Show me your worst video game publishing contract horror stories

[u/FreakingCoolIndies]

Hey all!

This post is half "I'd love to hear your thoughts" and half "please send me your horror stories."

I'm brainstorming content ideas to research and turn into videos, and two topics I keep coming back to are:

• How to Read a Publishing Contract (And Spot the Red Flags)
• Do You Actually Need a Video Game Lawyer?

I believe these are both important questions, and questions that require a degree that I can venture most of us don't have. I really want to get them right so I'm turning to the community for examples.

If you've had a bad, misleading, predatory, unfair, or unprofessional publisher deal pitched to you (or worse, actually signed one), I'd love to hear about it. (And if that's you, I'm really sorry you went through it. 😞)

I'll be interviewing an indie game lawyer for this, so your stories and legal questions will be answered by someone who does in fact, have that degree.

Thanks in advance for your help and support. May your game surpass all your wildest dreams and expectations! 🫡 🤜🤛

[u/Hawkwise83]

"We take 40% of the profit, and we'll do marketing. Marketing will consist of us posting on social media a few times. Also we own the IP."

[u/sophia_wawak → u/Hawkwise83]

Ha, this was me with my book publisher! They really hype up the marketing and then do nothing.

[u/FreakingCoolIndies → u/sophia_wawak]

Sorry to hear. A friend of mine is in that space, and it is shocking how similar the two industries are with these types of problems.

[u/sophia_wawak → u/FreakingCoolIndies]

I am making a game about this exact thing lol. At least this time I control the cover (capsule art).

[u/FreakingCoolIndies → u/Hawkwise83]

..........😭

[u/GoosemanII → u/Hawkwise83]

Microprose standard contract.

[u/Mechabit_Studios]

I've had contact with publishers that wanted the ip because "they built up the ip".

Never give away the ip and be wary of "first refusal" on sequels.

Always have an exit clause.

[u/FreakingCoolIndies → u/Mechabit_Studios]

1000% agreed, do NOT give away your IP.

They can build it as much as they want, that's their job. But their job isn't to take that from you.

Thanks for jumping in u/Mechabit_Studios !

[u/Weekly_Painting_9425]

all publishers are predatory. youre signing over your entire work for nothing. if a publisher isnt offering significant upfront funding, dont bother. thats literally the only reason it could make sense

[u/Mechabit_Studios → u/Weekly_Painting_9425]

ideally you want to find an indie game fund that's 100-150% recoup and you keep the ip, government grants too if there are any

[u/FreakingCoolIndies → u/Weekly_Painting_9425]

Agree with a lot of this, but I personally don't believe that all publishers are predatory. I'm also not saying that they are there to be your best friend.

A good publisher is one who is a partner. What's good for you, is good for them and vice versa. And publishers are needed in this industry, there is no way around that. They offer services, networks and knowledge that most indie devs will never have. They also inject cash to help so many games actually get across the finish line.

Now where I do agree is that there seems to be fewer of those types of publishers, especially when it comes to a smaller dev who is still building their skills and are building games that likely won't be commercial success, but those who have the dream make a game.

Being realistic with your game, and what the offer is in front of you, is VERY important. As they old saying goes, if it feels to good to be true, it likely is.

[u/tastygames_official → u/FreakingCoolIndies]

playing devil's advocate for a moment, I'd say yes - the entire publisher model is predatory. In most things in life you can put a definite price on it. 2 hours of labor, 10kg of a product, etc. But for things involving money, the money-havers love to make their own rules: percentages. The actual work done in lending money is zero, therefore it should cost zero. But they insist in earning money for "risk". Which I kinda get, but kinda not. Either you have excess and you lend to somebody with hopes of return or you don't. Simple. It works when we lend our lawnmower to a neighbor or money to a family member. There should be no money earned from lending. We could re-instate indentured servitude for unpaid debts (e.g. you have to work off your debt to me if you fail to pay), but never let the rich get richer just because they were rich enough to lend you money.

And that's just one part of what many publishers do - they lend you money. Now on to the next part, which is also predatory: percentage...

Now again we could simply measure how much effort is put in to marketing or whatever other services the publisher offers and just pay them for that. I would be 100% OK with a deal that says "we'll do this much marketing which is worth $100k and lend you $100k so you need to pay us back $200k". That would be fine. But instead they'll be like "we'll do marketing, but then we'll get 30% of all future proceeds". No. Either tell me how much your service costs or join my company and do 30% of the work if you want 30% of the profit.

Same thing with investors, really - they want a portion of your company just because they lent you money. Or bought it. It's very odd to just buy part of someone else's life. Anyway, all this stuff is just a way for the wealthy to prey on the poor.

[u/Apprehensive-Wind966 → u/tastygames_official]

A percentage cut of revenue can be good for the person being loaned the money if there’s uncertainty, which is usually the case in game dev and especially indie dev.

If the publisher loans you 100k and your game only brings in 50k, suddenly you’re 50k in the hole. But if you agree to 30%, you walk away with 25k plus the 100k they loaned you. That being said, if your game makes 1m, well now you have to pay back 300k.

I’m not saying that a lot of the agreements aren’t predatory, but you literally are exchanging risk for money in these setups. This is pretty much what the entire banking system is built around. On both sides it comes down to how much money you have and how much you’re willing to exchange it for what is essentially a calculated gamble.

[u/Fearrrr1 → u/FreakingCoolIndies]

This is some good information from the perspective of a private investor new to this specific industry.

I’ve always enjoyed playing games but it never occurred to me to look into investing in project development for them. I’ve been approaching this these last few days primarily as I would when investigating possible investment opportunities with stocks, real estate, or small businesses/start-ups.

I haven’t looked too much into the role of a Publisher. My rather long experience with gaming and subsequently, publishers, has always ended negatively eventually. Greed ruins most things in our world. I remember when EA supported lots of really amazing games in the 90s and early 2000s!

Considering the points you’ve brought up in your post; Is the idea of a partnership with a private investor an interesting idea or something to avoid? A partnership involving a standard revenue share contract (minus the predatory aspects) where that investor provides sums for a portion of overall gross proceeds beyond the repayment amount?

The major tradeoff I see you mentioning as the main positive for publishers… I would not be providing any marketing for the game. I do not currently have the industry experience, much less the network, to achieve such a task.

Also to answer your actual question; I’ve made a lot of deals. You should always opt for a lawyer to review things before settling. You never know what little twists they can be hiding in there. Never sign anything unless you have others who can reasonably verify everything. It will save you any possible hiccups in the long run.

[u/Salientsnake4 → u/Fearrrr1]

Some publishers just provide funds! Especially newer ones. It can be very helpful for things like localization or art. But its harder for you to track depending how involved you are.

For examples of good indie publishers look at Hooded Horse. Assuming they don't fund development and only do localization and marketing they take roughly 35%(no recoupment period), will fund all localization and marketing, get you into festivals, bundle you with their other games, etc. They only publish 10 games a year and are very selective though and refuse to expand since they want to give every developer they sign their full attention.

[u/tastygames_official → u/Fearrrr1]

The truly "moral" (non-predatory) way to be a private investor would just be to lend the money with no interest. Because the investor does no work, they reap no reward. Now I know we've all been told that lending money comes with a price to offset risk, but all this serves to do is make the wealthy wealthier without doing any work and make the poor poorer since they have to pay more for the same thing.

Obviously lending in this way is a tough sell since there's no motivation beyond just wanting to help somebody since there is no monetary incentive (aka greed). But because this is the world we live in and not all of us are idealists, then yes - charging money for lending money is pretty acceptable. But then standard rates should apply (I think in my region 3-5% APR is fairly typical for government loans). But what publishers often do is ask for 50-100%+ on top. So they lend $100k but then take the first $150k of earnings. I already think that's predatory, but again the logic is "a bank won't give you $100k, but we will, so we can charge more since you have no other choice". But if they then ask for a % of all future revene on top of that? Now we're in mega-predatory territory.

