A closer look at Raw Fury's publishing contract

The following column is an adapted version of one featured in the free GameDiscoverCo newsletter from Simon Carless. Carless recently launched GameDiscoverCo as his own research and consulting firm after spending 16 years with the organizer of the Game Developers Conference, Informa, and its predecessor UBM.

Working with a game publisher -- and its subsequent deal terms and conditions -- is a complex and interesting subject. There are lots of positives in finding a trusted partner to go publish your game with -- but also plenty of caveats to keep in mind.

So it's incredibly useful that independent game publisher Raw Fury (Kingdom, Call Of The Sea, Backbone) has made public its full publishing agreement, including revenue split percentages.

Let's analyze it -- and the subsequent online reaction, including an extra publishing agreement from Whitethorn Games -- to understand what these deals are like, and how both parties can get the best out of them.

Inside a publishing agreement

Firstly, wanted to give kudos to Raw Fury for being willing to put this agreement out in full. (And not just because they link to me at the bottom of the post.) Transparency is pretty much always good, and helps the biz move forward. As they say, "We believe having publisher contracts out in the open helps level the playing field, and allows devs to have a more intimate understanding of the machinations of different deals when they start looking for partnerships."

The agreement is part of a set of dev/pub resources which also include a sample pitch deck, mutual NDA, outsourcing & content creation sample legal contracts, and various other helpful documents. Again, extremely helpful.

But let's get to the matter in hand -- here's the contract, translated into a few languages. And needless to say, publishing it caused a bunch of drama -- and plenty of legitimate questions and complaints -- on Twitter.

It's a little difficult to work out the best way to evaluate contracts, beyond 'What financial terms are there, and are there any gotchas?' So for the record:

• The financial terms are, as Simon Boxer discussed on Twitter, but clarified and enhanced by me: "Funding amount + 15% gets recouped at 100% publisher recoup rate… external expenses such as paid marketing spend and external 'services revenue' -- localization, porting, etc. -- are deducted from net revenue before royalties... 50% net revenue split after recoup of both." (Obviously, Raw Fury is paying for its own internal staff for full-service marketing & most other services.)
• Tracking down those extra expenses: according to tweets from Raw Fury staff, sounds like services revenue can be $100,000-$150,000, and external marketing spend can be about $75,000-$150,000. But it's somewhat variable and based on the specific game.
• There are no major contract gotchas, but a number of small/medium things that I'll let others talk about presently. The contract is clear about what it wants, nobody is trying to take your IP or perpetual franchise rights, and there are clear instructions on when and how everyone is funded and recompensed.

And here's what Raw Fury notes you get in exchange for this deal, in addition to (obviously) money to make the game, which you didn't have already and probably needed: "Production support… PR, marketing, sales management, partner/platform relations, IP refinement (movies/tv-series… physical editions, vinyl, merch etc.), quality assurance (internal and external), release management, events management, social and community focused work, media asset creation… and so on."

In other words, it's pretty full-service.

So let's make up an example here, just laying it all out. You're somebody who signed a $500,000 USD deal with Raw Fury. This enables you to make your entire game, with their help. You launch your game. Here's what you would see:

• $575,000 in Raw Fury's bank account -- Initial breakeven, not including marketing/services costs (some of which might be post-launch)
• $800,000 -- Breakeven including estimated marketing/services costs
• $800,000 to infinity -- Royalties happen! 50% goes to Raw Fury, 50% goes to you

One important thing to note here. I tend to talk about 'gross' and 'net' in this newsletter as if gross is the 'total amount of $ people paid for your game', and net is 'cost after the platforms take their share'. This legal contract has gross as 'all the money that Raw Fury receives' -- so basically what I talk about net as -- and then net as 'all the money Raw Fury receives minus marketing/services costs and porting costs'.

This is fine, but just noting that if you had no platform deals that came as lump sums (like Xbox Game Pass deals), you would need to sell $1.28 million worth of the game to get into royalties on this title. That's presuming that post-platform net is 61% of gross, and is a composite number based on Steam % being lower and console being higher, and better Steam sales than console. This type of flowthrough is normal. But many people forget!

