Drawbacks of Worldwide Publishers

Working with the worldwide publishers has a lot to offer if a developer is in a position to move on such a deal. However, these publishers also have their drawbacks.

Time Restraints

When a developer submits a title to one of the worldwide publishers, they should be aware of the time that it will take that publisher to evaluate the title. Most of these companies will have to show the title to multiple offices in North America and Europe to even get the approval process rolling. These offices will evaluate the game based on the gameplay, finances, and marketability. If the game passes these steps, a board will generally have to approve the project. The higher the budget of the game, the more processes a developer can expect to go through. This process can take anywhere from one month to three months in some cases.

Contract Negotiations

Once the title is approved, the contract negotiation begins. Again, this is going to take time, as the publisher will have a large and sometimes exacting legal team reviewing the contract at each step. The developer is now looking at another one to three months in negotiation before a single dollar is transferred to them.

The contracts themselves are much more stringent with the larger worldwide publishers. A developer might find that they are not getting the best deal possible with the contract that they have been presented from the publisher, and swinging the points of the contract in their favor will be a long and arduous process.

Overlooked Territories

Very few worldwide publishers have true distribution across the entire planet. In many cases, some smaller territories with a market for the game will be overlooked. True, these territories generate limited revenues, but when added together they can contribute a nice sum of money. If a worldwide publisher has no presence in South America, Portugal, or Eastern Europe, the developer might end up leaving a lot of money on the table. If the publisher has no plans to support the game in a territory, the developer would be better off selling it on their own in those markets.

Sublicensing

Worldwide publishers who do not have their own worldwide distribution will also sublicense to the territories they cannot cover directly. By sublicensing the game to smaller distributors or publishers, the worldwide publisher can generate revenue of their own with little effort. The drawback to the developer is that in most situations they are receiving a percentage of the percentage their worldwide publisher receives. With a little effort, the developer could make these sales directly and earn much more money.

Lower Royalty Rates

The sublicensing factor is not the only downside to the royalties from a worldwide publisher. Depending on the developer's track record and the profile of the project, the overall royalty rate from a worldwide publisher is generally much smaller as well.

This is because the risk associated with completely or nearly completely funding a project is much higher than that involved in acquiring a nearly complete game. Consequently, the royalty rates will generally be much smaller—from 15 to 25% as a general rule. Other deal structures can generate a much higher backend for the developer.

Less Mind Share

Worldwide publishers handle dozens if not hundreds of titles each year. A developer can rarely count on getting the mind share from a worldwide publisher that they can get from a smaller territorial or country-by-country publisher. Less mind share can translate into less time spent with the producer polishing the game, and less marketing attributed to the game. All of this can easily result in fewer sales, which means smaller royalties for the developer.

High Risk for the Developer

One of the biggest concerns with the worldwide model, given the state of the industry over the last few years, is the risk involved in this type of deal for the developer. By signing full rights to a game over to one publisher, that developer has placed all of their eggs in one basket. Without a solid contract and backup plan, this could spell disaster for the developer if the publisher goes bankrupt, is purchased, or loses interest in the title.

Case Study 3.6.3: What to Include in a Package to a Country-by Country Publisher

Submitting a project to a national publisher requires very different materials:

Finished Goods

• Copy of product

• Sell sheet

• Localization summary form

• Product walkthrough

• Saved games with descriptions for evaluation aid

• Review and previews

• Cheat keys, keyboard commands

• Installation guide

• Current product competitive analysis

Beta

• Playable demo/beta

• Saved games with descriptions for evaluation aid

• Design overview

• Gold master date

• Completed localization summary form

• Detailed installation guide

• Summary description of all game levels/missions

• Printout of keyboard commands and cheat keys

• Copy of marketing plan

• Trailer of game

• Unique selling points

• Product walkthrough

• Mock-up of box design (if available)

• Plan for porting game to other platforms

• Minimum and recommended system requirements

• Timeline for localization

• List of marketing and advertising assets available

• Copy of manual/documentation

• Competitive analysis