Revenue sharing, how to do it? how not to do it?
Buy out the studio of a massively successful game, buy the IP, fire the designer and create a sequel... Yes, a sequel full of in app purchases. I bought pvz three times, once for mobile, on e for xbox 360 and once for PC. Needless to say, never even downloaded the sequel...
Edit: sorry Tom didn't see your reply till after I posted. We now resume normal programming... Any chance this ot bit can be split off to general discussion?
OP, please check if any of the 3 Fs (friends, family or fools) would invest in you first.
Work-for-hire agreements go so much more smoothly from my experience. You just specify what you need, pay 50% upfront, the freelancer gives you screencaps/samples to ensure that you're happy and then pay the rest once you're happy and the freelancer gives you the goods.
Compare this to revenue share. You specify what you need and the person gets to work. They could bail on you, give you subpar work or give you good work in 2-3 months. You would most likely end up chasing that person for the goods. That's of course assuming it's a stranger and not a friend.
Revenue share is also something you can't get rid of when you have investors taking a slice of your revenue. So please check all of your options before committing to this agreement.
Frob is right that profit share doesn't [generally] work.
You forgot the qualifying word, which Frob included.
Lots of small companies have a bunch of co-founders, who are all joint-shareholders in the company, but don't necessarily have a strict revenue-sharing agreement in place. That's extremely common.
At the other end of the spectrum, lots of large companies will give all employees shares in the company as a bonus -- those shares then pay out dividends based on the company's profits... That's kind of revenue sharing, but not at all in the same way as these common (naive) "let's split all the income" type plans.
The only game I know of that's succeeded with a typical "let's split all the income" type model is Armello (see page 2)... and even then, they did it properly by actually writing up real employment/contractor's contracts, plus they've got a bunch of co-founders who are all on the board of directors and who pay themselves huge salaries that are equal to the entire rest of the staff combined... i.e. they're actually running a real business, not an expensive hobby :lol:
