Exclusivity Deal vs Non-Exclusivity Deal

[Rhubarb]

I was thinking about possible deals on my new game and got to thinking about advances and what the industry pays on a non-excluve deal versus an exclusive deal.

So, my question is, if you were willing to accept, for example, $20k for your game on a worldwide exclusive retail/download deal (i.e, completely selling your game i.p), what level of advance would you expect on the same game on a non-exclusive deal under the same conditions?

This is assuming that the deal is an advance-only deal with no royalties included?

I realise that there are factors that can infouence this, but just a general opinion based on the 20k example would be helpful.

Cheers...

[luggage]

Not sure I understand everything there. If you're selling your game IP and not receiving any royalties then it will have to be an exclusive deal. No-one will buy your IP in a non-exclusive deal as you could then go and sell that same IP to somebody else.

[Rhubarb]

So you are saying that there is no value in the i.p on a non-exclusive deal?

Surely, some publishers/portals, etc would place 'some' kind of value on acquiring the 'rights' to sell a game on a non-exclusive basis without the need to pay developer royalties?

[luggage]

Oh, you mean licensing the rights to your IP rather than selling your IP? Not much use I know but it's difficult to put a figure, even a guess really, on something like that without seeing the game at least. It would all depend on how well your game went down with the publishers, if they love it you'll get more than if they just take a punt with it.

[Rhubarb]

Sorry, reading back my original post it was indeed a little ambiguous. I do indeed mean licensing the rights to the i.p on a non-exclusive basis...

My example used the exclusive value of $20k which assumes that is the amount a publisher/portal is willing to pay for the full i.p rights.

So, if you had a game worth 20k, what would you accept for the same deal on a non-exclusive value?

(all hypothetical of course, but interesting nevertheless!)

[Nikos Beck]

I'd be wary of signing over all of my hard-earned work for $20k and never see it again. Maybe it's just the indie in me. In terms of $20k as exclusive? That seems low. If you spent a year of your spare time, is it worth only $20k, knowing that characters, art, code, story is no longer yours. I have sold all claims to everything you did?

Assuming that I would accept $20k for an exclusive, all-encompassing deal. I would expect a non-exclusive deal to offer royalties. I don't think there would be any benefit to the publisher offering a large cash payout. If the game will be sold by multiple vendors, they are very unlikely to offer a big payout because they cannot be guaranteed any sales. If your game is famous then they might offer some cash up front so that they can offer it as well because they're somewhat sure of profit and they don't want to look like a sod who can't carry a popular game.

Some portals or publishers might offer something up-front if you can give them an exclusive deal for three months before the game is released to other companies. That gives the publisher some return on their marketing and bragging rights if the game becomes popular.

[zoombapup]

I'd never sign a deal like that. Never give away your IP (unless its for a very VERY healthy sum).

There was a very interesting tale here a while back about the developer of platypus and how he signed over the rights to Idigicon. Wasnt a good tale :)

These days, I wouldnt make a game I didnt love and if I love my game, I'm not going to sign away rights to it without some serious consideration and a big net win for me.

[sillytuna]

You need to differentiate between an exclusive deal (effectively licensing your IP), and selling your IP.

If selling, be very careful and get something off the back-end (not just a one off fee), and keep certain platform rights and rights to regain the IP in some circumstances (e.g. IP isn't exploited in a new product over a 24 month period).

Sigh, get a lawyer...

[Coyote]

I think the biggest failure of game developers over the last three decades of the medium has been to underestimate the value of the IP.

Publishers understand this, and know how to exploit it (and have the money to do so), and have gotten to the point (amongst mainstream publishers, at least) that IP ownership is the deal-breaker for them. They act as though its a tertiary concern, hardly worth anything, but try saying, "Okay, how about we just keep it then, and you save $50k" or whatever and see how they react. (I'm talking mainstream and bigger budgets, here, sorry, but it applies either way).

Even just a license to the IP can make things complicated. Opportunities OFTEN come up even for a mediocre-selling IP, and if the ownership / control of the IP is in question, both parties may be reluctant to take full advantage of the possibilities.

