How to Read a Publisher Term Sheet Without a Lawyer in the Room

Six clauses decide a publishing deal: what revenue share is calculated on, which costs are recoupable, who owns the intellectual property, how long exclusivity lasts, what the term is, and what happens to the game if the deal ends. Read those first, in that order.

Why this matters

A term sheet is short, non-binding, and sets the shape of everything that follows. The long contract that arrives later mostly implements it.

That makes the term sheet the moment where negotiation is cheap. Points conceded here are difficult to reopen once lawyers are drafting.

You still want a lawyer before signing anything binding. Reading it yourself first means you spend their hour on the parts that matter.

The clauses that actually matter

Work through them in this order, because each one affects how you read the next.

1. Revenue share and its calculation basis
2. Recoupable costs
3. Intellectual property ownership
4. Exclusivity
5. Term length
6. Termination and what happens to the game

Everything else, including marketing commitments and reporting obligations, is secondary. Useful, but not deal-shaping.

The percentage is the number everyone negotiates. What the percentage is calculated on is the number that decides what you actually receive.

Revenue share and what it is calculated on

A share of gross and a share of net can differ enormously.

Find the definition and read it slowly. Then check whether each of these is deducted before your share is calculated.

User acquisition spend is where deals differ most. A share calculated after marketing spend means you see nothing until the campaign is profitable, which is a fundamentally different arrangement from a share of net revenue.

Ask for a worked example with real numbers written into the term sheet. A publisher who will not model it is telling you something.

Recoupable costs

Recoupment means the publisher recovers what they spent before your share begins.

Three things determine whether this is reasonable.

• What is recoupable. Development advances and marketing spend are normal. Salaries, office costs, and general overhead are not.
• Is there a cap. An uncapped recoupment pool can absorb an entire game's earnings.
• Is it cross-collateralised. This is the one to watch. Cross-collateralisation lets a publisher recover losses on one of your titles from the earnings of another. For a multi-title deal it can mean a successful game never pays you because an unsuccessful one is still in deficit.

Push for a cap and against cross-collateralisation. Both are commonly negotiable.

IP ownership and sequels

Ownership determines what happens after this deal ends, which is the part founders think about least.

Check four things.

1. Who owns the game. Publisher-owned, developer-owned, or jointly held. Developer-owned with an exclusive licence to publish is the healthiest common shape.
2. Who owns the name and characters, which can be separate from the game itself.
3. Sequel rights. Whether the publisher has an automatic right to the next title, and on what terms.
4. What happens to code you wrote. Reusable systems and tools should stay yours.

Joint ownership sounds fair and behaves badly, because both parties need the other's consent to do anything. Prefer a clear owner with a clear licence.

The general ownership picture is in Who Owns Your Game IP.

Exclusivity and term length

These two work together and should be read together.

Exclusivity covers what you cannot do elsewhere: this game on other platforms, similar games in the same genre, or work for competing publishers. A broad genre exclusivity can quietly prevent your studio from taking most of the work available to it.

Term length is how long the arrangement runs. Look for how it ends: a fixed number of years, a period after launch, or perpetual.

Perpetual terms on a live game are common and not automatically unfair, but they should come with performance obligations. If the publisher stops supporting the game, the term should be able to end.

Termination, and what happens to the game

The clause nobody reads and everybody eventually needs.

Establish four things.

• What triggers termination, on both sides, including failure to hit milestones or minimum spend.
• Who keeps the game afterwards, and whether it can continue operating.
• What happens to the live players and their purchases, which matters legally as well as ethically.
• Reversion of rights. If the publisher holds rights, do they return to you, and after how long.

A deal with no reversion means an unsupported game can sit unavailable forever with nobody able to revive it.

What is normally negotiable

More than founders assume, particularly before signature.

• The revenue definition, especially whether marketing spend is deducted
• A cap on recoupable costs
• Removing or narrowing cross-collateralisation
• The scope of exclusivity, narrowed from a genre to a specific title
• Sequel rights, changed from automatic to a right of first refusal
• Reversion of rights after a defined period of inactivity

The percentage itself is usually the least negotiable number and the one founders spend all their energy on. Trade it for the clauses above if you have to choose.

What we would do

Read the six clauses before responding at all, and write your questions down before your first call.

Ask for a worked revenue example in writing. It converts an abstract argument about definitions into a concrete number, and it frequently changes the conversation.

Then spend one hour with a lawyer who has seen games deals, focused only on recoupment, exclusivity, and reversion. That is the highest-value hour available on a publishing deal.

If it is your first deal, remember that a modest deal with clean terms is usually better than a generous one with cross-collateralisation and no reversion.

The short version

• Six clauses decide the deal; read them in order.
• The revenue definition matters more than the percentage.
• Cap recoupable costs and resist cross-collateralisation.
• Developer-owned IP with an exclusive publishing licence is the healthiest shape.
• Read exclusivity and term together, and require reversion when support ends.
• Most of these are negotiable before signature and difficult afterwards.

Pull out the six clauses from any term sheet on your desk and write your questions before the next call. If you want a read on one before it goes to a lawyer, send it to us.

Related reading: Do You Need a Game Publisher, Work For Hire, License, or Rev Share, and What to Do When Every Publisher Passes.