All About Minimum Guarantees (MG)
Alright, indie game developers! Today, we're going to talk all about minimum guarantees (MG) for video games publishing deals. If you are new to this game (pardon the pun) and want to understand all the A to Zs of MGs and how to secure one, read on!
Understanding Minimum Guarantee (MG) in Indie Game Publishing
First of all, what is a MG? In simple terms, it is an upfront payment paid by the publisher to the game developer used to fund the development of the game. The publisher then typically recoups the MG from the game's revenue before any profit share occurs. It's a method for the developer to secure some funding and for the publisher to show commitment to the game's success. It is also like a reassuring financial safety net, ensuring developers receive a minimum revenue amount, regardless of their game's sales performance. It's your financial ally during the game's development and post-launch phases. And here's what a MG is not. A MG is not a free pass to unlimited funds nor a magic solution to your financial worries. It's also not an opportunity to place all risk on the publisher while your team stays safe. Instead, MG is a commitment from the publisher to pay a certain amount towards your game's revenue even before the game makes a sale. It's a mark of the publisher’s belief in your game's potential, but it comes with expectations of professionalism, quality, and shared risk. It's crucial that indie developers approach MGs with a clear understanding of their purpose, instead of viewing them as a chance to pass the buck. Remember, your game’s success is a shared journey between you and the publisher. Misunderstanding or abusing the concept of MGs can harm this partnership and possibly your reputation in the industry.
A minimum guarantee is not free money, but a commitment from both game publisher and good developer to see the game to success.
Determining a Fair MG Amount
If you're hoping for a magic number outlining the precise Minimum Guarantee (MG) that you can secure for your game, brace for some disappointment. Just as each video game is a unique creation, each deal involving an MG is subject to a host of variable factors.
Here are some of the key elements that can influence the MG a game developer might be able to negotiate:
Game Type: The kind of game you're developing is perhaps one of the most significant factors affecting the MG. A game with mass appeal, like an RPG or shooter, might command a higher MG than a niche or indie game. The platform (mobile, PC, console) and the business model (free-to-play, premium, subscription) also play a part in determining the MG.
Team Size: The size of your development team can also influence the MG. Larger teams often require a more substantial budget to pay salaries, purchase equipment, and cover other overhead costs. Therefore, they might be able to negotiate a higher MG.
Development Timeline: If your game requires several years of development, a publisher might be willing to provide a larger MG to help cover the extended production costs. However, a longer development timeline might also increase the publisher's risk, which could affect negotiations.
Team Location: Your team's location can also impact the MG. Development costs can vary widely from country to country, with teams based in regions with higher living costs typically requiring larger budgets.
Production Stage: The stage of production your game is in when you start negotiations can significantly influence the MG. If you have a nearly completed game with positive early feedback, you're likely to secure a higher MG than if you're at the concept stage.
Track Record and Reputation: A proven track record in delivering successful games can significantly improve your negotiating position when it comes to the MG. Publishers are often willing to invest more in teams that have demonstrated their ability to deliver a high-quality product on time and within budget.
Game's Unique Selling Proposition (USP): What sets your game apart from the competition? A game with a unique concept or a fresh take on popular mechanics can attract higher MGs because of its potential to stand out in the market.
Projected Sales: Publishers will project how well the game will sell based on market research, similar titles, and target demographics. This can influence the MG. The better the projected sales, the higher the MG might be.
Intellectual Property (IP): Games that are based on popular IP (a famous book series, movie, etc.) can command higher MGs due to their built-in fan bases and higher potential for success.
Cross-Platform Potential: Games that can be ported across multiple platforms (PC, consoles, mobile devices) can appeal to a broader audience, increasing sales potential and thereby influencing the MG.
Don't Expect Your Development Costs to Be Fully Covered:
Asking for the entire development costs as a Minimum Guarantee (MG) can come across as impractical and excessively risky for publishers. It's better to aim for a portion of the development costs as MG, while personally financing the remainder. This approach demonstrates your own investment in the project, showing that you're not simply passing all the risk onto your publisher.
When to Expect Your MG Payment
MG payment schedules can vary depending on the publisher and the specifics of the deal. Here are some common scenarios:
Upfront payment: Some publishers might provide the entire MG amount at the beginning of the agreement. This is quite uncommon and typically happens only if the game is almost completed.
Milestone-based payments: Publishers could opt to pay out the MG in installments tied to specific milestones during the game's development. This is the most common arrangement.
Post-launch payments: In some cases, the MG amount could be paid after the game's launch, often in scheduled installments.
Minimum guarantees are usually disbursed in stages in accordance to delivery milestones.
Other Factors That Can Affect Your MG Every indie game and publishing deal is unique, but some factors can impact the MG you can expect:
Game genre: Some genres are more popular than others, and that can influence the MG. Having said that, you must stay true to the kind of game you are confident of building and should never deviate for the sake of securing a higher MG.
Marketing and promotion: If your game has already gained traction in the market or has a significant social media following, you may be in a better position to negotiate a higher MG.
A game's genre can influence the Minimum Guarantee a developer can secure. Larger fanbases in certain genres can boost a game's earning potential, impacting the MG amount.
Determining a fair Minimum Guarantee (MG) amount is a crucial aspect of indie game publishing deals. By considering factors like development risks, the publisher's interests, and market standards, you can arrive at a reasonable MG amount to ask for. As a video game publisher ourselves, we're more than happy to help talented game developers have their games discovered and played by the world. Each case is unique, and we're here to discuss the specifics, so don't hesitate to reach out and let the conversation begin!