Advice on royalty sharing

If you can get the publisher to handle all the accounting instead of doing it yourself, you'll be doing yourself a big favor. The less bookkeeping, the better.

Hi RDR ...

Thanks for posting. It's nice to have someone with experience in the mass market game & toy industry posting. Most of the folks that post at this site who are involved in the game industry are more familiar with the niche markets, like Euro-games and indy-published games. A lot of us are hobbyists (for now).

To gain a better picture of where you're coming from, can you let us know what sorts products and games has your company been involved with?

Thanks,
-Matt Worden

I have a verbal agreement to meet and pitch to Hasbro on a game I have, but not until 2010 (they are tracking performance on existing product and testing me as a designer to make sure I am a patient person, I am sure). This will be my first such pitch and I am unpublished and without agent.

I assume this is a rare situation indeed, so I plan on capitalizing on that by bringing the best preparation and plan to bear.

However, that doesn't answer the questions you really have - fitting game with appropriate company.

You have a word game... if it is party-esque, plays fast and is quick to learn, I suggest Out of the Box publishing.... they accept outside submissions without your connection.

To me, you are going to have to familiarize yourself with the companies that exist and learn what games fit what companies best. They are your best chance. Then, find out if they accept outside submissions.

Do your homework before you start handing out your money. You might not need any connections.

Just wanted to chime in and say that I'm very glad that RDR joined the conversation. I also sincerely hope that he or she continues to participate in discussions here on the forum.

Why? RDR's experience, stance, and opinions come from a different P.O.V. from those of most of us here on the forum. This is immensely valuable.

Thanks for speaking up, RDR. I hope you continue to do so.

As to the 50% thing... It all depends. Consider this:

If you had a choice of earning $2,000 or $25,000 in royalties off of your game, which would you choose?

What if the $2,000 came from doing it all yourself and only reaching the hobby market and the $50,000 came from going through an agent and paying the agent 50% of $50,000 in royalties?

See what's happening there? Some people will refuse to take the larger sum, simply because they think that it's not fair, even though it results in lost revenue. What the right decision is all depends on what's important to you. (Me? I'll take the big money, thanks.)

Also, there are significant benefits to Mattel / Hasbro level exposure that are not measured in money. What price can you put on the ability to lay claim to designing a game that sold 50,000+ units and is carried in TRU or Wal-Mart? That would give you formidable clout when pitching your games in the future. What if you have a game with a message that you want to get out to as many people as possible? In a case like that royalties may be less important than the size of your market.

You make your decisions. You choose your path. Figure out what's important to you, then do what you need to get there.

>>you might understand some of the frustration of having to share 40-50% of all royalties you receive on a project (in perpetuity) with someone who is involved in only the last few steps of the journey. To be totally honest, it feels quite predatory. <<

You see, new game designers often feel that the "design process" is most of the journey, but its simply not. Its a leg of the journey in the process of bringing a game to market, but usually not even the longest leg at that. Designers get this skewed sense of proportion largely because they often do not get to see the level of involvement and work required on the other legs and therefore do not respect them.

As a designer/publisher, my own experience pegs the game design parts of bringing a game from concept to market at maybe 10% of the work. And to be fair, since we are a small company and self publish, our process has less steps in it than Hasbro or Mattel will have. For instance, we don't need to "canvass" the market for game submissions that meet certain criteria that R&D or marketing has told us we should be seeking to sell next year and thusly also don't need to deal with the agents who will work with them to do that canvassing.

The "idea" has its place and it is important, but it is perhaps a mistake to think that its the cornerstone of the process. Just as an example, we have an business plan centered around a new means of publishing and distributing games. Its an old concept applied, as far as I can tell, newly to games. A good idea. Coupled with what we believe to be good game designs. But the whole idea goes nowhere without a huge amount of leg work selling advertising. On the order of importance, its like 5% idea, 95% ad selling legwork.

