A company has shown interest in investing money and resources into my game development company. There is no set dollar amount on what they will give. It would be easy if they would say "we''ll give you $10,000 and we want $15,000 back". It''s more of a "we''ll give you this to start with and later we will give you more". They won''t tell me what they want in return, they want me to tell them what it is worth to me. They are going to let us use their office space and licenses for 3D Studio Max, Photoshop, etc. along with giving us some money for funding. My problem is I don''t know how much to pay them back and when to pay them. Should I say "well I''ll give you X amount for the resources and I''ll pay you 150% when the company becomes profitible", or "I''ll pay you back what you gave me plus interest". How should I work this?

I''d recommend that you insist on getting everything down on paper before proceeding. I know it can be really exciting when a company shows interest in your startup, but you need to protect yourself. Get a contract for everything; even if its as simple as "You give us X and we''ll give you Y in Z years." You want to make sure its all recorded.

Good luck!

Charles Galyon

OK, First of all, you need to know what toy think you can make from the game. What is the target market, what will it pay, how much will it cost you to make it (There are loads of good articles on this here and on Gamasutra).

It''s No good you asking for $10,000 if you go bust before the end of the project. Once you know what it will cost you to make (don''t forget to add on a contingency - say 20%) Look at wjhat you want to gain. Is this just to get experience, is the company going to have a future after one game (you''ll need money to keep selling the game and start work on the next one, don''t forget all the work you haev done so far probably hasn''t been in a budget anywhere.

Then, You have to negotiate. Before you talk to them, decide what you can bear (worst case) to give up, i.e. do they get a % in the comapny and all profits (and so have an interest in making the game work, but may then want to sell you out), do you pay them back a fixed amount, in which case I''d say look at what you want, add in the interest that money could earn in the bank - That will be considerably lower than what they want back, after all it is their cash and their risk. Don''t go in and give them your worst case, try to decide on a case that is good for you and them (but slant it towards you slightly) and then go negotiate. Don''t negotiate on their terms if you can help it, either do it at your place in your time, or ona Neutral ground.
You don''t want to jerk these guys around, they are offering to help you so be prepared to give some up so that they can benefit, but they have to see that you need to eat / sleep and maintain some credibility too. Also, don''t ever negotiate based on future returns of your second game when you haven''t started it, a lot of things can happen. If you write a best seller and have given up the sequel rights for peanuts,think how much you''d kick youself !

Before you go much further, hunt out the articles on this forum and on Gamasutra, like I said before. Theres loads to think about I haven''t touched on.

Good Luck, and keep us infomed if you get on, your experience will prolly help others in here :-)

Bp.

Thank you both for replying. Your posts are very helpful.

I will re-state what Charles said in a more forceful manner. Do not accept any money under any circumstances until you have a contract that details your rights/obligations and their rights/obligations.

At best you could end up with them having some ownership over your company/product and at worst you may get to the point where you need that "more later" money only to find they will only provide it if they own everything.

Get it in writing now or regret it later.

Dan Marchant
Obscure Productions

No, clowns are not cool, they are horiffic beasts that scare little children...

CEO Plunder Studios

Obscure > i have just seen your website, which is very very professional. i was wondering if u could provide a bit more info on what are "sub-licensing" , "subsidary rights", and "sequel rights", rather than i make the obvious assumptions.

[edited by - edwinnie on April 20, 2002 12:39:39 AM]

sub-licensing
A smaller publishers may buy a game or licenses a game for publication worldwide, except that they only have a publishing operation in one territory. In such a case they would sub-license the game to a local publisher. The sub-licensing revenue they get is much lower than the money they would get for publishing directly.

Subsidiary right
All non-game revenue sources, such as films, books, toys etc.

Sequel Rights
The right to produce, publish or get revenue from a sequel, which follows on from the first game or that features story elements, locations or characters from the first game.

Dan Marchant
Obscure Productions

erm..ok...

are developers allowed to use software that are "non-original",
as maybe the publishers have proper licenses for the software.

who gets the blame, the publisher or the developer?

ROFL - Do I really need to answer this question? If you really don''t know the answer then I suggest you read the license agreement for almost any piece of commercial software installed on your PC.

Dan Marchant
Obscure Productions