Negotiation as a game developer with a game publisher

Hi,
Is the game developer required to share the expenses of the UA campaigns (Marketing) along with the game publisher? or is it the game publisher's resposability alone?

Attached the article from the contract.
1.1. Publisher shall pay Licensor sixty per cent (60%) of Net Revenues (as defined below), for all sales of the PRODUCT.

1.2. “Net Revenues” is defined as the invoiced price (“Gross Revenue”) charged and collected by Publisher for all sales of the PRODUCT and for all licenses for the PRODUCT less the App Store Commissions (e.g Apple App Store and Google Play Stores 30% commission) and also less marketing, including UA (User Acquisition) campaigns where these are in the interest of both parties and additional market development funds including rebates, volume discounts and returns credited. Upon Licensor’s demand, Publisher shall provide Licensor with proof that such marketing expenses have been made.

1.3. If UA (User Acquisition) campaign costs exceed net revenue then these initial costs will be assumed by the Publisher but would be recouped at the next available revenue payments received by the app store, but for a period no more than six months. UA spend is contingent on the profitability of the game and where it is in the interest of both parties, i.e where ARPU (Average Revenue Per User) KPIs (Key Performance Indicators) are greater than CPI (Cost Per Install User) Acquisition to maintain profitability of the marketing spend.

 

Basically, they're agreeing to loan you advertising money in exchange for 40% of the net.

Unless this is a well known and reputable publisher, I'd be very skeptical... even then I'd be skeptical - especially if there was no agreed upon minimum spending for advertising.

 

Really it is up to the contract. These days, relationships between developers are all over the place, it is becoming less and less easy to say what is standard as common.

@frosted s comments are probably going to be your best advice.

 

Yeah, for better advice, I think you'd have to speak to professional studios who have experience in the subject.

But when reading these kinds of contracts, what you should be asking yourself is "what is the minimum they're agreeing to do for me, and what is the maximum they're asking in return".

From the clip you presented (and there could be other bits that say different stuff) it would appear that the minimum they're agreeing to is zero and the maximum they're agreeing to is a short term loan in exchange for nearly half of your sales.

 

The frosted contract killer.. new app... help you make sense of bullshit contracts

 

Exactly...

 

The wording sounds good and fair to me.

Recouping UA spend before paying out the developer is a common theme among publishers.

Before signing up, you might also want to read this excellent article on the pitfalls of signing with a publisher.
It goes through things that should and shouldn't be in your contract.

 

1.2 gives them license to unbounded spending on 'marketing and advertising', to which they should give you a schedule of how they are going to spend that money, and on what. They could easily just take 100% of the revenue, and invest it back into their own 'marketing' team. That is the type of behavior that should be monitored and/or capped.

I would almost counter and say that you will split all proceeds after app store sales 50/50, with advertising costs split equally as well and coming out of the 50/50 split.

 

@omerelfassy ,
10-15 years ago, a publisher asking the developer to participate in the marketing budget would have been a no-go. Basically, you allow them to do all kind of experiments and you'll help them to pay the bills, which means they have no idea how to sell your game and how much it's going to cost them. 10-15 years ago, that was highly unprofessional.

Nowadays, there are poor Indie Devs without a clue by millions, the publishers can probably do about whatever they want. Up to you to see if you want to give them cannon fodder or not.

@grimunk transformed your 60% share into a 50% share, not the best negotiation process... (do the maths with a 100-Euro income from AppStore and a 50-Euro spent in Ads )

 

Oops, you're right, I reversed them.

 

Yeah, I'd want a clear idea of exactly what their "marketing" may entail, and what their UA practices are. If they're trustworthy then having this uncapped in the contract might be ok because it leaves them free to quickly respond to market response and opportunities. If they're not trustworthy then it could leave you in a situation where someone else is playing double-or-nothing with the proceeds of your work. The only assurance against that is the notion of spend being "mutually beneficial", which is itself open to interpretation.

As a whole it also leaves me wondering what you're getting out of it. You could engage a marketing agency of your own and you can buy UA services of your own, so if they're making you pay for those things then you don't necessarily get any benefit from that. Depending on who they are you might get great benefit from prior experience, existing reputation and/or brand power, existing relationships they have in place, superior market reach, and other such factors.

If they're providing you with genuine benefit from stuff like that then sure, "you pay the costs, we provide expertise, and we split any profit afterwards" could well be a reasonable and mutually beneficial deal. On the other hand, I'd want to make absolutely sure that your work isn't just another coin they're sticking in a slot machine.

Depending on whether you're under time pressure or not, I'd consider finding other developers signed with the same publisher and asking what the experience is like.

 

Lets be honest, any publisher working with small indie/solo in the mobile space in 2017 is a scam.

At best, they do nothing and take 40%, at worst they hire their buddy Sam the "marketing consultant" for $500/hr and bill you for it ...after taking their 40% off the top.

Don't worry though, Sam will totally write up an invoice as proof of service.

 

No, not a slot machine... you better see it
It has been in development for 2 years and it cost almost 500k$ to develop.
We are good at developing but bad at marketing, and that's why i'm considering to go with a publisher...

I'd like to introduce a brand new entrance in the Collectible Card Games category – Runewards: Strategy Card Game.
Combining the best elements of the genre in an addicting multi-platform game which you play against others competitively or go solo in our single-player or story campaign mode.

Your goal is simple. Collect cards, build decks from 4 distinct races and battle your way to glory.
You play for the highest Total Power each round, but the way to achieve it is not easy. You combine abilities and tactics together to create the perfect strategy, but remember, that so does your opponent.

The game is available now to download for PC and Android devices.
https://www.runewards.com/downloads#downloadfocus

Here’s a short video that explains the game in 2 min (and a half).

Trailer

Facebook
https://www.facebook.com/Runewards/

 

Way more impressive than I expected!

 

Nice! Looks good.