creative_dreams

What is their most underhanded tactic? Former games industry studio head here. I will share an answer to this since I am not going to get in trouble for doing it, and because I am no longer reliant on keeping the dogs happy. I hope that is ok, because this is something developers seriously need to be aware of.

Video game publishers have a history of rather nasty hostile takeovers, when they are interested in acquiring a developer instead, but do not want to pay. I ran a game studio for a decade and this happened three times, each time we stopped it from happening and each time it was a nightmare. It reached the point that we knew it was coming and took action to keep them from being in a position to do it...but it causes massive problems and is seriously fucked up.

Here is how it works.

1. Publishers get developers under contract where most the revenue for the company comes from the publisher. Game devs will try to have multiple publishers because having just one is a recipe for anal, if you know what I mean. Even that is not enough..
2. Publisher then gets everyone busy and right at the point that things are going strong, and they ascertain the developer likely has no other development contracts incoming, they stop production (it is typical for devs to seek projects closer to contract completion dates and not early in long term deals).
   
3. With production stopped, the developer now realizes his funding is also grinding to a halt (dev payments are based on deliverables and milestones typically).
4. The dev panics about laying off his team and with hundreds of thousands of dollars burning monthly, the dev tries to find a new contract, Time is too short and this often means a massive loss in company value is impending.
5. the publisher then swoops in with an offer to "buy" the developer for salaries and signing bonus, or some other lowball offer, in the guise of "saving them". The devs don't realize this is a standard move, and will sometimes bite.
   

We found alternative contracts and ran the company lean, and set aside back up funds for a rainy day to stop this from happening. Many are not so lucky.

When you hear of game studios getting bought this is sometimes the way it got done. I know of three in California right now, who work on the biggest mmo's and games in the biz, who had this happen and to this day they think they got saved by their publisher. they didn't. They got totally shafted.

This type of process can be used to renegotiate contracts and the existing deal as well. Of all the problems we dealt with as a game developer the hostile takeover crap was the worst. Without great attorneys, and our advisory board of industry leaders there, we would have been screwed. Get a great lawyer. Get great advisers. They will help you save your asses.

With that said, many problems do not come from the publishers or the like. They come from not having that list that videogameattorney posted as things to get done, especially shareholder or partnership agreements. Failures often come from the inside, when either money comes in, the big money, or when money struggles happen. I cannot stress enough how important it is that you follow this attorneys advice in his post above about company structure documents etc...

cheers.

no worries at all. many lessons were learned over the years. we actually work with a guy you probably know, Jeff Rose esq. who literally saved our butts numerous times. You, and he, and the other white knights are a godsend for us devs.

cheers.