Lecture Notes: Revenue Sharing Agreements in Game Development

Introduction

• Discussion on the concept of revenue (rev) share agreements in the game development space.
• Sam is interested in commercial marketplaces for games and proposes questions about rev share.

Key Points on Rev Share Agreements

Advantages of Rev Share

• Rev share agreements are generally seen as a good idea.
• They allow team members with differing skills to complement each other (e.g., a strong developer partnering with a marketing expert).
• They can facilitate broader skill coverage, such as technical development, artistry, audio production, marketing, negotiation, and sales psychology.

Important Considerations

• Duration and Rights: It's crucial to know how long the agreement lasts and who holds what rights.
• Partnership Clarification: Clarifying if the agreement constitutes a partnership is vital to avoid "accidental partnerships" which imply unlimited liability.
• Legal Review: It's important that rev share agreements are reviewed by attorneys.

Potential Pitfalls

• Accidental partnerships can expose individuals to unlimited personal liability, unlike limited liability companies (LLCs) that limit personal risk.

Practical Examples

• Comparison with self-publishing in the book industry: Authors often face challenges in marketing despite having a good product.
• Game developers, similar to authors, need assistance in marketing to achieve sales.

Rev Share Agreements in App Stores

• Examples of rev share agreements include:
  • Apple iOS App Store
  • Google Play Store
  • Steam
• These platforms typically take a percentage of gross sales in exchange for services like payment processing and customer support, aiding game developers in marketing their games.