Raw Fury Publishing Contract evaluation by industry expert Simon Carless

Important clarification: Raw Fury determines gross revenue as the entire amount that the company receives from the sale of the game, and net revenue (net revenue) — as the entire amount minus the costs of marketing, porting, etc.

Raw Fury Contract TermsTo calculate the initial payback point, the publisher’s margin of 15% is added to the amount for the development of the game.

• All additional expenses, including marketing, are deducted from net revenue until the project reaches payback and begins to make a profit.
• After that, the publisher starts paying developers royalties in a 50/50 ratio.In addition to the money provided for development, Raw Fury is responsible for the following services: PR, marketing, sales management, relations with partners and platforms, quality control, release support, event organization, community work, etc.
• The average maintenance costs are $100-150 thousand, and marketing costs are $75-150 thousand.
• However, the total amount always depends on the specific game.How the contract works by example

For clarity, Carless presented a situation where a developer signs a contract with Raw Fury for $ 500 thousand.

In this case, his path to receiving royalties will look like this:

• $575 thousand (the amount of financing + 15%) is the initial payback point, excluding marketing and maintenance costs;$800 thousand is the payback point, including approximate marketing and maintenance costs;
• $800 thousand and above — at this stage, developers begin to receive royalties, which are divided 50/50 with the publisher.
• At the same time, to start receiving dividends, the developer will need to sell copies of the game in the amount of about $ 1.28 million.

This is due to the fact that net revenue after platform commissions, according to Carless’ calculations, will be about 61% of sales (the average value of commissions on different platforms).

If the game earns, for example, $5 million, the developer and publisher will receive $1.125 million each (the cost of development and marketing and service costs are deducted from the net revenue of $3.05 million).

Is the criticism of the Raw Fury contract fair?The most discontent was caused by the lack of payments to developers before the project was released for payback and the fixed share of the publisher of 50%.

Game designer Jan Willem Nijman notes that in his practice and by industry standards, revenue is usually divided 70/30 in favor of the developer.

In response, Carless cites the example of a study by the law firm Voyer Law. According to her, the revenue of games with an advance of $ 100-150 thousand is divided on average in a ratio of 55/45 in favor of the developer. If we are talking about an advance of $ 500 thousand, then the developer will receive only 53%, and above 70% usually receive only games without the financial support of the publisher.

Thus, Neumann’s ideas about a certain “industrial standard” may be incorrect. On the other hand, the Voyer Law sample based on 30 publishing contracts may also not be fully representative.

ConclusionsThe number of developers on the market significantly exceeds the number of publishers, and therefore the latter can dictate conditions depending on the range of services provided.

Carless notes that when choosing a publisher, the following principles should be followed:

• it is worth publishing the game yourself only if the developer himself can fully perform the basic functions of the publisher;since it is difficult to find an ideal contract that would satisfy all parties, it is necessary to try to choose a publisher who is interested in the game as much as the developers themselves and will be able to significantly help the project.
• Carless generally praises the Raw Fury contract for its transparency.

However, he notes that it would not hurt for the company to soften some conditions, including clauses prohibiting the development of games in the same genre and exclusive rights to sequels for the publisher for the duration of the contract.

Carless also believes that the publisher’s share of 50%, even if it exceeds the industry average, includes a wide range of services provided. However, in his opinion, Raw Fury should introduce a gradation of royalties in favor of the developer, depending on the advance and the budget of the project itself. In its current form, the terms of the contract may be unprofitable for small studios whose net revenue is measured in tens of thousands of dollars.