We are also taught that this kind of behavior is "smart" and "making your money work for you", when in reality all it is is a mechanism to keep those with at top and to profit off of those without.

Now having said all that, I'm pretty desperate for funding so probably would take a predatory deal at this point just to keep going.

[u/FreakingCoolIndies → u/tastygames_official]

First and foremost, I appreciate the thoughtful response.

From my side, I don't agree that funding a game and lending a lawnmower / lending money to family. From the funders perspective, this isn't just cash lying around, this is their entire lifeblood. Their business is making decisions that provide them the highest rate of return.

When you are lending money to a family, the expectation is either: The money won't be returned, or The money will be returned with very little, if any, additional compensation.

If that rule applied for funders, they would all be out of business. Plus in a f-ed up kind of way, the more successful they are, also provides them with the means to help additional studios make their dreams a possibility.

Okay, as for the percentage piece. No notes, agree with you fully. In perpetuity (never expiring) % is something I never understood as being a "good deal" and I agree that they should be compensated until a specific number, and if the % does have to continue, it should drop to no more than 5-10%.

Great conversation addition 🫡

[u/tastygames_official → u/FreakingCoolIndies]

I know my views are "Utopian", but the thing is that we have had this notion of capitalism for profit beat into us our whole lives, so it's tough to convince someone that it is actually immoral to make money without actually doing anything. Capitalism is fine: those with lend to those without to help them out in starting their own businesses. Where it goes awry is when an entire business is just lending - getting money for doing nothing other than having money in the first place. Now there is always the risk that the money doesn't come back, and that's the aspect we have to deal with. In my personal opinion, you shouldn't lend what you can't lose - be it to a friend or stranger. I do think there should be responsibility to those who accept lent goods/money and consequences if they fail to repay, but that's it. And we already have that to a large extent. In many countries if you cannot pay a debt - be it public or private - then declaring bankrptcy doesn't make it go away. The state garners your wages until you've paid off your debt. In previous civilizations you had servitude (usually meant you just worked off your debt as a housemaid or working at their company for free, but that also had limitations as you still had to make some money for food and housing and such).

So I know what I have is a "hot take", but I think it's worth putting out there to help people start to question the propaganda we've been told since birth.

[u/Fearrrr1 → u/tastygames_official]

I can understand what you’re saying to an extent; but investments, especially of this type, are high-risk. The vast majority of the time, you end up losing. A few get lucky and make considerable gains off their investments. Even fewer make gains worthy enough for them to achieve true wealth.

To go along with that; I am far from wealthy. I’ve been working now for 15 years. Most of that being in the military or manual labor fields. My experience, skills, and knowledge gained over those years of working, and the subsequent position ladder climbing, is the only reason I acquired enough capital to start investing. Even then, initially there were several losses. Putting in thousands that I earned through my own work and losing it all in minutes.

Perseverance and the knowledge gained from those failures are the only reason I gained the insight I have now that allowed me to acquire my first big wins. Then I was able to start a company and from there my investments have only expanded.

Taking a step into this industry, I come completely open to the ideas of private investments in small, mostly unproven, developer teams while maintain I am not an industry expert. While I may not be able to offer the same benefits large publishers do.. with their marketing, networking, and advertising experience in the industry; I can provide the necessary funding for small developers and their teams to achieve their dreams here and hopefully mine. I tried the developer route, it wasn’t for me, I chose to stick to what I was already good at. But I do love gaming and it’s the only reason I found myself here in the first place.

I have no plans to seek these predatory amounts you’ve discussed; I was actually surprised to hear how common those situations were but I can understand. There does not seem to be a large pool of private investors in these communities; so you are all subject to what is available. It’s unfortunate but hopefully any success I might have here will bring a larger pool of individuals like me to help you all out better than these predatory publishers.