Ryan S. Johnson
Guild of Blades Retail Group - http://www.gobretail.com
Guild of Blades Publishing Group - http://www.guildofblades.com
1483 Online - http://www.1483online.com

What you're willing to accept for royalties has a lot to do with what you want to get out of the transaction.

Saying "I'm a published designer" inevitably brings up the question "Published by who?". And if the answer is Mattel or Hasbro, that's different than Mayfair or FFG, and that's different than "Self-published".

If you want money, an agent (at whatever fee they charge) represents a much larger upside POTENTIAL for you, if they can navigate you through to the right people at the big companies. If you want to be a published designer - and the money is not the prime motivator, then maybe an agent's services are not what you need.

That being said, a game designer (or publisher) can't do it all. Blue Panther uses an agent to represent us to the hobby games industry. What that agent charges for the services provided is worth every penny (to us) because we don't have the time to do it all oursevles. Sure we get less on each unit sold, but we have worldwide reach and any game store can call up their distributor and order our products. It's built into the business plan. Does the average game designer have a business plan for their game design? Maybe, maybe not.

We get game designs submitted from designers worldwide. Some we know and some we don't know. But the ones that say "I looked at what you already publish and I think this game will fit in your line because ..." get to the front of the line because they've already shown they're interested in what we may need from them as a publisher. I think that's the essential service that an agent is selling to a game designer. "I know how to navigate the Hasbro and Mattel product submission process and your chances are much better with my help than without it". That help can make your game a household name - so if that's what you want, then it's worth their asking price.

Would definitely be worth 15% in my opinion. It would be a bargain to be at any truly massive company with Wal-mart potential because of the numbers.

One thing I think you are underestimating severely is the company... you have a word game. If it COMPETES with the existing product line (like Scrabble) in their eyes, they will not want it. If it can be made into an expansion of their line, they may have increased interest. I can pretty much guarantee that Hasbro wouldn't want a word game that is competing with the same customers they already have in Scrabble.

Mattel might - though they seem to have been in much more of a lighter game mode, though I don't know how much a Scrabble game rates with them on the heavy scale.

Again, I don't know your game or how heavy or knowledge-necessary it is. My advice is to try to look into the games the companies are making most similar to yours and those that are willing to do them.

If it isn't a mass-chain potential game, I wouldn't work with an agent or your friend. The money potential just isn't worth further slicing of the pie.

This is a long post but might just be of help to some of you, inspire others and still may scare the rest out of the business...AND IT IS A BUSINESS SO TREAT IT THAT WAY!

Hello everyone. RDR here again. Thank you for the compliments. Perhaps some background would be helpful. I come from the unique, or perhaps not so unique perspective, of having been a game and toy designer for the past 19 years, (Still am with over 200 in my portfolio). When I first started out, my agent was the same agent that represented inventor Gunther Degan, creator of Scattergories to MB (now owned by Hasbro - who don't they own...). That game as you know has been consistently at the top of their line. Anyhow, we have been friends for all these years. In fact I spoke with him yesterday asking his opinion on an issue with Hasbro. (The Agent relationship is a business relationship for sure but much more than that. It is, or should be, a friendship as well. The idea is that if you are going to "be in bed" with someone for a long time you pretty much better have a good connection).

Let me tell you some horror stories that happened to me at the time I was green behind the ears and learning (slowly) the business and before discovering this particular agent: Let me take you back to the year 1992. At the time, KOOSH Balls were the number 2 selling non-advertised toys in America. OddsOn company was a small startup. I had never heard of them but read about them in USAir magazine. I immediately got 15 ideas for product line expansion. I researched the company, called and got through to the VP (I will not mention names but he has a thick Scottish accent) on a Thursday. He overnighted me a catalog and an NDA. I sent 15 market renderings and got a letter back from him (VP) stating "We were pleasantly surprised you came up with 7 different ideas we'd not considered being that we have weekly brainstorm sessions. We have already finalized our '92 toy line but when we get ready to define our '93 line we will be back in touch." (I know it verbatim). '93 came and went. At the time '94, I lived in NC. I visited my home state of Massachusetts and stopped at a toy store in Westboro, MA called the WIZ. There in the bin was my concepts: Koosh balls with collectible animal heads and extremities i.e. Lions, tigers and bears (OM). It was consistently in their top 3 selling products... it helped launch them into a 200 million dollar company and Hasbro bought them out a few years later for I think at least that much if not more. (and made the VP president of the acquisition).

