Tales of the Rampant Coyote

Adventures in Indie Gaming!

IP Rights – Why Are They Are Important to Indie Game Developers? Part 2

Posted by Rampant Coyote on June 13, 2012

So yesterday I prefaced the whole “IP rights” thing with a story about a non-indie publisher.

My feeling – echoed by most within the indie arena, but apparently not all – is that owning your own IP is a “necessary but not sufficient” aspect of your game being indie. But even within that, there’s a lot of fuzzy areas. Maybe a game is indie to somebody, but not to me, as I’m doing contract work for an indie or porting the game to another platform for a percentage. Does that make me non-indie?  Let’s just assume right now that it’s all a big fuzzy generalization with a lot of exceptions and nits that you could pick here and hairs you can split there. And IANAL, or even a good business-person, so feel free to take this all with a grain of salt. But maybe it’s something you’ve been thinking about, and these little essays will help.

Now here’s the thing. IP rights are simultaneously the most worthless and most valuable thing you can own as an indie.

On the worthless side: Ideas are a dime a dozen if we’re feeling generous. Sitting on my butt dreaming up “intellectual property” all day long is worth pretty much nothing. While some ideas and so-called properties may have some merit and more potential all on their own, the real value doesn’t exist until the property has an audience.

Plus, it has to have had some value pumped into it so its not something easily duplicated or replaced. For example, a webcomic that only has three strips drawn probably possesses no inherent superiority to any other webcomic that is also three strips long.  While three strips isn’t trivial, there’s still not a whole lot to it, yet. Now, fifty strips… that’s history. That’s an achievement.  That’s not something someone will be able to duplicate in a caffeine-fueled three-day weekend.

So I guess there’s three factors at work here that give an IP value: The inherent potential of the concept (which is more of a multiplier than an inherent value), execution, and audience. All three need to be kicking butt, and sadly… most concepts just don’t ever get there. Yeah, even our beloved indie games.

But what does that really mean? So how much is IP really worth?

Well, to put dollars and cents on it, it’s worth something along the lines of how much money you can make exploiting it vs. doing something else.

The trick is… it’s not the same value to everybody.

This was how the game studios got themselves pretty much boned by the publishers back in the early days.  For a studio with little means, expertise, or contacts, the value of the IP rights for their game to them wasn’t all that high. But to a publisher, especially one that eats, breathes, and sleeps these things, the potential value of a property could be huge. So it makes sense for the studios to trade those rights to the guys for whom its more valuable, right? That’s capitalism ‘n stuff.

That wasn’t the problem. The problem was that they traded those rights for something much closer to their own value than that of the value to the publishers. This persisted until taking control of the IP rights was pretty much boilerplate stuff for publishing contracts.

It’s like… who needs a soul anyway? When was the last time you did anything with it? We’ll just throw that little thing in the contract too, as a minor clause…

So studios got into the habit of selling off their birthrights for a mess of pottage.

To be fair,  the publishers don’t even bat something like .500 when it comes to picking winners, either, and it’s an expensive biz. So it’s not like a fair price is exactly in the center of the value range or anything. And a lot of that value invested into the game that I mentioned – that can be measured in marketing dollars that get poured into it. You’d better believe a publisher doesn’t want to pour millions into promoting a game series that it doesn’t control… that someone else could leverage off of and make money on the sequel. Or on the ports. Or on the original game.

Anyway – I’ve done a lot of talkin’ about a subject. And I still haven’t arrived at a direct answer to the question posed in the title. I’m working up to it. Next time. Probably.


Filed Under: Biz, Indie Evangelism, Production - Comments: 2 Comments to Read

  • Yoel said,

    Interesting point about them being worth different amounts to different people. Right now, my game is worth practically nothing. But if we signed the rights away and someone else made millions in a thirty-sequel series, we’d feel pretty stupid.

  • Rampant Coyote said,

    But then you’d have to ask yourself where the value of the rights were. Was it in the original game, or was it in the sequels? Or the marketing they put into it?

    When Richard Garriott first published Ultima 1, I don’t believe the IP rights for the “Ultima” series would be worth very much – to him OR to anybody else. Ultima 2 probably only did marginally better for the name than if it was a completely original IP (which it kinda-sorta was… it didn’t have much to do with the original).

    But after Ultima III, the IP was worth quite a bit. And I suspect that even today, even if you pretend Ultima Online never existed, more than a decade since the last single-player RPG, the IP rights would still be worth MILLIONS. And that legacy has much more to it than just a bunch of old code that is probably lost forever.