Mobile Game Publishing deal - Profit calculation deducting the marketing costs

Hi All,
I was reading a blog post by a game publisher here: LINK
Regarding this part, i was wondering if it is a known standard in the industry:

I doesn't seems a standard to me that the profit is calculated by deducting the Marketing cost from the revenue. Isn't that part of the publisher only costs? Even stranger is that they might require an additional sum for the ad campaigns management. The post points out a fair (imo) 50/50 split deal.
As a game developer/studio you invest a relative big amount of money on making the project.
As a Publisher they should deliver value compared to publish the game yourself. So where is the value if the profit is calculated by subtracting ad costs + campaigns management?
Isn't the same as saying the profit is calculated by subtracting programming, arts, concept, sounds, and project management costs?

It looks like to me they are getting a 50% of a project revenue by simply taking the risk of "lose" the marketing budget. This "lose" is quite relative, as if everything is handled correctly and project is profitable, it is quite hard to lose the entire amount.

I do understand how much work a good publisher invest in a project.
Does anyone with more experience in the industries know if it is a normal practice ? I'm also sure every contract is different so a "standard" as written above is hard to identify.

 

That's not the standard way to calculate payouts. That's basically an out that lets them ever pay you any money ever. You should be looking for a set percentage of the gross, not the net.

Marketing is the publishers expense to bear, and comes out of their portion of the gross. Just like development cost are the developers responsibility to bear, and come out of the developers portion of the gross.

 

Is it terrible that I spent more time looking for typos in their blog post than actually reading it? I found three misspells.

 

Thank you. Yes this is exactly my opinion.

 

You will probably find more misspells on my first post actually

 

One quick way to determine if a site is a scam is that the grammar and spelling will be really bad. I don't expect most people to proof read a forum post but a web site should at least be put through a spell check and the ones that do not are usually best avoided. That said the few misspellings across all of their blog posts is a very minor thing. Simple mistakes most likely.

 

It is not a scam. it's the website linked on the 15th ranked Universal App in the US app store. 4th on game chart.
Try to go here and check: https://itunes.apple.com/us/app/paper.io/id1171814682?mt=8 .

 

That's a valid thing to look for in someone who is going to take over marketing and publicity for your game.

Another tip to assess a publisher is to see what they've done for other games. They list paper.io at the top of the game page. I did a google search for it, and didn't find any real marketing done by the publisher anywhere.

The games Facebook page has about four posts on it. This is their flag ship, and the best they can do is four posts? It doesn't even have a twitter account. And it's only got a couple of reviews on no name sites.

Despite all this the game seems to have done reasonably well. I'm just not sure the publisher had much to do with that.

 

they have a global fan page here: https://www.facebook.com/voodoogames (with 212k likes ).
This is because of my concerns on the blog post.

EDIT: I didn't see they only have 4 post on paper.io . My fault.

 

I submit this also for consideration.

 

I saw the cached version with the price. Yes.

 

It can be reasonable to do the split after direct marketing costs, but the percentage in that case should be better for the developer, say 70:30 in their favour.

User acquisition costs are high, but if LTV > UA, then it makes sense to plough in a lot of money. You don't want the publisher restricting the spend because of the deal when spending would be to your benefit as well.

Just make sure you avoid Hollywood Accounting.

 

Another way to spot a shady site is when the site is "professional looking", but very generic. Meaning generic banner, probably animated, few posts, but everything is sterile, empty and impersonal. I think it happens when somebody uses a template: no physical address, small number of posts, no names of the staff anywhere, and contact information is a form submission.

I think the site fits squarely into this category.

 

"Enjoy the simplicity and strategy of an io game in a world with unique graphics"

Unique graphics?

I would question to legitimacy and aptitude of anyone who describes the graphics so commonly seen in mvp games, just like this game as unique.
Interesting article though - thanks for sharing.

 

It's not uncommon for UA costs to be deducted from the gross. The costs for 'managing' the campaigns isn't as common, as it should fall under the overhead of the publisher. But even so, common is relative, all the other points should taken into account.

Remember, it is a partnership, just as a publisher will want to choose a developer that can deliver a good game, developers want to choose a publisher that can make optimal choices on ad spend.

 

The advantage of effectively splitting the ua costs, is that both sides are more invested in the success. If for example the publisher is eating all the ua costs (which are ongoing, and in a successful game, can vastly surpass development costs), is that additional investment can reduce thier revenue while increasing the developer's. it can become in thier best interest to reduce spend, and lead to sunsetting the game earlier before the costs become unjustified. Splitting the burden, keeps both sides equally interested in the long term success.

But again, relationships will vary. Some publishers bring a lot to the table, like strategic partnerships, QA, backend support, better deals, strong brand, and of course IP. Some may just bring cash.