(Of course, if you get a $300,000 Game Pass or Stadia deal, paid directly without any platform cuts, it significantly winnows down the path to royalties. This is actually one of the bigger advantages of reputable indie publishers nowadays -- easier access to these deals.)

The way it extends from there, $2 million worth of the game's digital 'retail' sales with no platform deals would end up with the developer having had all of its dev costs paid for, and an additional $210,000. (Raw Fury would also get $210,000, under this scenario.)

For a bigger hit -- let's say $5 million in raw revenue -- the dev will get all its dev costs plus $1.125 million, and Raw Fury will get $1.125 million. (The 'net' is $3.05 million on this $5 million in sales.) If your game starts to become a bigger hit, the cut to the publisher certainly starts to mount up.

So what does the Internet think?

As is often the case on the Twitter-verse, there was a lot of yelling -- some productive, some less so -- over the contract reveal. Foremost among the more productive yellers was Jan Willem Nijman (Disc Room, Minit, formerly half of Vlambeer), who commented on it in an annotated document.

JW knows indie publishing agreements well in the abstract (having signed multiple with Devolver, for example.) And while he goes pretty deep on some of specific legal comments, I think his main points are:

• In his view, 50% rev share post-recoup is a high royalty rate, especially to be set in stone for every Raw Fury game: "It is absolutely WILD that this is fixed and not dependent on project budget/advance size. The industry standard (on the non-scummy side) up to around $100k advance is 70/30 for the dev/publisher (after costs have been recouped)."
• The 100% recoup also concerns him: "Raw Fury also does not give you any revenue before recouping (including that mark up), which is also not necessarily standard." This depends on if Raw Fury has post-launch paid milestones, but it's true that 100% recoup (as opposed to 80% to publisher and 20% to dev, which is becoming more common) often means that you need immediate post-launch funding from elsewhere to keep operating as a company. Which is no bueno.
• The contract in general has a lot of publisher protections, and a number of specific paths that may end up benefiting Raw Fury -- even if they never intend to use them -- but not the dev. (That probably sums up the many other frustrated comments he made! I agree that the contract has some sharp edges.)

I did ping JW to say his prominent comment that 70% dev/30% pub being the 'industry standard' royalty, even with an advance, wasn't what I've seen. Recent research by Voyer Law, albeit from a pretty limited pool, suggested that on average, there were "advances of between $100,000 and $500,000: 55/45 split, in favor of developer… advances of over $500,000: 53/47 split, in favor of developers… 71% [average to dev] in no-advance deals."

But there are definitely many great, more 'informal' publishers -- folks like Devolver, Finji and others -- who I believe can deviate positively from Kellen's research, and towards JW's wished-for standard. If they like your game and want to work with you, of course.

One well-considered set of comments came from Cassia Curran (Wings Fund advisor and Curran Games Agency founder!), who noted the split disparity too, and commented:

"Raw Fury's agreement feels like it was first written by a lawyer intent on doing their duty in protecting their client, and then modified by a biz dev person to be nicer and more friendly to indie devs. So the terms are on the whole written to protect Raw Fury, not the indie dev…

Which I think is fine, but it means that *you* *must* *get* *a* *lawyer* who is experienced with game publishing to review. And *you* *must* *negotiate* the terms to protect yourself and to get what you want out of the partnership.

I have not seen a 15% markup on an advance before, but I can instantly see why they would do that; it's to incentivize the indie game dev not to keep asking for additional payments. I quite like the idea, but for 115% recoup and 50/50 split the pub services have to be *GOLDEN*." Agree.

Bonus data which came through as a result of this? The folks at boutique 'cozy games' publisher Whitethorn Games (Calico) also shared its publishing agreement, which looks less custom-written for actual game devs than Raw Fury's, but also less serrated.

It oddly uses gross revenue (actual gross revenue) instead of net for the revenue split, which is very rare, but the agreement is worth perusing. Some friendlier -- in some cases surprisingly so -- terms: Whitethorn has a 2-year renewable term for publishing agreements, 30-day at will notice to quit the agreement on both sides, and it provides 'free' porting to all consoles. (Really? Is all that free porting sustainable? Love it, though!)

