Dev Reveals Exploitative Nature of Most Game Contracts

Receiving a publishing deal from an indie publisher can be a turning point for an independent developer. But when one-man team Jakefriend was approached with an offer to invest half a million Canadian dollars into his hand-drawn action-adventure game Scrabdackle, he discovered the contract’s terms could see him signing himself into a lifetime of debt, losing all rights to his game, and even paying for it to be completed by others out of his own money.

In a lengthy thread on Twitter, indie developer Jakefriend explained the reasons he had turned down the half-million publishing deal for his Kickstarter-funded project, Scrabdackle. Already having raised CA$44,552 from crowdfunding, the investment could have seen his game released in multiple languages, with full QA testing, and launched simultaneously on PC and Switch. He just had to sign a contract including clauses that could leave him financially responsible for the game’s completion, while receiving no revenue at all, should he breach its terms.

Hey #indiedev #gamedev, I turned down a pretty big publishing contract today for about half a million in total investment (I'm a solo dev). They genuinely wanted to work with me, but couldn't see what was exploitative about the terms. I'm not under an NDA, wanna talk about it? 👀 pic.twitter.com/h4mvP8Avbt

— jakefriend (@jakefriend_dev) August 13, 2021

“I turned down a pretty big publishing contract today for about half a million in total investment,” begins Jake’s thread. Without identifying the publisher, he continues, “They genuinely wanted to work with me, but couldn’t see what was exploitative about the terms. I’m not under an NDA, wanna talk about it?”

Over the following 24 tweets, the developer lays out the key issues with the contract, most especially focusing on the proposed revenue share. While the unnamed publisher would eventually offer a 50:50 split of revenues (albeit minus up to 10% for other sundry costs, including—very weirdly—international sales taxes), this wouldn’t happen until 50% of the marketing spend (approximately CA$200,000/US$159,000) and the entirety of his development funds (CA$65,000 Jake confirms to me via Discord) was recouped by sales. That works out to about 24,000 copies of the game, before which its developer would receive precisely 0% of revenue.

Even then, Scrabdackle’s lone developer explains, the contract made clear there would be no payments until a further 30 days after the end of the next quarter, with a further clause that allowed yet another three month delay beyond that. All this with no legal requirement to show him their financial records.

Should Jake want to challenge the sales data for the game, he’d be required to call for an audit, which he’d have to pay for whether there were issues or not. And should it turn out that there were discrepancies, there’d be no financial penalty for the publisher, merely the requirement to pay the missing amount—which he would have to hope would be enough to cover paying for the audit in the first place.

Another section of the contract explained that should there be disagreement about the direction of the game, the publisher could overrule and bring in a third-party developer to make the changes Jake would not, at Jake’s personal expense. With no spending limit on that figure.

But perhaps most surprising was a section declaring that should the developer be found in breach of the contract—something Jake explains is too ambiguously defined—then they would lose all rights to their game, receive no revenue from its sales, have to repay all the money they received, and pay for all further development costs to see the game completed. And here again there was no upper limit on what those costs could be.

– I also pay them *all development costs yet to come* for them to finish the game without me, with no limit to what that budget or cost is.

So, here's me, a 30-year-old solo dev, facing a consequence where if my game is be taken away from me I'm also *in debt*.

— jakefriend (@jakefriend_dev) August 13, 2021

It might seem obvious that no one should ever sign a contract containing clauses just so ridiculous. To be liable—at the publisher’s whim—for unlimited costs to complete a game while also required to pay back all funds (likely already spent), for no income from the game’s sales… Who would ever agree to such a thing? Well, as Jake tells me via Discord, an awful lot of independent developers, desperate for some financial support to finish their project. The contract described in his tweets might sound egregious, but the reality is that most of them offer some kind of awful term(s) for indie game devs.

“My close indie dev friends discuss what we’re able to of contracts frequently,” he says, “and the only thing surprising to them about mine is that it hit all the typical red flags instead of typically most of them. We’re all extremely fatigued and disheartened by how mundane an unjust contract offer is. It’s unfair and it’s tiring.”

Jake makes it clear that he doesn’t believe the people who contacted him were being maliciously predatory, but rather they were simply too used to the shitty terms. “I felt genuinely no sense of wanting to give me a bad deal with the scouts and producers I was speaking to, but I have to assume they are aware of the problems and are just used to that being the norm as well.”

Since posting the thread, Jake tells me he’s heard from a lot of other developers who described the terms to which he objected as, “sadly all-too-familiar.” At one point creator of The Witness, Jonathan Blow, replied to the thread saying, “I can guess who the publisher is because I have seen equivalent contracts.” Except Jake’s fairly certain he’d be wrong.

“The problem is so widespread,” Jake explains, “that when you describe the worst of terms, everyone thinks they know who it is and everyone has a different guess.

(I can guess who the publisher is because I have seen equivalent contracts and also gotten the “everybody signs this” line.)

— Jonathan Blow (@Jonathan_Blow) August 14, 2021

While putting this piece together, I reached out to boutique indie publisher Mike Rose of No More Robots, to see if he had seen anything similar, and indeed who he thought the publisher might be. “Honestly, it could be anyone,” he replied via Discord. “What [Jake] described is very much the norm. All of the big publishers you like, his description is all of their contracts.”

This is very much a point that Jake wants to make clear. In fact, it’s why he didn’t identify the publisher in his thread. Rather than to spare their blushes, or harm his future opportunities, Jake explains that he did it to ensure his experience couldn’t be taken advantage of by other indie publishers. “I don’t want to let others with equally bad practices off the hook,” he tells me. “As soon as I say ‘It was SoAndSo Publishing’, everyone else can say, ‘Wow, can’t believe it, glad we’re not like that,’ and have deniability.”

I also reached out to a few of the larger indie publishers, listing the main points of contention in Jake’s thread, to see if they had any comments. The only company that replied by the time of publication was Devolver. I was told,

“Publishing contracts have dozens of variables involved and a developer should rightfully decline points and clauses that make them feel uncomfortable or taken advantage of in what should be an equitable relationship with their partner—publisher, investor, or otherwise. Rev share and recoupment in particular should be weighed on factors like investment, risk, and opportunity for both parties and ultimately land on something where everyone feels like they are receiving a fair shake on what was put forth on the project. While I have not seen the full contract and context, most of the bullet points you placed here aren’t standard practice for our team.”

Where does this leave Jake and the future of Scrabdackle? “The Kickstarter funds only barely pay my costs for the next 10 months,” he tells Kotaku. “So there’s no Switch port or marketing budget to speak of. Nonetheless, I feel more motivated than ever going it alone.”

I asked if he would still consider a more reasonable publishing deal at this point. “This was a hobby project that only became something more when popular demand from an incredible and large community rallied for me to build a crowdfunding campaign…A publisher can offer a lot to an indie project, and a good deal is the difference between gamedev being a year-long stint or a long-term career for me, but that’s not worth the pound of flesh I was asked for.”