As one example of the difference (and it's probably NOT typical, BTW), I think GarageGames advertises 50% royalty on non-exclusives, and 65% on exclusives. So a little more than a third better rate for exclusives. However, in talking to them (and it's been a while, dunno how they are now) they were a little reluctant to take responsibility for the sales of an exclusive title, and were promoting the non-exclusive case. But that might vary from game to game.

[jcottier]

I think the biggest failure of game developers over the last three decades of the medium has been to underestimate the value of the IP.

It is not that they underestimate the value of the IP. They don't have any other choice. In most cases, developers don't have any money. They use publisher money, then kiss goodbye the IP. Simple.
Very very few developpers can dictate their way. Valves for example is one of them.

JC

[Elder]

I'd never sign a deal like that. Never give away your IP (unless its for a very VERY healthy sum).

There was a very interesting tale here a while back about the developer of platypus and how he signed over the rights to Idigicon. Wasnt a good tale :)

These days, I wouldnt make a game I didnt love and if I love my game, I'm not going to sign away rights to it without some serious consideration and a big net win for me.

Where can we read this tale?

[sillytuna]

You can read it on a variety of sources, including by searching this forum.

It's not quite as bad as some people on here think, i.e. it was a case of signing the wrong contract rather than an illegal rip off (and I know some stories involving major publishers and have been on the receiving end myself...).

The Platypus developer signed a contract handing over all rights for a small set fee. The game was a surprise hit, but of course he had no rights or royalties.

Learn from that mistake. Try and keep an interest in your game whatever happens.

[Desktop Gaming]

You can read it on a variety of sources, including by searching this forum.

It's not quite as bad as some people on here think, i.e. it was a case of signing the wrong contract rather than an illegal rip off (and I know some stories involving major publishers and have been on the receiving end myself...).The Platypus deal was an agreed deal - I worked at Idigicon at the time and saw it happen - nobody put a gun to the guy's head, he'll be among the first to tell you that and there was never any talk of "hey, lets rip this guy off". As Alex said, with hindsight it wasn't the right deal for him to take but at the time it was felt the right thing to do.

Alex - wandering very slightly off topic, but, didn't you once do a deal with OTM Publications and Promotions in Tamworth? Or am I thinking of somebody else?

[edit] http://www.squashysoftware.com/makingplatypus.php

[sillytuna]

No we never did a deal with OTM. They did another karting game when we were doing ours.

OT: At the time I wrote my first game - which was a true (and successful!) indie title by the way (where's my indiegamer badge, lol!) - some publisher quite literally copied our game and tried to sell it commercially as a sequel to ours.

It's amazing what some people will do! They got a nasty legal letter as you can imagine.

Back on topic - you need to push and prod publishers to work out what's negotiable. If you truly have a good product then you have more strength than you think. If you aren't going to make them much $$$ / you're just a portfolio filler, be aware of that when negotiating. It's not always a bad thing either.

To negotiate, you need to be aware of their position and how they see both you and your product.

[zoombapup]

I wasnt trying to imply there was anything in the platypus deal that was dodgy, just that you should learn the lesson of what CAN happen if you sign your IP away for a small fee.

Not that it will ALWAYS happen mind you.

I guess Idigicon had quite a lot of smaller games sign there IP away and I'm sure a few of them actually quite liked that (made some pocket money etc).

Just a bit of a weird thing to do to me.

[Rainer Deyke]

I would ask ten times as much for an exclusive license than for a non-exclusive license, and again ten as much for the full IP.

Example:
Non-exclusive license: $10,000
Exclusive license: $100,000
IP: $1,000,000

[sillytuna]

Dekye, nice in theory but unrealistic I'm afraid - figures (multiples) will be way out in most cases.

I've signed away an IP or two in the past and got the right deal. It doesn't have to be much more cash - it all depends upon the project, potential sales, and the way the IP sale is constructed.

Remember that publishers are often buying with investor cash and/or for portfolios, so your game may be "worth" rather more with a good up front figure than on a low advance/high royalty.

As I said, you need to understand the market and calculate some predicted income based on predicted sales.

The Platypus problem wasn't the figure, or even selling the IP per se given the market the title was headed for, it was the lack of any further control or royalty on other platforms.

Contrast that with the Worms deal. The Worms creator earns from all Worms income even though he's not worked on the project for years and it's Team17's ip (as long as they don't breach the contract).