All this is in exchange for its 10%-25% gross revenue cut, which is anywhere from 17% to 40+%, if we take previous gross to net rates. Unsure of what triggers what royalty levels, or if it's title by title. Small boutique publishers can afford to do this, especially for low-$ advance titles, and kudos to them for doing so?

The Goldilocks problem

In the end, there are three things to talk about re: the Raw Fury publishing agreement: contract language, intent, and actual financials. So let's have a quick wander through them, and try to set some kind of baseline opinion:

● CONTRACT LANGUAGE: The Raw Fury contract is fundamentally transparent. But it's got some barbs, for sure -- often for contingencies that are unlikely to happen, and have probably never been triggered. Examples: a 'competing games' clause, a fairly sharp 'sequel rights' clause, various termination rights that favor the publisher, despite the fact the developer can only terminate for a contract breach.

If you compare Raw Fury's language to some other indie publisher contracts I've seen, including Whitethorn's, it doesn't feel very fluffy. I feel like Raw Fury should ask if some of these things are likely going to happen and/or be monetarily significant. If not, nix 'em pre-emptively. However… if you compare it to the big, bad history of 'work for hire' dev/publisher deals back in the PSone/PS2 era, this contract is way, way better.

● INTENT: Raw Fury made a good point at some point in the Twitter storm, which is: are its developers happy with the deals it signed? In general, it seems they are. (Semi-relatedly: I guess there's a non-disparagement clause in the Raw Fury publishing agreement, which I'm not a fan of at all. So I guess we don't know for sure! But I legitimately do think that devs like working with the company.)

A lot of this revolves around a key issue: is the publisher on your side and helping you make the best game you possibly can? Did they literally fund the game into existence and love it as much as you? If that's true, any slightly adversarial contract language is moot. So don't lose that.

● FINANCIALS: The 50% post-recoup royalty rate from Raw Fury is, if you look at comps, a bit more than average. And the 15% markup on the advance is also aggressive. But this is for a very full-service 50-person publisher, who is presumably spending hundreds of thousands of dollars or more on its most recent advances, in a very competitive market. So they believe they're worth it. (I'm surprised that they don't vary the post-recoup % royalty based on the size of the game or advance, though. A number of publishers I know do.)

So… it's definitely about perspective. People seemed content with Epic's recent announcement that "Epic Games Publishing will cover up to 100% of development costs… once costs are recouped, developers earn at least 50% of all profits." In fact, it sounded generous to the average internet game player. I guess it depends completely on where you are as a dev financially and publishing support-wise, exactly how much money the publisher is paying out -- $15 million seems great for that royalty % versus $50,000 -- and so on and so forth.

To JW's point in criticizing the situation in general, there are many, many more sellers (devs) than buyers (indie publishers) in the market right now. He feels like publishers are taking advantage. I don't feel that. But I do feel like publishers have their own perspective, and wield some market advantages right now that allow them to set the agenda, and devs should think very carefully about this.

Luckily, this level of transparency allows us to all talk about the problem. And it's also worth reminding again: self-publishing may make plenty of sense for you, if you can bootstrap or fund without a publisher, and can do the publisher services parts yourself. (Even publishers agree with this!)

But I also see things publishers bring, in particular game funding and platform relationships, but also a lot of the other pre-launch support that devs are often too busy for or aren't capable of -- that developers absolutely need.

In the end, we often get into some weird 'Goldilocks'-level problems with dev/publisher relationships. I sometimes hear devs say that either a) they never recoup on their publishing deals and feel neglected or b) they've done great and the publisher is getting a large percentage of the net post-launch for doing not much.

Both of these can be legitimate complaints -- and actually the heart of why the publisher business model works. (There will always be big hits paying for average sellers or flops; that's the publisher arbitrage that makes their biz model function.)

But hopefully more deals than not fall into the 'just the right temperature' Goldilocks category: 'We're a team, we helped each other and we succeed or lose together'. At the best indie publishers, most of them do. That's the conundrum, though -- it's difficult to get the level of support, the royalty %, and the advance 'just right,' so that both parties are equally motivated and happy at the end of the day.