Disadvantages of Country-by-Country Deals

Signing a contract with a country-by-country publisher has definite advantages to any developer in the industry. Unfortunately, there several disadvantages to consider and barriers to overcome before someone can adopt this method of publishing or distribution.

Game Should Be Near Completion

One of the major disadvantages to this model is that a game needs to be nearly completed for a country-by-country publisher to invest in the game. In fact, most country-by-country publishers will not evaluate a title unless they can see at least a beta copy. Because they are handling only a handful of titles a year, they are very reluctant to take a risk on a title early in development.

Smaller Advances

As the deals that are being structured in this model only involve one territory at a time, the advances are generally much smaller. Typically, a publisher will guarantee a set amount of units at a fixed royalty rate in dollars, unlike worldwide publishers who set their royalty rates as a percentage. If they don't approach enough country-by-country publishers, a developer might find that their total advance is lower than it would have been with a worldwide publisher. This is usually offset by the royalties on the backend, as country-by-country deals are much more likely to see a sell-through than worldwide deals. Sell-through occurs when a title sells more units than the publisher guaranteed to the developer. This is the point where royalty checks are issued each month and the revenue from these payments can quickly compensate for a lower advance.

Difficulty Landing U.S. and UK Deals

Due to the small number of publishers in the United States and United Kingdom that handle deals for only their market, approaching this model will make it difficult to land a deal in these countries. Most of the publishers based in the United States and the UK only want to acquire titles that they can control on a worldwide basis. These two countries hold smaller numbers of country-by-country publishers than countries such as Germany, France, and Italy, so the deals are harder to find unless the developer truly works hard to acquire them.

Time Investment

This is the biggest disadvantage and hurdle for any developer looking to approach the country-by-country publishing model. Developers will be approaching three to four times as many publishers on average than they would for a worldwide deal. A developer has to take time to build that many more packages, follow up on those packages, and negotiate contracts. In many cases, this is a job for a minimum of two people working only on sales for the company.

Once the deals are secured in all the major markets, the developer then must deal with localization efforts for each of their partners, negotiating each of the individual contracts, handling the press requests, and aiding each publisher with the marketing effort in their country. After the game has been released, the developer must keep in touch with the publishers to continue the press and marketing, and to receive their royalty reports and any money due with each report.