Publishing Agreements Explained: The License to the Video Game

For a publisher to release and commercialize a video game, the developer must grant a license to the game, often while it is still in development. Because the license clause is such a standard element in video game publishing agreements, many developers underestimate its importance. That can be a costly mistake. There are several critical points to consider when negotiating a license clause, as it directly affects how your game and intellectual property (IP) can be used.

What is a license clause in a video game publishing agreement?

The license clause is the part of a video game publishing contract where the developer grants the publisher permission to use the intellectual property rights vested in a video game in a specific way, mostly to allow the publisher to perform their obligations under the agreement. Without such a license, the publisher cannot legally release, reproduce, or distribute the game.

In essence, the license clause is what makes publishing the game possible.

The importance of a license clause

A video game is typically protected by multiple intellectual property rights, including copyright. Under copyright law, only the rights holder has the power to reproduce the work and make it available to the public.

When a publisher releases a game, it must reproduce it. For a digital game this happens when a video game is purchased and downloaded; for a physical edition this happens when the physical editions are manufactured. That means a publisher cannot do its work without first getting permission from the developer.

Granting that permission happens through a license, which generally covers five key dimensions:

• Scope: Which game is being licensed?
• Activities: What exactly can the publisher do with the game?
• Platforms: Which platforms does the license cover?
• Duration: How long does the license last?
• Legal characteristics: Is the license exclusive, transferable, or sublicensable?

 Example of a license clause in a video game publishing agreement

Below is an example of how a license clause may be worded in practice.

Even though such language may appear standard, every word in it matters, and small changes can have significant consequences for ownership, exclusivity, or future projects.

How to review and negotiate the license clause

Define the licensed activities

Start by reviewing how broadly the activities licensed exclusively to the publisher are described. The nature of an exclusive license is that only the publisher may perform the listed activities. If the scope is too broad, it can lead to problems later.

For example, some contracts also stipulate that the publisher receives an exclusive license to create ports. If this is included without clear agreements in place, it can lead to discussions later.

Set the term for the license

In most cases, the license lasts for the duration of the contract. However, some contracts state that the license is perpetual, meaning it remains valid even after the video game publishing agreement ends.

It’s generally best to avoid agreeing to a perpetual license. If the agreement does not clearly state that the license terminates if the publisher breaches the contract, you risk being permanently tied to that publisher.

We have witnessed several cases where a developer created multiple sequels, prequels, and spin-off games within the same IP, but their first publisher still held a perpetual license. The result was a split IP portfolio across multiple publishers, which complicated new deals and limited future options., as a publisher often prefers the option of publishing other games from the same IP, for example, in a bundle.

Align licensed platforms with funded scope

In most cases, a publisher will want to obtain an exclusive license to release the video game on all platforms. This makes sense from the publisher’s perspective, as they invest in the video game’s development and handle the marketing.

However, publishers usually only provide development budget for one or more specific platforms, most commonly PC. This can create a deadlock if the publisher holds exclusive rights for a particular platform but decides not to expand or invest in porting.

Some typical situations include:

• The publisher has another video game in its portfolio that’s performing better, so their funding and attention are focused on that video game;
• The publisher declines to invest in porting, while the developer cannot cover the costs independently.

For a developer, it’s often crucial that the video game is released on as many platforms as possible. However, an exclusive license often creates a deadlock situation, as the developer is prohibited from self-publishing due to the exclusive license. To avoid this, negotiate clear release obligations or fallback rights that allow you to self-publish or seek another partner if the publisher does not expand to additional platforms.

Before you sign: summary and next steps

Grant the publisher the rights they need to do their job, and no more. Keep ownership of your IP, define the licensed activities precisely, avoid perpetual terms, and make platform expansion a shared decision tied to funding and timelines.

The license clause is one of the most critical parts of a video game publishing agreement. Getting it wrong can affect every future release tied to your IP. Before signing, it is strongly recommended to have a professional, preferably one familiar with game publishing contracts, review the language. A short legal consultation can prevent years of limitation or dispute and give you the confidence that your creative work remains under your control.

Next up, we’ll look at milestone schedules and advance payments: the clauses that decide when, and how, you actually get paid for your work.