Multiple UELA quesions

Development Programming & Scripting AI
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1

Hello everyone,

Right now we are developing a game for a client. Until now we have only done architectural- and product visualizations so we are new to the royalties structure.

So I have read your EULA however there are some questions that need clarification and I am hoping you can help us out. To be clear, our company is based in the Netherlands.

The client will pay for the product once, they will be distributing the game through a subscription model. Do we need to pay a royalty fee over this initial price of the game?

The client will make the game available for their customers through a subscription. This subscription fee still needs to be determined. Does a royalty fee needs to be paid over this subscription fee?

2.1
Does the developer (we) or the publisher (the client) need to pay this fee?

The client will need to pay a licence fee for using our IP.

3
Do we need to pay a royalty fee over this licence fee?

4
We assume that the $3000,- named in the EULA will be translated to an equivalent amount in euros. For instance: $ 3000,- is equal to € 2688.89 euro on the day of writing.

4.1
Is this correct or will this be translated to € 3000,-?

4.2
If the above statement made under item 4 is correct. On which moment should the dollar-euro rate be determined?

For the next question I have created an example:

We publish our game on the first of januari. We have a turnover of $ 3000,- per month, so in one quarter we have a total of $ 9.000,-. This will be the same for the other quarters of the year.

Is it correct that the royalty fee only needs to be paid over € 6000,- each quarter?

Any help would be great!

2

You have a lot of questions! I’ll try to cover them each in turn.

  • If you are making a custom work-for-hire game for a client, your work-for-hire fees are not subject to a royalty.
  • You also mention the client owing you a license fee. Is that different from the work-for-hire fee? If so, how? I’m not sure right now about royalties there.
  • If the client distributes the game and monetizes it via a subscription model, the subscription fees are subject to royalty. Since you are the licensee right now, you are responsible for the royalties. I recognize that this is not ideal, so it would be better if you got your client to agree to take a EULA license themselves and take over the royalty obligation instead of you.
  • As for currency conversion, this should be calculated at the time royalty quarterly reports are due (45 days after the end of the calendar quarter). At that time, you can use oanda.com or x-rates.com to calculate the current conversion of US$3,000 into Euros, and subtract that from the gross revenue.
  • On your final question, you will have a gross revenue of $9,000 per calendar quarter (you use the word turnover, but I assume you mean gross revenue). You are correct that you’ll owe royalties on $6,000 each quarter.
3

Thanks for the answers, they are helping a lot!

You also mention the client owing you a license fee. Is that different from the work-for-hire fee? If so, how? I'm not sure right now about royalties there.

Yes the licence fee is differente from the work-for-hire fee. We see this more as a licence on our IP. It is more like the royalties epic is asking for using their IP.

Right now we want them to pay epic the 5% and pay us another X % over their gross revenue. So if we would have to pay another 5% over our X % to epic that would be double right?

Could you clarify this for us?

ML

4

Ah, we would just get our 5% of gross revenue, not an additional percentage of your license fee.