Contract negotiations are an essential part of the video game development process.
Negotiating a contract that accurately reflects your needs and goals can help protect your intellectual property and set the stage for a successful partnership, whether it’s with a publisher, a passive investor, or a licensor who will grant you rights to use their existing property in a game you’re making.
In this post, I’ll provide some practical tips for negotiating video game development contracts to ensure that you’re protecting your interests.
Know Your Goals and Priorities
Before entering into contract negotiations, it’s essential to have a clear understanding of your goals and priorities for the project.
Consider the following:
- What is the scope of the project?
- What resources will be needed?
- What are the milestones and deadlines?
- What is the budget?
- What is the revenue sharing model?
By understanding your goals and priorities, you can negotiate a contract that accurately reflects your needs and helps you achieve your objectives.
For example, if you’re evaluating the deal terms of a potential publishing agreement, you need to prioritize the kind of terms that protect your game IP and keep you safe from a publisher’s failure to hold up their end of the deal. I’ve written a post on Gamesindustry.biz detailing the kinds of things you should be looking for – check it out here!
Seek Legal Counsel
Working with a lawyer who specializes in video game law can help ensure that your interests are well-represented in contract negotiations.
Consider the following:
- What types of legal issues may arise during the project?
- What provisions should be included in the contract to protect your intellectual property?
- What potential risks should be considered?
By seeking legal counsel, you can navigate the complex legal issues that may arise during contract negotiations and protect your interests.
Obviously, I have a vested interest in getting you to hire a lawyer (since I am one). But I have also experienced numerous clients coming to me AFTER signing the deal.
For example:
- a developer who has been burned by a publisher who isn’t marketing their game at all, or
- a publisher burned by a developer who isn’t delivering, and the publisher has no right to take over game development!
Sometimes, it’s too late to force new terms, and it can be a huge headache to clean things up after the fact.
Negotiate Key Terms
During contract negotiations, it’s important to focus on negotiating key terms that are essential to the success of the project.
Consider the following:
- Intellectual property ownership
- Scope of the project
- Payment terms
- Milestones and deadlines
- Warranties and representations
- Liability and indemnification
- Termination provisions
By negotiating key terms, you can ensure that the contract accurately reflects your needs and goals for the project.
Many developers I work with are afraid to push back on ANYTHING, fearing that asking for any changes will make the deal fall through. I have a couple thoughts on this:
- Having no deal is often better than having a bad deal – at least when there’s no deal you have other options. A bad deal closes those off and puts you in a terrible spot.
- Most publishers I’ve worked with are happy to meet in the middle on many issues, whether it’s making certain protections mutual or coming up with a different royalty scheme that is fair for everyone. You never know until you ask!
- If you work with someone who is absolutely unwilling to negotiate, that’s a huge red flag! They’re not someone who is going to be a good partner moving forward.
As I mentioned before, I’ve got a lengthy post on the kinds of terms you should be looking for when negotiating a video game publishing agreement over on GamesIndustry.biz here.
Consider Future Scenarios
When negotiating a contract, it’s essential to consider potential future scenarios that may arise during the project. As a lawyer, it’s my job to keep these in mind and always consider the worst while hoping for the best.
Consider what happens if:
- The project goes over budget or past deadlines?
- There are disputes between parties?
- One party wants to terminate the contract early?
- There are changes in ownership or management?
Too often, I get someone coming to me after the fact when a deal has gone sour and there aren’t any protections in the contract to help them.
By considering potential future scenarios, you can include provisions in the contract that help protect your interests and ensure that the project can move forward smoothly.
One of my jobs as a lawyer is to be pessimistic – while most deals work out just fine, there’s always the risk that things go bad and we need to have thought about that before we sign the deal.
Build a Positive Relationship
Finally, it’s essential to remember that contract negotiations are not just about the contract itself. They are also an opportunity to build a positive and productive relationship with your partners – this is basic etiquette stuff, but mutual respect and good faith are important in any contract negotiation.
Consider the following:
- Listen to your partner’s needs and concerns.
- Be respectful and collaborative during negotiations – we like to say in dispute resolution that we’re trying to “expand the pie” rather than dividing it up. Sometimes there are creative solutions that increase the benefits for all parties involved, rather than being a zero sum game.
- Set clear expectations and communicate openly throughout the project – when a partner leaves you hanging and doesn’t communicate well, the uncertainty can really kill your enthusiasm and confidence in a deal.
By building a positive relationship, you can set the stage for a successful and mutually beneficial partnership.
Wrapping up – where do we go from here?
Negotiating video game development contracts can be a complex and challenging process, but by following these tips, you can ensure that your interests are well-represented, and the project can move forward smoothly. Remember to know your goals and priorities, seek legal counsel, negotiate key terms, consider future scenarios, and build a positive relationship with your partners.
By approaching contract negotiations with a clear understanding of your needs and priorities, you can help ensure that the project is a success and set the stage for future collaborations.
Have a video game contract negotiation you need assistance with? Jump over to my contact page to set up a call to discuss!
