Work For Hire, License, or Rev Share: Which Contract Fits Your Raise

Work for hire buys you the finished work and its ownership. A licence buys you the right to use something the studio keeps. Revenue share trades cash today for a share of income later. Funded studios almost always want work for hire, because investors are buying an asset you own outright.

Why this matters

The contract model decides who owns the game, which is the only question that really matters when the game succeeds.

It also decides what happens when the game does not succeed, which is the more likely outcome and the one nobody plans for.

Founders often treat this as a legal formality handled at signature. It is a commercial decision that changes the price, the ownership, and the exit.

The three models in plain language

Work for hire. You pay for the work, and you own the result. The studio builds to your specification and hands over source, assets, and rights.

Licence. The studio owns something already, usually an engine, a framework, or an existing game, and grants you the right to use it. You pay less than building it and you do not own it.

Revenue share. The studio takes reduced or no fees in exchange for a percentage of the game's income. You conserve cash and give away future upside.

Most real contracts are a blend. A work for hire build might sit on a licensed framework, and that is fine as long as the boundaries are written down.

The question to answer before reading any contract is simple. When this game earns money, who is allowed to sell it?

What work for hire gets you

For a funded studio this is nearly always the right answer.

• Clean ownership. The code, art, and design belong to your company, which is what your investors believe they funded.
• Freedom to move. You can change studio, hire in-house, or sell the company without renegotiating.
• Simple diligence. An acquirer or a later investor can verify ownership quickly.
• Predictable cost. You know the number and it does not grow with success.

The trade is that it is the most cash-expensive option upfront, because the studio carries no upside and prices accordingly.

Two details are worth checking in the contract itself. Rights should transfer progressively as milestones are paid rather than only at the end, and the transfer should explicitly name source code, assets, and any tooling built for the project. That connects directly to Structuring Milestone Payments.

When a licence makes sense

Licensing is underused and often sensible.

It fits when the studio has genuinely built something you would otherwise pay to recreate: a proven multiplayer backend, a level pipeline, an established game you want reskinned.

Transferability is the one that surprises people during an acquisition. A licence that cannot move is a discount on the sale price.

Revenue share: the maths and the trap

Revenue share is appealing to a founder watching runway, and it is the model most often regretted.

The arithmetic is straightforward. You save cash now and pay a percentage of income for a defined period, or forever, depending on how the contract is written.

The trap is in three places.

1. What "revenue" means. Gross or net, and net of what. Store fees, ad network fees, user acquisition spend, and refunds all belong in that definition, and their absence changes the number enormously.
2. Duration. A share with no end date attaches to the game permanently, including on a sequel if the wording is loose.
3. Control. A revenue share partner has a legitimate interest in decisions you may want to make alone, such as pricing, platform, or sunsetting the game.

Revenue share is also harder to explain to investors, for the reason in the next section.

Where it genuinely fits: an unfunded team with no cash, a studio that believes strongly in the concept, and a clearly capped term. Outside those conditions, it usually costs more than it saves.

What investors prefer to see

Investors are buying equity in a company whose value is its intellectual property.

A cap table is straightforward. A revenue share sitting on top of the main asset is not, because it reduces the income the company can ever earn and it is invisible in the equity structure.

That does not make revenue share disqualifying. It makes it something to disclose early and to have written tightly, with a defined term and a clear revenue definition.

The related ownership questions come up in diligence, and they are covered in Who Owns Your Game IP and What Investors Mean When They Ask About Your Tech Stack.

Matching the model to your raise

A rough guide that holds up in practice.

• Funded, building your core product. Work for hire, with progressive rights transfer. Pay the cash, own the asset.
• Funded, needing a specific component. Work for hire for the game, licence for the component, boundaries written down.
• Unfunded, strong concept, no cash. Revenue share is reasonable, with a defined term and a tight revenue definition.
• Funded, testing several concepts. Work for hire on small prototypes. They are cheap enough that giving away upside makes little sense.

The pattern is consistent. Cash buys ownership, and ownership is what you are being funded to accumulate.

What we would do

Default to work for hire when the game is your company's product, and negotiate the payment schedule rather than the ownership.

Read the definition of revenue before anything else in a revenue share agreement. Most disputes in these contracts are about that paragraph rather than about the percentage.

Ask any studio proposing a licence for the term, the transferability, and what happens if they stop trading. Reasonable studios answer all three quickly.

Get a lawyer who has read games contracts before, for one hour. It is the cheapest risk reduction available on a six-figure engagement.

The short version

• Work for hire buys the work and the ownership, and suits funded studios.
• A licence is cheaper and leaves ownership with the studio, so check term and transferability.
• Revenue share conserves cash and gives away upside, and lives or dies on how revenue is defined.
• Insist that rights transfer progressively as milestones are paid.
• Disclose any revenue share to investors early, with a defined term.
• Spend an hour with a games lawyer before signing anything six-figure.

Work out which model your current engagement actually is, then read the ownership clause. If you would like a plain-language read on a proposal, send it over.

Related reading: Fixed Price or Hourly Game Dev Contracts, How to Read a Publisher Term Sheet, and Structuring Milestone Payments.