The answer to "Why?"

A good industry friend of mine is trying to start a new studio with some well known developers.  He wrote to me:

Scott, I've been making the rounds, pitching that idea for a new development studio -- where we retain the IP.  Not an easy sell -- but no one has officially passed yet.  Everyone asks -- "Why do you care so much about owning the IP?"  I say, "So I can someday sell it, like 3D Realms!"

I replied back to him with the following:

Heh heh, that's so funny of them to ask that question. Like, duh! Owning an IP...

o Gives a studio clout and leverage.
o The ability to better control their future.
o Much better company value.
o And a way to cash in on that value without having to sell the company.

BTW, it's not just enough to maintain IP ownership. You must also...

o Maintain control over the final game, not allowing the publisher to control the design.
o Maintain approval over marketing, so that the brand is not misrepresented.
o Do not give away anything but game publishing rights (keep rights to other media exploitation, and merchandising rights). If the publisher insists on certain rights of this type, then they must commit to exploiting these rights (i.e. merchandising), and if they do not have something in motion by the release of the game, then the rights revert. Another thing is to only give them rights of this kind directly associated with the released game, and not the IP overall.
o Do not give them the right to more than one sequel, and even then make that a right to match option, not a guaranteed right.

If they ask that dumbass question again, turn it right back at them: "Why do you want to own the IP?" Watch 'em squirm.

Comments

[Matt Forbeck]

Dead on, Scott. Hey, if they want the IP that badly, it's a negotiating point. You can sell it now--for the right price.

[Patrick Johnson Jr.]

Owning IP is like controlling your destiny. Not wanting to own IP (especially your own IP) allows someone to attach you to strings and make you dance like a puppet.

I think Tom Hall/Commander Keen is a good example of what can happen when you don't own IP that you are passionate about, you lose control and can't do it until you do have control. Especially if it is your own IP that is owned by someone else.

[Robert Howarth]

It seems that the bottom line in all of this is money. If you have enough cash to support your own payroll for any amount of time and don't need to rely on publisher support, you can have anything you want from publishers. So, I'd suggest your friend have a nice sized bank account before heading out on their own.

[Mark Wallace]

This is a good sign, that a developer even feels bold enough to ask to retain the IP to their games. It makes me think the game industry is approaching some kind of fork in the road. If things veer toward the Hollywood model, it will be difficult to retain too many rights to your creations. If they veer toward the model used in book publishing, however, more and more rights will accrue to the developer, and publishers will become just that: publishers, rather than owners. Unfortunately, Hollywood works the way it does because it costs so much money to produce a movie, whereas you can just sit at home and write a book almost for free. Since it costs a similar amount to produce a game, I wonder whether it's possible to get that close to the publishing model. I imagine things will probably settle down somewhere in between the two, but I don't think that's necessarily a bad thing, just part of the process of the industry maturing.

[Patrick Johnson Jr.]

I agree with you Mark, if it runs towards that "Hollywood" model, it's going to be more political when it comes to seeing an IP being created and then made a sequel of if the IP has that potential. EA is not the company they are today by just having a few IPs under their thumb and making games. They're whole base is around IPs. This is why they keep trying to buy out other companies, for potentially good IP deals. They scored a knockout in the sports brand by getting exclusive rights to the NFL name for five years while the competition has to get ficticious or wait it out and hope the name comes back. They've gobbled up studios left and right, Origin, Westwood, Maxis, and more and more as the years have grown on. They did it to obtain one thing: their IP.

This is why we're seeing EA make Ultima games though Richard Garriott isn't the brain behind the game anymore (which on a side note, I feel Ultima lost their game design "soul" when he left, Ultima is him, much like Duke is 3D Realms, or Todd Replogle whichever or both :)). They shut Westwood studios down, alot of them I've read from news reports from Gamasutra is that they've defected to Blizzard. Yet EA still pushes Command & Conquer titles, compilations and merchandise out for it. EA didn't need Westwood anymore, they got what they wanted, and now can make profit on it without Westwood Studios in the way. (It'll be a shame if they do Maxis in this way, I feel).

So EA buys companies to buy IP, they pay a one time price, faze the company out and assmilate their IP. They make money off the IP after this happens, and I have long said this about EA titles, that the quality of their game is never the best when you compare it to another game in the genré on the market. I can name quite a few games that have some lamebrain quarks in it (Especially the AI turning into a fence deliberately while leading in Need For Speed Undergrounds 1 and 2).

IP owning is great, especially if it is your own, it is an idea you have been passionate about, and want to do more with. Sometimes its good to save IPs from going the way of the dinsoaurs by purchasing it outright from a company who has no intentions for it, or if the company titanics themselves into oblivion (See Acclaim, 2004). But hogging IP like EA has done, or try to take a company for their IP, is going to be devastating for the game market if it continues (example, UbiSoft is under the gun by EA now for being bought out).

But I agree with a few things, IP is essential to staying alive and afloat in the game industry. I just don't necessarily agree with EA's method.

[Jason]

Unfortunately, Hollywood works the way it does because it costs so much money to produce a movie, whereas you can just sit at home and write a book almost for free. Since it costs a similar amount to produce a game, I wonder whether it's possible to get that close to the publishing model.

The publishing "leash" as it might be seen could also be less of a threat that one thinks. Valve's lawsuit ordeal with Vivendi, and their relatively successful use of Steam demonstrates a developer's ability in today's world of broadband to distribute (read=publish) their own games.

Although no gamer wants to be peppered with hundreds of Steam-like background programs to verify and run their games, there's certainly a market for downloadables. DSL & Cable, coupled with the whole idea of instant gratification could mean publishers will *have* to start shifting more IP rights to developers in order to prevent them from jumping ship, as it were.

If I could download a 400k installer app that connected securely to the developer's servers, downloaded and installed my game, then left me alone--I'd do it. In fact, everyone but the publisher probably would.

At least...that's my (frankly uninformed) take on things.

Nice blog, by the way.

- Jason Preston

[Alexei]

I though better sell IP then having much problem with handling it.

[The Unknown Developer]

I would go a step further, and be a little more explicit with what other people are saying: even if you don't want to own the IP, pretend that you do. As independent developers, we're very limited in both the number and the quality of our sticks and our carrots. If you have something of value, hold onto it! Even if it's not really of value to *you*, it makes for a very powerful bargaining chip later on when you're in a tight spot and need to sign another title quickly or just bail your ass out of a busted schedule.

And that's one to grow on.

[hugh]

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