Avoiding the Tiny Death Star: reducing risks of a published game being canned

I just read about Disney deciding to pull NimbleBit’s excellent Tiny Death Star from the Apple and Google Play app stores, apparently without prior warning to NimbleBit.  So I thought I’d write a few thoughts on what should a developer do to make it less likely that a a publisher can pull the developer’s game.  Here goes…

99% of the time, it’s down to skilful negotiation of the publishing agreement.

Under a game publishing agreement, whatever the platform, the fundamentals are that the developer makes the game and the publisher distributes it.  Normally that means the publisher wanting to give itself wide discretion about exactly how to get the game to market and when it can take it down and walk away.  Let’s analyse that further:

(1) The publisher will want wide discretion about how to distribute the game.

Here’s a clause I drafted myself for an indie publisher of another indie game:

“PUBLISHER shall have exclusive in its total discretion rights to carry out, and will use commercially reasonable endeavours to achieve, the marketing, public relations, sales and distribution work and generally to carry out publishing work regarding the Game.  This includes control over pricing strategy for the Game and the entry into any third party business relationships for the purpose of the Game.”

And here’s an extract from another agreement I negotiated for an indie developer in a deal with a publisher:

“Subject to the terms of this Agreement, DEVELOPER hereby grants to PUBLISHER the exclusive right to publish, manufacture, package, distribute, and sell the Game in agreement with DEVELOPER under the consultation process set out in clause XYZ (“Consultation Process”). Subject to the terms of this Agreement, DEVELOPER hereby grants to PUBLISHER the non-exclusive right to advertise, publicly display, publicly promote, and otherwise promote and market the Game. In addition, PUBLISHER may distribute the Game by [XXX METHODS] with DEVELOPER’s prior written approval.  All other rights and methods of distribution whatsoever are expressly excluded and reserved to DEVELOPER.  Any pause, ceasing, restructuring or renegotiation of any agreed distribution means will be agreed by the parties under the Consultation Process.

As you can see, it’s more favourable to the developer and puts several curbs on the publisher.

So tip no. 1: the developer should negotiate with the publisher regarding precisely what rights the publisher gets in the game. The publisher will for its part want to ensure that it obtains all rights it needs to do the job, ideally without having to get the developer’s OK to every little thing.  This all depends heavily on the negotiating power of the parties.

(2) Termination rights

The publisher will want the ability to terminate its distribution work if it isn’t working for some reason, e.g. the game isn’t selling well enough, costs are mounting too high, the relationship with the developer isn’t working or (apparently most likely in Disney’s case) it has a better offer or game to pursue. So, the publisher will want the maximum favourable termination position it can get.

By contrast, the developer will want to put fetters on the publisher’s ability to walk away from the deal, possibly while itself getting walkaway abilities if it doesn’t like or value the publisher.  Again, this all depends heavily on the negotiating power of the parties.

Here’s an extract from a termination clause in a games publishing agreement I was involved with recently:

(1) PUBLISHER may terminate this Agreement with immediate effect by written notice to DEVELOPER following receipt of the final Game build under clause XYZ if it considers at its reasonable discretion that the Game does not comply with the Specification or is of insufficient quality generally, or under clause XYZ if the Game is rejected for submission to any Platform more than 3 (three) times under clause XYZ.  In that situation, PUBLISHER shall (without prejudice to any other rights it may have under this Agreement or at law) be entitled to terminate the Agreement and demand immediate repayment of all of the Development Payments and any other amounts paid to DEVELOPER. 

(2) PUBLISHER may terminate this Agreement with immediate effect by written notice to DEVELOPER for any reason at its discretion, provided it pays DEVELOPER the Development Payment for the relevant month in which termination is carried out.”

(Then there were the usual material breach and insolvency/bankruptcy termination clauses.)

This was a fairly informal agreement for publishing deals, but even if has the kind of stuff that favours publishers over developers – in particular, the publisher can terminate under clause (1) if it doesn’t think the game is up to scratch and under clause (2) it can walk away for any reason it likes, provided it pays money to the developer (and even that, by some publisher standards, could be a generous offer – I’ve seen many deals where the developers gets absolutely nothing).

So, tip no. 2:  negotiating termination rights is another big issue in publishing agreements.  Often the developer it has to accept wide termination rights, so it becomes a question of what quid-pro-quos it can get in return (like being paid something).

(3) IP ownership and post termination rights

OK, so sadly the game is canned.  What happens next?  It depends on what the agreement says as well as what the IP ownership position is.

If the developer has been able to keep IP rights in the game, it can argue for the contractual right to take the game away and keep working on it itself, possibly via self-publishing or possibly by another publisher deal.  However, first of all you need a developer biz bod (or lawyer!) farsighted enough to include that in the negotiations at all.  Then you need to be able to negotiate the terms with the publisher, which naturally may be loath to give away the game.  In practice a lot comes down to the relationship between the parties and what kind of termination we’re talking about: if the publisher is terminating due to the developer’s breach, it will not want to help the developer out much.  If the publisher is just walking away for some other reason, it’s more fair for the developer to take the game as it stands…but that’s still far from a given if the publisher sees potential in the game (if not the developer).

This all gets more complicated in the Tiny Death Star scenario where the publisher has contributed licensed IP to a conversion/modification of developer’s existing game Tiny Tower (in that case, the Star Wars name, characters, locations etc).  In this situation, it’s fairly unlikely the game can continue once the deal is terminated, because there’s usually no real middle path: either the publisher is happy for its IP to be in the game, or it isn’t.  In that situation, usually the best you can get in the contract negotiations is: (1) ensuring there is a minimum notice period before the game is pulled; (2) a joint public approach to avoid negative PR for the developer; and (3) reasonable financial compensation for the developer given that a revenue stream is being taken away from it.

So, tip no. 3: developers should try to retain IP wherever possible BUT that isn’t enough on its own: it should also work through every reasonably likely scenario in the contract negotiations – like the game being pulled – so that its position is covered contractually.  IP rights alone may not be enough.

So, that’s a quick guide to some of the things I would think about if a games developer came to me with a publishing deal, especially a licensed IP publishing deal.  I’m afraid it won’t help NimbleBit much, but it might help others…

13 comments

  1. Nimblebit were only consultants on the game, the game was built by Disney. That said nimblebit did get some revenue from it for licensing the format.

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