Today’s market is rapidly changing. This year alone, in the span of a few short months, we witnessed prominent competitors enter the PC market with the introduction of Google’s Stadia, and a number of other platforms rolling out their own version of “Netflix for Games.”

With the rise of all of these new platforms comes greater accessibility and larger reach, but also more channels to manage, and increased market saturation. Even on traditional platforms, like Steam, it’s become incredibly difficult to get noticed. The market is so saturated that Steam is starting to look more like a mobile app store, and consoles will soon follow suit.

This saturation is why it’s become increasingly important to leverage a publisher’s expertise in breaking through all this noise, and keep you focused on making the best game possible. Yet, there’s still a stigma around the specter of publisher greed, and I’m sure you’ve all heard horror stories.

Due to this avoidance of the traditional publishing route, many developers decide to self-publish, which is great if you have the resources to do so. The downside is that on Steam alone, the number of indie games has increased by 534% in just 3 years. Of these 13,624 games, the large majority are self-published, and most of them have sold fewer than 500 units.

The good news is that MOST publishers aren’t evil.

Sure, there are extreme scenarios where publishers have been unethical or immoral in their business decisions, but those are few and far between. The vast majority of issues that arise during a publishing partnership come down to the simple fact that the studio and the publisher weren’t properly aligned on terms in the first place. Clear communication about the expectations from both parties and terms of the partnership will save you a lot of trouble when problematic situations arise…and they always do.

Here are three steps to take before working with a publisher to make sure you don’t sell your soul.

STEP 1

The first step to working with a publisher is pretty straightforward: do your diligence and ask a lot of questions.

These can include, but are not limited to, the following:

• How many employees does the publisher have and how many will be dedicated to your game?
• What are the reporting lines, and who will you have direct contact with at the publisher?
• What does their marketing team look like? Ask for examples of past campaigns!
• What’s the process for porting, localizations, QA, and age ratings?
• Do they have a dedicated team to handle release management and submissions?
• How do they manage platform promotions and curated sales?
• Do they do game evaluations, user experience testing, and mock reviews?
• What territories will they launch in and will there be marketing in those territories?
• What type of sales reporting will you receive from the publisher, and at what frequency?

Asking these kinds of questions will not only ensure that your (and the publisher’s) expectations for the partnership are clear; they also set the groundwork for what that partnership will look like moving forward.

STEP 2

The second step is to make sure you understand how guarantees work.

A guarantee is where a publisher gives you a cash advance to help fund the development of your game. Most publishers will pay you this money according to a pre-defined milestone calendar. So for example, when you sign the contract, you’ll get a percentage of that money, and when you reach vertical slice, you’ll get another percentage, followed by alpha, beta, and so on. Make sure that you really take your time to plan these milestones with the publisher, and that the expectations are clearly defined. Running out of money and not being able to complete a milestone can create issues for both you and the publisher.

It’s also important to remember that a guarantee isn’t “free money” from the publisher. Publisher advances are recoupable, meaning that once your game goes on sale, the publisher will get all the revenue generated from the game until they make back the money they advanced to you. This advance could also include the cost of porting, localization, QA, age ratings, and sometimes even marketing, depending on how the deal is structured.

Once the publisher’s cash advance is paid back with revenue generated from game sales, that’s when you, as the developer, will begin receiving a percentage of the royalties.

If the publisher is releasing a physical version of your game, keep in mind that there are a lot more costs involved, such as cost of goods, freight, markdowns, etc. Therefore, your royalty rate is going to be lower. As a benchmark, the industry standard for a physical royalty split is around 30% of net revenue to the developer after recoupment.

Digital royalty rates have a lot more variables, and it’s not as easy to give a similar standard percentage. Is the development studio taking on a lot of the financial burden? Or, conversely, maybe the game is already complete, and the development studio only needs marketing and PR support. Both of these scenarios would increase the developer’s royalty rate. But if the publisher is taking on most of the financial risk, and activating all of their publishing services, their portion of the royalties will be higher.

STEP 3

The third step is to don’t give up what’s important to you.

Maintain your intellectual property; many publishers don’t require ownership of your IP to secure a deal. There may be certain circumstances where you’ll want to sell your IP; for example, at Modus Games, we recently acquired The Balance for a game we published last year, Override: Mech City Brawl. This was an exciting opportunity for both parties and was mutually beneficial.

You don’t need to give up creative control over your game – or at least, you shouldn’t – to work with a publisher. At Modus, for example, we provide developers with quantitative and objective feedback gathered through our playtests. Our creative suggestions aren’t intended to be subjective – they’re based on player data with the goal of getting the best critical and commercial results possible.

Finally, be honest about your weaknesses and find a publisher that can fill those gaps beyond just funding. These gaps often include marketing, release management, and distribution…but every studio has unique strengths and weaknesses. If you have a specific publisher with whom you’re already in discussion about your game, ask for references from other studios that have worked with them and get their opinion about their own partnership process.

Your game might be a passion project for you, but remember: it’s still a business. The people working on your game at a publisher can and should be your biggest champions. In a partnership where your success is their success, and vice versa, you should be able to work together in a mutually beneficial relationship – without having to sell your soul to get there.