I attended the 94 toy fair because my next concept/game had done well and was being launched there. I invented, (along with my brother) the first ever color version of Jenga. More on that later... At the show I went up to the KOOSH Booth and met with the same VP. When I confronted him he stumbled and stammered on his words and claimed he already had that idea. (Remember I had it in his own words he'd not). Well, after the show I reached in my back pocket for some cash but to my amazement I didn't have $250, 000 to start a federal lawsuit so I eventually found a high profile lawyer willing to take it on contingency. According to him by then I'd already been cheated out of about $2 million dollars of royalties. Well, he took the case but was involved in a huge suit with Power Rangers or something and sat on it for two years until the statute of limitations ran out...(2 years from discovery). I hate to think how much 5% over all those years would have amounted to.

Next, that Jenga thing. Took it to Irwin Toys (STAY AWAY FROM THEM). Irwin licensed Jenga to MB. I should have gone right to MB or at least Pokonobe - the owners - Irwin licensed it from Pokonobe. Again verbatim, "Great idea but were not interested because we are coming out with our own color version but don't worry it is all one color and doesn't use a color die."

(Now back to the '94 Toy Fair - a year later). My agent licensed it to TC Timber owned by Haba. They thought it would launch them out of niche` markets into mass merchandise. They had a six foot display at their booth - huge blocks. Irwin comes to the booth and says, "I can't believe it. Mine is not even on the market yet and your knocking me off." They told him, they licensed it from the same people that showed it to him over a year ago and said he turned beat red in the face and walked a way.

So why am I telling you all this: Because you need to know, it is a dog eat dog world in this industry too. My game was called Rainbow Timber. It won a platinum Oppenheim Award, A Parents Choice Award, Katie Couric and Al Roker played it on the Today Show for 7 minutes of air time and it was voted in the top 10 games of the year, featured in Child, Parenting magazines and Chicago tribune as top ten. TC Tmber had offers from major mass merchandisers but turned them down because of buy back clauses. Rather than negotiate an ok but lets try your top ten markets first to see how well they sell, they just said no. Consequently we sold just under 80 thousand games and MB went on to sell tons under the name Throw N Go Jenga.

So, again why mention all this? Two fold, and one of them is not to toot my horn. One, to tell you, while you may be a game designer - this business is anything but games. It is, or can be, depending on who you deal with, nasty, underhanded, cutthroat and any other adjectives you care to throw in there along with a few expletives. I have navigated the waters, learned who you can trust, and who you can't. I have paid my twenty years of dues and am more than ready for that twenty year "over night success story! to come along. I am willing to help anyone. The point is is that an agent can keep you from making the same mistakes or going through the same crap.

That said it can still happen with an agent too. But another reason to consider an agent who is worth their salt (or 40 to 50 %) is that they can tell you right off the bat if your idea had merit or not. If they have seen it a thousand times already. If you idea is sellable. If it is sellable to the big dogs or not. Many times as the inventor we are too close to the project and have fallen in love with it. BIG mistake. An agent has a vested interest in you and your concept, believe me he or she wants it to be a good one, otherwise they doesn't make money either. So, they can be honest with you. It sucks move on to the next one, or delete this and ad this and we can do something with it... etc.

I don't know about you but a million unit seller with a 5 to 10 dollar wholesale with a 5% royalty is nothing to sneeze at. Even with half to a quarter of that distribution. So, if as said elsewhere, if your goal is to just get it in the marketplace even if it is with a small company with small distribution channels, YES, do it your self if you want and if you have the time and inclination to learn the ropes. Otherwise, consider the agent's services. I mean $4k or $2k - its not that much difference in royalties....Oh, and BTW, it isn't "at the end" of the process - it is more or less at the beginning. It is a hell of a lot of work and aggravation to get it to the marlketplace. Plus with the agent working for you and with you, that frees your time to do what you obviously do best - INVENT. You may not make that million dollars a year on the first one but what if you just churned them out? three or four and you have your million residual working for you.

