Background

Contracts, legal considerations, and statements of work

John Wright

๐Ÿ’ฐ Revenue Share

Revenue share determines how profits (net revenue of UA) are split between the developer and publisher, typically based on:

๐Ÿ”น Risk & Investment โ€“ More funding = lower revenue share for the developer.
๐Ÿ”น Market Potential โ€“ Projected higher-performing games get better splits.

๐Ÿ”น Long Term Relations – Normally if the studio is tried and tested with the publisher they get better splits.


๐Ÿข Studio Burn Coverage

Burn coverage determines if the publisher funds the studioโ€™s operational costs or not, this could also be done on the title/project level:

๐Ÿ”น Full Coverage โ€“ Publisher covers all costs but takes a bigger revenue cut.
๐Ÿ”น Partial Coverage โ€“ Some funding, but better long-term revenue for the studio.
๐Ÿ”น No Coverage โ€“ Developer self-funds but keeps more revenue.

If milestones (statement of works) arenโ€™t met, funding may be delayed or cut off.


๐Ÿ“Š Commercial Terms

Beyond revenue share and burn, contracts define:

๐Ÿ”น Recoupment Terms โ€“ Publisher may reclaim investment before revenue split.
๐Ÿ”น Bonuses/Incentives โ€“ Performance-based financial rewards.

Transparency here is key to avoiding legal surprises.

๐ŸŽฎ IP Ownership

๐Ÿ”น Developer-Owned IP โ€“ Studio retains full control over sequels/licensing.
๐Ÿ”น Publisher-Owned IP โ€“ Publisher controls future use of the game.

๐Ÿ”„ Sequel Rights

Publishers may legally have right of first refusal on sequels:

๐Ÿ”น Exclusive Rights โ€“ Publisher gets first refusal.
๐Ÿ”น Limited Rights โ€“ Studio can pitch elsewhere after a set time per the contract.

๐Ÿ’ฐ Buyout Clauses

๐Ÿ”น Game Buyout โ€“ Publisher purchases full IP rights of the game, only.
๐Ÿ”น Studio Buyout โ€“ Publisher has the option to acquire the studio and bring them in-house.


๐Ÿ“‘ Statement of Work (SOW)

A SOW outlines everything the studio must deliver, including deadlines, milestones, and feature expectations.

๐Ÿ“Œ Whatโ€™s Included?

๐Ÿ”น Development Milestones โ€“ MVP, Retention, Monetisation, Soft Launch, Hard Launch, On-going.
๐Ÿ”น Feature Requirements โ€“ Core loop and mechanics, meta systems, and live ops.
๐Ÿ”น Testing & QA Expectations โ€“ Performance standards and bug thresholds, this could be done on the publisher or developers side contract depending.

โ— What Happens if You Miss Deadlines?

๐Ÿ”น Payment Delays โ€“ Funding may be postponed.
๐Ÿ”น Contract Termination โ€“ The deal may be canceled.

๐Ÿ“Œ Be realistic with timelinesโ€”rushing leads to poor quality and risks the deal falling apart.


๐Ÿ“ข Final Thought: Contracts Define Your Gameโ€™s Future

Signing a publishing deal is as much a business decision as a creative one. Understanding contracts ensures you:

โœ… Get fair financial terms
โœ… Retain control over IP & sequels when possible
โœ… Avoid restrictive clauses that limit future opportunities
โœ… Meet SOW expectations to maintain good standing and complete project

๐Ÿ“Œ Keep realistic expectations, negotiate where possible and consult legal experts before signing.

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