This is all more complicated than people think and every game and every contract is different. As a general rule, you should always have an income for all versions of your game ever made, and the IP should revert back to you in certain circumstances (i.e. non-exploitation after x years, not hit a developer net revenue target after x years).

[Rhubarb]

Thank you all for your comments so far.

I realise this is probably a long-shot, but I am looking into publisher contracts and the implications/law surrounding them. (I actually studied law for a while...)

I don't suppose anybody could let me know where I may see some examples of publisher contracts on the net? Alternatively, if anybody has a contract that they have been sent that isn't covered by an NDA, I would love to see a copy of it.

Contact me by PM if you prefer.

If you don't ask...

[Rainer Deyke]

Dekye, nice in theory but unrealistic I'm afraid - figures (multiples) will be way out in most cases.

I wouldn't call it unrealistic. It's my price point - if nobody want to buy at that price, that's fine with me. The exclusive vs non-exclusive prices are based on how many non-exclusive deals I can get, including international deals. I would also accept royalties. The full IP price is based on me really not wanting to give up creative control and sequel rights. I'd say that it's simply not for sale, but it is - if and only if it makes me filthy rich.

BTW, the numbers were just an example. For a much smaller game, the numbers could look like this:

Non-exclusive license: $100
Exclusive license: $1000
Full IP: $10,000

[zoombapup]

For those interested, this is a great read.

http://gamasutra.com/features/20070112/spark_01.shtml

I dont think there is a single type of deal, but a multitude of them. What tends to happen is that the best negotiator gets what they want. What happens in the ideal case is that everyone gets what they want.

Then there's the above type of case :)

[sillytuna]

Hi Rainer - I understood what you meant, I just didn't want readers to think that's how it works.

As you say, the IP has a value other than financial.

[Desktop Gaming]

Well, I've written 13 games since 2001. I sold the IP to eleven of them for varying amounts.

Why did I do it that way? Because that way I was guaranteed a sum of money. The games did not take massively long to create. One of them took a little over a week, another took 32 days and most of it was written in a London hotel room while I was away there. While I was doing this I did not do any other work so as daft as it seems, I gained a lot - far more than just money - because I was completely independent.

The option of a royalty deal did not appeal to me. A royalty deal, to me, is a risk. There's always a chance that you can come away with nothing. If your game will be a roaring success then yeah, royalties all the way. But for a game that took only a couple of months on average? Its not going to happen. Take the cash, wash my hands of it and move on.

The lowest I sold a game for was $400. It was just a little puzzle game I wrote in a week or so, to kill time while I was waiting for my graphics artist to 'do his thing'. I finished the game and just sat on it for a couple of years, until the chance came to earn a few quid from somebody that wanted to make branded versions of it for promotional give-aways. So I took it.

I think as has already been said, every deal is different and you have to do what you feel is right at the time. It may be that later on, you'll reflect on that decision and feel that it may have not been the right thing to do after all - I can testify eleven times over that this is completely true.

That said, although I can't legally make a 'sequel' as such to any of my games, there's nothing legally stopping me from writing another radio controlled powerboats game, or another golf
sim. And I may do so one day.

No we never did a deal with OTM. They did another karting game when we were doing ours.Ah, yeah thats right, it was Virtual Karting. I know the guy is/was floating around here somewhere too.

[Elder]

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[Elder]

[sorry I double posted my message by accident...]

[HairyTroll]

I hope that Igniton acted charitably once they meet success with their game and sent a personal reward to the guy who has contributed to their success, if not, my opinion is clear; the persons in charge of Igniton aren’t ethical people, agreement or not.

So you're saying that if Igniton had lost their shirt on the deal, then the $2000 should have been returned?

[Elder]

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[sillytuna]

To defend Ignition here, you mean Idigicon! Ignition do the Metal Slug and Mercury series ;)

I'm a very moral person myself but I need to make a point here that isn't going to be popular. However, it is the truth.

If you sign a deal then you're in the commercial world and I'm sorry, but you can't expect charity. Ok, there are moral arguments, but you wouldn't get extra money in any other business and I assure you that this goes on in all industries.

