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AGDC 2004 ‘Developing a Set of Standard Trading Terms for Doing Deals with Publishers.’ Tom Crago CEO – Tantalus Interactive “The definition of insanity is doing the same thing over and over again expecting different results. ” - Albert Einstein

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AGDC 2004

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AGDC 2004

‘Developing a Set of Standard Trading

Terms for Doing Deals with Publishers.’

Tom Crago

CEO – Tantalus Interactive


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“The definition of insanity is doing the same thing over and over again expecting different results. ”

- Albert Einstein


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Overview

  • The Tantalus Experience

  • What are Standard Trading Terms?

  • How to develop them

  • How to use them

  • Some specifics

  • Moving forward


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The Framework is…

‘Getting smarter about negotiating development contracts to better position yourself for a fairer deal and a less stressful development cycle. ‘


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Tantalus

  • 10 years of learning from mistakes…

  • Conversions

  • Experienced everything ‘bad’ about the games industry.

  • If we had a dollar for every dollar we were owed…


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Standard Trading Terms

‘A properly documented set of pro-forma contractual terms and conditions that can be put to a publishing partner during a negotiation, or inserted directly into a game development contract. ‘


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AKA…

The things that are REALLY important to you and your company.

(or)

The things that are going to REALLY piss you off if you get them wrong…


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But first…

  • Ask yourself ‘what is a contract… really?’

  • If you even have to reach for the filing cabinet…

  • Trust and the parable of the frozen snake.

  • Who are these guys and what do they want?


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Let’s assume there’s a deal to be had…

  • ‘Negotiation’ can happen in a variety of ways…

    • At trade shows, ‘little remarks’

    • At dinner

    • Through email

    • Across the table

    • Via lawyers

  • EVERYTHING you say, and how you say it, is important.


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    Let’s say you’ve got your STT document…

    • 3 main ways of getting it across:

      • Informally, through requests and suggestions

      • Just hand it over

      • During the legal negotiation

  • You’re going to HAVE to pick your battles.


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    Let’s run through some Standard Trading Terms…

    • Some of these are from our experience at Tantalus, some are more general.

    • Ultimately, developing STT’s is something individual to each company.

    • This is a start (by no means extensive).


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    Personnel

    • Who is going to work on the game?

      ‘Developer will undertake to utilise specified key personnel to develop the game, but will not provide details in respect of the entire team. Developer will use reasonable endeavours to utilise the same key personnel throughout the life of the project. ‘


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    Intellectual Property

    Three pronged attack…

    1.The agreement must recognise and the Publisher must acknowledge that Developer owns the intellectual property rights in pre-existing tools, object libraries, methodologies and materials that the Developer will use to perform the agreement.


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    Intellectual Property

    2.For the purposes of the title in question, Developer will license its intellectual property rights in the pre-existing intellectual property to the Publisher on a non-exclusive, non-transferable, royalty free basis for the purpose of producing and marketing the game.


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    Intellectual Property

    3.Where Developer uses its pre-existing intellectual property to develop new intellectual property specific to the game, that intellectual property shall remain the property of Developer. Developer will license these intellectual property rights to the Publisher on a non-exclusive, non-transferable, royalty free basis for the purpose of producing and marketing the game.


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    Intellectual Property – Other Issues

    • Where the Publisher supplies IP, have them warrant that they own it.

    • If it’s from a 3rd party, the Publisher must warrant that they’re authorised to licence it.

    • Publisher must then license Developer to use that IP.


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    Intellectual Property – Finally…

    Get your logo on the box…!!


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    Non-disclosure and use of Information

    • Obligation not to disclose confidential information should be mutual.

    • Agreement should provide adequate exclusions from the obligation. Eg:

      • Recipient already has the information

      • Information is already in the public domain


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    Development Kits and Tools

    • The Publisher should pay for Development Kits, in addition to the project budget.

    • How many and what happens after the project?

    • What happens if you have to order them?

    • What about debug/compiler software?


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    Milestones and Deliverables

    The Big One…

    • How and when is the milestone schedule set?

    • What do these crazy, generic terms really MEAN?

    • ‘Game Design finalised’?

    • In what form are milestones submitted?


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    Milestones and Deliverables

    • What is the approval process?

    • When can you invoice and what are the payment terms?

    • What happens if a milestone isn’t approved

    • What happens if a milestone isn’t paid on time?


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    Payment

    • A big one for Tantalus… x% of the total budget upon execution.

    • Currency. It’s a huge factor… Try for a natural hedge by dealing in multiple currencies. Doesn’t hurt to ask.

    • Costing… What is included (software, travel, etc).


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    Cancellation

    What happens if the project is canned…

    • MUST pay all milestone approved

    • Pay all milestone submitted but not yet approved?

    • Pay milestone currently working on?

    • Pay next milestone as well?

    • Pay a percentage of remaining budget?

      And then what…?


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    Localization

    Often a contentious issue

    • Agree in advance the languages you’re to produce.

    • Publisher should be responsible for translations.

    • Agree an additional fee for extra languages (needs to be per language, per platform.)

    • Think about the ‘real cost.’ Tendency to low-ball.

    • Of course, where possible, agree on languages at the start of the project.

    • Let it be known that the price will go up if a decision to localize comes later in the game…


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    Changes in Scope

    • Flexibility is important. Be open to change.

    • BUT… Be clear about the time/money trade offs.

      2 key points:

    • Changes in scope should be costed at a premium rate.

    • Get full payment for the changes at the next milestone, never at the end.


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    Working with Licensors

    • Insist on getting the Licensor Style Guide at the start of the project

    • Work out a communication plan between yourself, the Publisher and the Licence Holder.


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    Testing

    • You have to deliver a bug free game, but the Publisher has to test the game…


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    Copies of the Game

    • Make sure there’s a clause saying you’re entitled to receive copies of the game for the team!


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    Marketing & PR

    • Get a marketing contact at the Publisher.

    • Get a marketing plan at Alpha.

    • Set yourself up to be able to promote your own game through your website, interviews, etc.


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    Credit

    • Make sure you’re properly credited for your work.

    • Make sure they have to say that you developed it!


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    How to use Lawyers

    • Doing development deals can be an expensive business…

    • Don’t ‘hand over the reigns’ on a deal.

    • Firstly, get help putting together your Standard Trading Terms. Look at it as a ‘philosophical exercise.’

    • Lawyers charge by the minute, keep track of it.

    • Use the phone and ask specific questions.

    • Always keep your conversations focused on the key issues you’ve identified.


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    Next Steps…

    • The ‘business of games’ has to change.

    • Deal structures will become different.

    • Financial modelling and understanding the value chain will become increasingly important.

    • Be ready for the transition by figuring out the things that are important to you and your business.


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    Happy Hunting…


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