One of the most important clauses to review in a video game publishing agreement is the consequences of termination clause.
That might feel ironic as the clause actually concerns what happens after the collaboration has come to an end. However, your legal and commercial position after termination often determines how smoothly you can move on if the publisher relationship is no longer beneficial.
In practice, we have seen many disputes arise from poorly drafted or missing porivions in this area. Disputes that usually disadvantage developers, who must then rely on publisher cooperation to finalise the separation.
What is the consequences of termination clause?
The clause on the consequences of termination describes how the developer and the publisher wrap up their collaboration after the contract has expired or has been terminated.
Why is the consequences of termination clause important?
The reason to include a clause on the consequences of termination is to provide clarity and legal certainty for both parties. Without clear rules, developers may find themselves blocked from publishing their game further or stuck in disputes over rights, payments, or access to digital storefronts.
Example of the consequences of termination clause in a video game publishing agreement
Below is an example of a consequences of termination clause in a video game publishing agreement which we have seen in practice, so that you can recognise a similar clause in your own draft:
“General Consequences of Termination.
All rights and obligations of the parties will cease to have effect immediately on the termination or expiry of this Agreement except that termination will not affect the accrued rights and obligations of the parties at the date of termination and any provisions of this Agreement necessary for the interpretation or enforcement of this Agreement. In addition: (a) all licences from Publisher to Developer will cease immediately; (b) Publisher will have a right (but not the obligation) to continue distribution and sales of the Game and Ports for an additional period of 6 (six) months on the same terms as contained in this Agreement (and therefore, for the avoidance of any doubt, Net Revenue will continue to be divided between the parties as described in the Financial Terms; (c) The exclusive rights granted to Publisher will terminate and Developer will be entitled to publish the Game and Ports (but only where ownership of the Ports has transferred to Developer) itself; and (d) the parties will return, or if required destroy, promptly all Confidential Information belonging to each other.
Specific Consequences of Termination.
if Publisher terminates this Agreement for developer breach, then Developer will repay to Publisher any unrecouped Development Funding in full by no later than the date falling 60 (sixty) calendar days after the effective date of such termination.
If the Game has had its Commercial Release, Publisher will where possible: (a) recover the monies via set-off or deductions, including from the Developer Revenue Share otherwise payable to the Developer; and/or (b) continue to distribute the Game and Ports until full recoupment of any outstanding amounts.
How to review and negotiate the consequences-of-termination clause
Ensure a proper transfer of the store pages
A very important thing to include in the contract, is that the store pages will be transferred back to the developer as soon as the contract comes to an end. The reason is that only the publisher can initiate the transfer back to the developer on most platforms.
In case you do not include an obligation to transfer the store page back, you are dependent on the provisions of applicable law. These provisions do not explicitly deal with store pages, which means you fall back on general legal provisions. This leads to legal uncertainty. While under some jurisdictions not returning the store pages can be considered unlawful or an abuse of rights, having a direct obligation is always preferable.
In our practice, we have actually seen one publisher refuse to give the store pages of the video game back to the developer, because their marketing efforts had resulted in a lot of wishlists. The publisher felt that it was unfair that the developer would be able to try and convert the amount of wishlists into buyers of the video game without sharing any revenue. Without a specific obligation to transfer the store page, the publisher refused to hand over the store pages and invited the developer to go to court to determine who was right.
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Ensure a proper transfer of intellectual property rights
One of the central principles of copyright law is that the copyright of a creative work is assigned to the person which has created it. This means that in the event a publisher has developed a port or marketing assets, these ports and assets are owned by the publisher. In case of a termination of the contract, this could lead to a situation where a developer is not allowed to use these assets without the consent of the publisher. Whether that is the case will depend on the applicable law.
However, this situation can be easily prevented by including a clause that obligates the publisher to transfer or license these intellectual property rights to the developer. These clauses can also include provisions regarding the compensation which the publisher will receive (if any).
Ensure clear agreements on the (return of the) advance payments which have not been recouped
Another key issue is what happens to unrecouped development funding if the agreement ends before the publisher recovers their investment.
It is important to include clear provisions regarding repayment. In most agreements I have seen, an obligation to repay any unrecouped investment will only exist in case the contract is terminated as a result of a developer breaching the agreement. In most other cases a repayment obligation is less common. However, some publishers still include such obligations, even when the contract is terminated as a result of their own breach of contract.
Before you sign: summary and next steps
The end of a publishing agreement is just as important as its beginning. A well-drafted termination clause ensures clarity on rights, payments, and store pages. With the right protections in place, developers can avoid legal uncertainty and safeguard their game’s future.