Manor Lords Publisher Criticized Publishing Methods Hitting Devs. 'This Is a Silly Way to Do Business'
Tim Bender from Hooded Horse criticized the industry's „ingrained” habit of including cash-flow clauses by publishers. In his opinion, this is bad for both developers and players.
The Manor Lords publisher isn't pleased with the industry standard, which he believes includes unfair clauses related to the so-called recoup terms. Tim Bender, in an interview for the Game Developer website, even said that it was a "silly" and "ridiculous" idea, but it took root in the gaming industry.
The CEO of Hooded Horse company made this statement when asked about the things developers should consider when signing a contract with a publisher. Bender believed that devs should be especially careful with what are known as recoup clauses, which hinder the "critical cash flow" after the premiere.
Relative risk
Although the American admits that such records are used even by "good publishers," he himself, as a former lawyer, considers them to be nonsensical. In practice, these clauses mean that the publisher receives the majority or even all of the money from the game's sale before the developer receives anything. Of course, it's about recovering the "investment."
Meanwhile, Bender indicates that the foundation of "reasonable" contracts is the premise that the majority of the risk should be carried by the party "most prepared to carry it." However, a publisher will manage the failure of one of the dozen or even several dozen projects they publish better than a studio that works on only a few games or even just this one single project.
They have many of those projects. It's not a big deal. It's not like every project has to be a financial success for the publisher. But developers have one or maybe a couple of projects. They can't easily bear that risk. So, just from a matter of contract theory, it's fundamentally stupid to have recoup terms where publishers protect all of their downside risks and recover all the money first.
Clause unfavorable for devs and players
Such an approach is also, in Bender's opinion, bad for players. It prevents the developers from having the resources or motivation to continue developing the project. The American believes that many "wonderful" projects have been buried precisely because of the return clause.
According to the head of Hooded Horse, the lack of such clauses should be the standard. His company sticks to the division of "35% for us, 65% for developers." Bender thinks it's a better deal for devs, but he also believes it would be more financially rewarding for publishers in the long term.
If from a publisher's perspective, you then analyze your entire portfolio and say 'okay, let me go back for years and pretend I never did recoup terms, but instead asked for a tiny increase on that long-term rate [from 30% to 35%]. Let me see how I would have done.' I bet most of them would discover they would have been better off financially.
