Historically, funding from publishers was by far the main source of finance for UK games studios. Today, it remains a crucial part of the funding ecosystem and is still the largest source of finance, even if many studios have become less reliant on publishers than in the past. This is due, in part, to the availability of new, alternative sources of finance and the emergence of self-publishing.
This really depends on the publisher involved, as there are many different types of publisher (traditional, mobile, online, indie etc.), and many different approaches taken to a publishing deal. You should always seek advice when entering into a publishing deal.
It also obviously depends on bargaining power.
At one end of the spectrum, if a large publisher with operations in a number of territories has approached your studio to develop a game based on IP owned by the publisher, it will likely fully fund the development of the game, usually providing its funding over the course of development upon your studio achieving certain milestones. In return, it may require your studio to transfer all IP in the game to the publisher or else seek to licence the game and the underlying IP across multiple formats (including even non-games exploitation, such as film, books or other media). It may agree to grant your studio a share of the revenues arising from the game sales, but often only after it has recouped its funding in full.
At the other end of the spectrum, if your studio has approached an indie publisher with a proposal to develop a game based on IP owned by your studio which is already partly developed and/or partly financed, and where less funding is required, the publisher may agree to much more ‘pro studio’ terms. This may mean that not only can you retain the IP in the game and but you may be able to limit the licence provided to the publisher to specific formats. More generally, you should be able to negotiate much more favourable financial and other terms.
As you might expect, there are a variety of positions between these two poles – perhaps the publisher will require an exclusive licence of the IP subject to certain terms, but you will retain ownership in the IP itself. What happens to the IP developed in the game is critical, and should be a key focus for you.
Publishers can also facilitate access to platform exclusivity deals, e.g. Xbox Game Pass, which could bring with them sizeable upfront payments. These payments can go a long way towards recouping the publisher’s costs and therefore brings forward the milestone when you start receiving your revenue share. It’s important to remember that some publishers can not only fund your game, they can also assist with marketing, localisation/translation etc and potentially open doors.
In between these two ends of the spectrum, there are many other deal types and variables that you might come across (and market standards change quickly), so it is important to take advice on the terms. The deal that you are able to negotiate will depend on various factors, including the clout of the parties involved, the importance of the project to the publisher, the deal precedents of the publisher, what else the publisher is offering other than finance (see below: What other support can publishers offer?) and how well you and your lawyers negotiate!
There are many key issues and pitfalls to watch out for. Some examples are:
These are just a few examples and there are many other issues to consider.
A publisher may consider becoming involved in your game at an early stage (e.g. before the start of full development) or it may come on board at a much later stage (e.g. when there is an alpha or beta version of the game available). At a later stage, the focus of the publisher may be more on providing assistance with marketing and distribution than development. In the current market, indie publishers tend to become involved later in the development process, and you should be aware that the timing of when a publishing deal is signed will affect a number of financial and other aspects of the deal.
The amount of funding that a publisher may offer a studio can vary enormously from a few thousand to many millions of pounds.
Certain publishers will fund the full development, marketing and distribution of a game, others may only fund marketing or distribution. There are also deals where the publisher funds only part of the development and the studio or another financier provides the balance of the funding.
Many publishers are open to considering deals with start-ups as well as proven studios.
It depends on the publisher and the deal you are entering into as to whether the publisher will require you to transfer the game’s IP to the publisher. It has become more standard for publishers to allow studios to retain the game’s IP, where the IP has been conceived and created by the studio, although as noted, the extent to which the publisher will be licensed rights to different types of exploitation will depend on several factors, in particular, the amount of funding or percentage of the budget.
Other than providing finance, publishers may be able to provide your studio with a range of other support and services, for example:
The value of these services must be taken into account when evaluating a potential publishing deal. In the best circumstances, a publisher can become a valuable long-term partner for your studio.
Feel free to contact Mark Phillips or Kostya Lobov for further information about publishing deals.
Ukie represents most of the main publishers in the UK. If you would like to speak to a publisher drop sam.collins@ukie.org.uk a line.