I've pointed it out before, but it happens *all the time* in the film and music industry. Everyone can make lots of money but the director/writer/producer may never see a penny. I can name endless examples. One or two actors have also "sold" tv rights to series that went on to be come popular again/made into films. They very publicly have a go at the people they sold their rights to, but they made their decision and should live with it.

Remember that most games lose money and that this is a business. If you are selling something for money, you need your business head screwed on. Business is capitalistic and not moralistic. Now you could argue whether a corporation should have some humanistic regulations (and I'd agree actually) and you'll find there are books on that.

Anyway, if a company paid me $1m, had $1m in costs, and the game grossed $50k, should I give money back and save the company and everyone's jobs? Hell no! So why should it be the other way around?

Where such small amounts are involved, morally I do agree with you, however few businesses would do anything about it. To me that's a bit short sighted - what happens with the next game - especially in this case, and, for the record, I wouldn't have handled it the same way.

I should also ask, where are Alten 8 now? I've dealt with probably 30+ businesses in ten years, in games, web, and advertising. Almost without exception, the really successful ones are run by ruthless people. Doesn't mean they aren't nice (most of them are great), but they are absolutely ruthless in a business sense.

[Elder]

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[sillytuna]

Yes there were ways to handle it better but it's been put to bed elsewhere.

With reference to this thread though, the lesson is that doing exclusives can be a risk, and if selling IP then remember there is a little more to it then just receiving X thousand dollars.

[Spore Man]

Minor detail, but in the name of accuracy, he got paid over $3000us. (The initial 1000bp plus a completion bonus of 500bp)

[papillon]

It's hard to be 'accurate' when you're discussing two currencies whose exchange rate has changed a lot in the past few years. :)

[Sybixsus]

I should also ask, where are Alten 8 now?
Same place they were then, publishing games. Two of mine are due to be released in the next few weeks, knock on wood. My experience with them has been excellent, and it's a very short list of companies that I can say that about.

[Elder]

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[sillytuna]

I should add that the only bad thing I'd heard about them was inexperience.

[Elder]

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[Desktop Gaming]

Thing with Idigicon/Ignition/Indigion - call them what you will - is that they've never forced anybody to sign a contract with them. Everyone that's done it - myself included - has done it of their own free will. If you feel you can get a better deal elsewhere, then go and get it.

People at either end of a contract should know exactly what they're signing. If they don't, more fool them for not reading it properly/at all. That said, I don't think I would have sold the game for the amount he did, either. However... his choice to do so, be it out of misinformation, desperation, or whatever.

As for Elder's comments about "the uniqueness of the game".... plasticine graphics aside (which weren't to my taste at all), its just a shoot 'em up, and one with even less features than, say, Thunderforce III, Project X, or X-Out. In that respect its far from unique. Personally I'd much rather play Thunderforce III despite the fact that its 15+ years old.

[Adrian Cummings]

I won't disagree, Paul from Alten8 started with inexperience (like everyone I guess), and I think he's still in the learning process, but he has certainly learned a lot during the previous months/years. I can't tell with precision because I'm not in touch with him very much now.

One thing I remember is that I suggested him not to work on so many projects at the same time. I strongly believe it prevents his company to focus on quality and wise decisions... So I wish that someday Paul will take hold of ‘one’ brilliant game and focus his energy entirely on the marketing.

However I presume everybody – Paul included – is able to discern that Alten8’s objective is to assist inexperienced and low-budgeted developers to luck into the industry, even if it’s not for millions of dollars like EA or Square-Enix. And let’s be honest, most games announced on his website wouldn’t have necessarily succeeded with any other publishers. So I think Alten8 is an 'alternate way', a good alternative for Indy developers that don’t necessarily meet the hard-to-reach industry standards.

However, like every type of publishers, everyone shouldn't be hasty before signing a deal. I think Alten8 accept non-exclusive games, so that's not bad if you want to sell your game at many different places at the same time.

lol there I am, doing PR for Alten8, Paul should pay me for this :P

Interesting to see what they do with Wiiware - I presume the SDK is available to bonafide signed Nintendo developer/publishers already? tho at a cost no doubt (i.e. not totally free as expected).

[sillytuna]

If you can get signed up to Wii, everything "Nintendo" is very affordable compared to Sony and Microsoft; certainly not beyond the reach of an indie who is serious about Wii.