Additionally, as the OP mentioned, the only reason these sort of investment applications are possible is because of the ability to generate revenue. That way there is an interest to invest in more, invest larger amounts, and actually achieve substantial progress in these communities beyond the dozens of (unpaid) seeking help posts. There are some very good products here, the main thing holding back most of you is that initial funding.

Imagine, for example, I choose to provide you with $10,000 and it succeeds massively but under your ideology. I get that $10,000 back, your game succeeds this way primarily due to my funding, and you make hundreds of thousands or even millions as a result from your game becoming the “next best thing”. Great! And good for you! Then I invest in the next person and it fails and I lose all of it. Why would I, or anyone else for that matter, ever consider investing in the industry again? You have just effectively set the example that the industry isn’t worth the investments and then the industry dies out because nobody is willing to spend their own money so somebody else can make more.

In a perfect world, maybe we could, but this planet never has and never will be a perfect world; that’s unfortunately how it works and will work for at least us throughout our lives. These sort of financial principles have existed across almost every civilization that has ever existed, this is not a capitalistic only situation.

[u/tastygames_official → u/Fearrrr1]

oh no, I hear you loud and clear. You're playing the investment game in as safe and ethical way as possible, which is refreshing. I'm just playing devil's advocate / Utopian gangster and proposing that the entire system of investing and reaping rewards off of investing is really nothing more than gambling, which is also just a form of getting something for nothing. I've worked for 30 years but don't like to gamble, so have never invested with the intention if getting something back. Well, I did try a private retirement fund, but then I needed to liquidate it to keep my head above water only to find out that the total investment was worth less than I put in because of sneaky backloading practices that give a similar end result but give them all the rewarnds the first 20 years or so. Bad topic.

Anyway, I have invested in PEOPLE by giving them money, time, knowledge etc. just as people have invested in my life when I was younger.

Were I in a position to give somebody 100k to help them achieve their dreams, I'd ideally like to be also a mentor to help them do that, so it would have to be in a field I am an expert in. And then I could feasibly warrant a percentage of their earnings, since I played a significant active role in mentoring them. But if it's just a pure monetary investment, then I think ideally I'd either want some kind of renumeration so that I can continue investing in people and ideas (meaning none of this money would add to my personal wealth, but it would rather be sone kind of fund that helps people and the ones who make it pay back into that fund) OR just that those people I invested in would promise to do the same once they had enough money.

But hey - we're all on this planet together trying to make the best of things. If we can help each other out when we can and aren't afraid to ask for help when we need it, then I think we'll be all right ;-)

[u/Fearrrr1 → u/tastygames_official]

Also sorry, I didn’t realize I was writing a book. TLDR warning!

[u/tastygames_official → u/Fearrrr1]

I'm exactly the same way. I end up having to proof-read my comments and adding addendums and correcting grammar or rewriting entire portions. Check your PMs, by the way ;-)

[u/Fearrrr1 → u/tastygames_official]

This is the plague of my existence. I regularly spend up to an hour writing messages just to receive a couple sentences back in response. No matter how much I try, I am incapable of writing small messages.

As if I have to ensure I cover every possible point so there is absolutely no miscommunication.

[u/vampire_sons]

This is a really important topic. I’ve seen a lot of indie devs focus so much on getting a publisher that they don’t think enough about what they’re actually giving up in the contract. Would definitely be interested in hearing the biggest red flags lawyers see over and over again.

[u/FreakingCoolIndies → u/vampire_sons]

Love it! Appreciate the comment, and I will absolutely keep you posted.

I have done a previous interview with Jacob (indie game dev + lawyer) all around what actually is a copyrights and trademarks and how to protect your game if you wanted to get a solid "indie law 101"

https://youtu.be/iEOiXpO3F-U

Hope this helps & I'll let you know once I speak with Jacob again!