- > 3) Now lets assume that we have negotiated a contract that will benefit
- > both companies the most (ours and the distributor). How much money
- > can we hope for? How long will it take for the cash to really
- > start flowing (assuming the product is successful)? How long will
- > the cash continue to flow?
-
- All of this is variable according to your deal. In a reselling deal
- you will start getting paid on a regular basis (monthly or quarterly,
- probably) as soon as they get paid (which is often net 90), so you
- may be lagging as much as 6 months behind sales. In a royalty deal,
- first you have to pay off your advances (if any), which may take
- a year or more, then you have a similar lag which may be a couple of
- months longer because of the accounting practices of publishers
- (mostly involving returns). On the other hand, if you have a good
- contract with a nice place, you may be getting money in hand 45
- days after sale.
-
- The life cycle of products varies a lot. Today most retailers
- dislike leaving product on the shelf if it doesn't sell fast, so
- if you're not hitting big in the first couple of months it could
- be all she wrote. On the other hand, some products sell slowly
- but consistently for several years. It's something of a crapshoot.
-
- RPGs tend to peak quickly and drop off quickly as the game is
- solved by the dedicated gamers. You often then release a sequel
- which does the same thing. Puzzle games (like Fool's Errand or
- Tetris) tend to have slower, longer sales curves that never
- peak as high. Simulators seem to sell well while they are close
- to the technological cutting edge, but often disappear quickly
- when new technology comes out. Your mileage may vary.
-
-
- Oh yeah. Check out the Computer Game Developers' Conference, a
- yearly meeting of developers and publishers in the field of
- computer entertainment. This year it's in April, and it's always
- somewhere in the San Francisco Bay Area. I'll post info in the
- next couple of days. Please don't email me requests for info or
- post them here unless I haven't posted by 3 February 1993. Thank
- You.
- ****************************************************************************
- * Evan Robinson * "I never get sick of zombies. I just get *
- * herosoftware@cup.portal.com * sick of producers." *
- * * George Romero *
- ****************************************************************************
-