The other option of course is self publishing. You got an extra 50K to 300k or more laying around? Going to mortgage your house or your kids college funds? Are you an expert at managing, selling, marketing, administrating? Consider the minimum unit usually required is 5K. The unit price is going to be much higher for you on that purchase than for say Hasbro on a 250k unit order. Do you have 10 to 15 years to make significant market inroads?

Please don't let my last paragraph discourage you though. Believe me, the way Hasbro keeps buying up all the smaller companies, they are basically going to force many of you (and me) to go the self publishing route.

Funny story - I met with the two top guys (both Mikes for you in the know) and they loved one of my games (They usually kept 80% of what we pitched), but thought it needed reworking somehow. I was reworked out on this one and thought it played great the way it was. I thought it was a perfect match the way it was for Cranium. 6 months later Hasbro bought out Cranium. I'm telling you, this is the most frustrating business! But to me it is the most fun as well. I have met some great people, made a lot of friends, partied with pres/execs with a lot of the companies and for the most part they are all sincere and honest. There are some you have to watch out for though... Til next time,

Oh, and by the way, I am a writer too. since one of you mentioned that. I finished my first novel Murder-by-the-Sea two months ago. at 4 cents a word it is going to cost me 4k just to get it professionally edited to submit to the agent who is going to charge me that 10% LOL. Ouch!

RDR
Solomon's Thoughts, Inc.

. . . look into editing as a career move!

:)

I think you're assuming that most submissions aren't crap. I'm positive that Sturgeon's Law applies ("90% of everything is crap") in spades... and that it's probably even higher in game design due to the number of people who think you can design great games despite having only played a handful of them when they were children.

I found a few, but... and I know that this is probably just an issue for me... a lot of the websites look really unprofessional. They don't make me feel confident in contacting them or working with them. I'd really prefer going off of a personal recommendation.

That said: RDR, I've sent you a message through the BGDF's private message system.If you look on the upper-left of any page under "Content", you'll see a "Messages" link, probably with a number next to it. That'll be me, and anyone else who's contacted you.

Hi guys. Let me say this about that. Here are some facts you need to understand and may not have thought about. In an earlier post I said or alluded to something like: "never tell me the odds against me, (or you) if someone else can do it so can I (or you)."

Well I am a firm believer in that and always will be. Here is the philosophy behind that: When I was younger (51 now) growing up in the 60's hearing "I'm the greatest," from the mouth of one Cassius Clay or better known as Muhammad Ali, one of the greatest heavy weight fighters in history, I used to think "how arrogant of him." But you know what? Later in life, as a young man learning about life I realized something... Can you imaging getting into the ring with a 285lb man whose only goal is to basically pulverize and kill you and thinking....Maybe I'm not the greatest? So the point is, is that YOU BETTER BELIEVE IN YOURSELF AND THAT YOU DESERVE IT AS WELL. That glass in front of you should always be half full not half empty otherwise you might as well throw in the towel now cause you are going to have your clock cleaned in this business... and more than once.

Now that I prefaced that, here are the odds against you: Hasbro tells me they see (if I remember correctly) somewhere between 2000 to 4000 game submissions a year. Not sure of the exact number but 2000-2500 is a hell of a lot on the lower scale don't you think? Keep in mind to that not many of them are duplicates either. On top of that, realize that they may only have 20 slots open for new product for the year (which by-the-way is two years out into the future i.e. show it today and it hits shelves 2 years later.. or almost 3 years later depending on time of year they take it). Out of those twenty, they may have 16 from in house leaving four open from game designers like you guys.

