What is a Game Revenue Share Model?

The game revenue share model is a business model in which the revenue gained through the sale of a digital product, or a video game is shared between multiple parties based on a pre-established agreement.

Usually, the parties involved are: 

• Ontwikkelaars 
• Publishers 
• Content creators/ influencers
• Technology partners

In some cases, compensation is set by performance metrics. 

The game revenue sharing model is an option for studios, saas founders, and indie game developers because it does not require a large upfront investment.

Another reason is that this model attracts contributors through the product’s potential for success. If the product is believed to quickly gain popularity, contributors are attracted to the idea of having their revenue increase as the product scales.

Here are the parties involved in this model: 

• Indie game creators and SaaS developers gain access to skilled partnerships without increased investments. 
• Publishers and platforms can grow their catalog with lower upfront financial exposure.
• Content creators, influencers, and affiliates earn recurring revenue for promoting products they believe in.

Game revenue sharing model has several challenges: 

• Uncertainty: if the game or software in question does not sell as expected, contributors can earn little or even nothing, despite their work
• Damaged partnerships: incorrect accounting, delayed revenue, or percentage discussions can end collaborations 
• Operational risks: selling internationally can expose developers to a number of uncertainties regarding payments, compliance, tax obligations, and more

As a video game freelancer or partner, one should carefully consider: 

• goal 
• expectations 
• risks involved

Additionally, freelancers need to understand exactly what they need to deliver, how the revenue they are awarded is calculated, when the payment is done, recoupment clauses, and termination rights. These aspects should be covered in the legal agreements. 

The revenue share transactions start once the product is launched, and the requirements in the legal agreements are met. These could include recovering pre-launch expenses or hitting revenue thresholds.

Also, payment frequency depends on the contract, so it is essential for all those involved to know the details within the agreement. 

Indeed, in the majority of game revenue-share agreements, pre-launch and marketing expenses are recovered first, before other payments are made. 

Examples of these costs include: 

• Development expenses 
• Advertenties 
• System fees 
• Quality assurance

Maintaining trust within these partnerships can be achieved by ensuring transparency.

To manage revenue-sharing models, developers and SaaS founders need to focus on: 

• transparantie 
• procesautomatisering 
• financial infrastructure

Businesses must accurately track sales, handle global taxes, and distribute payouts on time. This is where Merchant of Record solutions like PayPro Global add value by managing payments, tax compliance, invoicing, and revenue distribution across regions.