That is pretty crappy odds. Now lets throw in the retailers on top of that: Go into a retailer like Walmart or Toys R Us. Do you see any empty spaces on the shelves? Not likely. Competition for shelf space is TIGHT, not to mention expensive. Shelf space is not free. Some charge for the space as well as the fact they want whatever is placed there to be TV advertised. So for Hasbro or Mattel to take your concept it has to be, without a doubt, the next best thing hands down. They will be investing millions of dollars to get in on the shelves.

Let me tell you what has happened to me: You do have the next best thing. They take what you have perhaps earlier in the year or the previous fall. Towards their cut off (May) an even better item comes across their desk. Yours gets bumped for it and I don't mean bumped til next year I mean bumped to the grave. And, or, an executives neighbor, sister, mother, brother etc. has a fairly good idea (not near as good as yours) guess what? Your's still gets bumped for one of those four slots.

Another fact: They don't care if you have the most exciting, incredible game they have ever seen, if they can't retail it for 5 times their costs they will not do it. It is not run by the creative types like us who go with their guts - not anymore. It is all business - all wall street mentality... run by the suits with calculators in their hands.

The odds are stacked against us on every level and angle. Here is another thing that happened to us: I submitted a game called Jewel Quest one September years ago. Mike called me to tell me it was the best family game they have seen in 9 years of searching and that they were probably going to do this one and would let me know in Feb after Toy Fair. The following March they sent us a down payment of $20k with a 30 day option Agreement. Guess what? They didn't pick it up. Granted we got to keep the money but I would have rather had the $250k royalty every year. The reason? Take your pick above... they will probably never tell you the real reason.

I also should tell you, even if they, and I don't just mean Hasbro, appear to be "friends" and even call you to redesign barrel of Monkeys or work on their wish list, you could bring in your concept and they see somethings or aspects of it they like but turn the game down. 2 years later you see they come out with something similar or something not like yours but incorporates one or two features from yours.

YOU BETTER BE SURE YOU COVER ALL YOUR BASIS. YOU NEED TO BRAINSTORM EVERY POSSIBLE DIRECTION YOU COULD TAKE YOUR CONCEPT. It is kind of like a patent: You want your patent to be as broad as possible to cover all the angles someone could copy you from but yet be narrow enough to be strong enough in its claims. Here is an example: You get this great idea for expanding GUESS WHO game. Instead of three rows of people you think CLUE - three rows, one with the possible killer, one with the weapon, and one with the place of the murder. And that is how you send it as described. WHO WHAT WHERE. They say no thank you and two years later the come out with GUESS WHERE.

Did they steal your idea or should I say a feature of it? Maybe they did. Maybe they didn't. But if you had described it that way to begin with as a possible method of play you would be in a better position for a royalty claim on it.

Geez - just looking at all I have written.. hope I didn't put anybody to sleep. I should just write a book on the subject. Incidentally, to the person who asked about the editing and mentioned the publisher doing it at no cost... While that may be true for a writer in their stable, I am not even in the corral yet! I have rewritten several times and edited as I saw it but the problem is I AM TOO CLOSE TO THE PROJECT (just as some of you are with your game design) and tend to miss a lot. Plus I suck at "speling" and grammar. I don't have the time nor want to take the time to edit. I want to do what I do best and that is create. Anyhow, I want the best possible manuscript to be competitive when that agent reads it. I have to look professional or it will hit the reject pile before he or she finishes the first paragraph. The good thing is that one of my favorite authors; NELSON DEMILLE, always on the NYT best sellers list, says he can't spell and his grammar sucks and credits his editor for making him a great writer. That encourages me cuz IF HE CAN DO IT THAN SO CAN I. Gee, where I have I heard that before...?

Ciao

OH BTW one more thing: I loved what someone said in a post, "someone might have the next best game on their shelf." That is so true. And for that reason I want to help ... I never charge anything upfront. I don't want to discourage anyone. I believe I am compelled to help others along to success just as others have helped me. That said, I don't take on a lot of clients for two reasons , there aren't a lot of truly new innovative things I haven't seen and I have too many things from our own portfolio. See? Even with me the odds are slim! LOL

RDR
Solomon's Thoughts, Inc