Intellectual Property Exclusivity: A guide for the lesser-informed

#1SigmaLongshotPosted 8/14/2014 9:11:57 AM
We all know WHY I've started this thread, but with a little luck and investment, we can finally lay the doubts to rest.


WHAT'S AN IP?

IP, or Intellectual Properties, are difficult commodities to quantify. An IP can literally be anything from a single character doodled on a napkin to a multi-million dollar franchise that's lasted for decades - it is simply designated by the unique qualities that defines all the content derived from it.

Simply put, if your IP is "Rodney the Metal Dinosaur", anything he shows up in, from games to cookies, is affected by IP ownership. If your IP is "rhythm-strategy games featuring beach balls", then all games meeting that criteria are covered by ownership of IP (and anyone who creates a rhythm-platformer featuring a set of beach balls from then onwards without IP ownership could be liable to fines/loss of content).

WHO CAN OWN IP?

Anyone can own an intellectual property. To make it legally valid it has to have even a basic copyright, which is fairly simple to obtain, but you must be able to prove unique and innovative ownership of your IP, with no prior copyrights claimed (and no overlapping criteria with currently-existing copyrights).

A little old man can own an IP, a giant company can own an IP.

HOW DO I BUY A PREVIOUSLY-OWNED IP?

First and foremost, the owning party has to be willing to sell! That all being good...

An evaluation of all content related to and derivative of that IP is carried out, taking into account revenue generated, projected revenue for future sales and monies generated at both high and low estimations (to account for economy fluctuations).

Basically, all money it's ever made, how much money it's due to potentially make, and the overall worth of the owned assets are all taken into account. From there it's just a case of settling a fair price.

If the IP hasn't made any sales or made any money yet, the process is more difficult - the seller must first pitch potential worth, bring up rival/similar IP and their sales/monies generated, and give estimations equivalent to those rival products in their native markets.

WHAT COULD STOP AN IP SALE, EVEN IF BOTH PARTIES WANT TO BUY/SELL?

Shareholders are often the biggest obstacle to an IP sale. Essentially, a general community can invest a certain amount of money to buy shares in a company (and by proxy, all of their owned IP) which entitles them to a legal say to the IP's future. It's handled case-by-case, but in most instances, an IP sale is based on the outcome of a positive majority vote (51% or more). The higher the value of the IP, however, the higher the percentages usually are - it's not uncommon for multi-million dollar IP to require an extreme majority shareholder vote (85%+) in order to action a sale.

WHO OWNS THE IP IF A COMPANY OWNING SEVERAL IP IS TAKEN OVER BY A LARGER CONGLOMERATE?

This is where things schism slightly. If the parent company specified "contemporary ownership", then the older IP-owning company get to keep all their previous stuff, but everything created from that point onwards is owned by the parent company. If it is a "complete absorption" or "complete buyout", this refers to absolutely all content now being owned by the parent company. The latter is usually incredibly expensive.
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Double Jump Game Comics: http://doublejump.thecomicseries.com/
#2SigmaLongshot(Topic Creator)Posted 8/14/2014 9:12:15 AM
WHAT'S THE DIFFERENCE BETWEEN FIRST, SECOND AND THIRD-PARTY GAME IP?

First-party IP are created by the parent company itself. So for example, if Nintendo makes a Nintendo game, that's a first-party IP. Second-party IP are companies owned by a parent company making games solely for it's parent - for example, Rare. A third-party IP is one with no internal ownership who agrees to deploy games on specific platforms.

WHY DO SOME THIRD-PARTIES CHOOSE CONSOLE EXCLUSIVITY/PREFERENCE FOR THEIR IP?

A genuine third-party developer/publisher has a number of reasons to remain multi-platform, but one rather large reason to opt for single-platform is, simply put, flat-fee incentive.

The very simple way to explain this is when a parent company offers a set amount of money for full development of the third-party company's project. Both companies get something out of the deal - the parent gets assured exclusivity of a project on their platform, whilst the developing third-party gets security and stability that their project is covered up-front, leaving all the sales worries to the parent company.

This is especially valuable as a business mechanic when taking a risk with a brand new IP - it actually increases success for both parties. Titanfall is a great example of this in recent times.

WHY DO COMPANIES PAY FOR TIMED EXCLUSIVITY, AND HOW IS IT DIFFERENT?

Simply put, when a third-party company is not in a position to devote full exclusivity to a singular parent company (for example, if shareholders feel it is detrimental to the company's success or impeding one or more IP) but still needs financial support, they can offer a timed deal in exchange for a smaller cash input from a first-party parent.

This is effectively a parent making a smaller payout to buy a period of IP exclusivity, whereby the IP may not appear on other platforms.

But, of course, this does not mean that the IP will definitely ever be deployed elsewhere after this time is over, but it's in the best interest of the third-party to maximise profits.

This type of investment is often seen when a high-profile third-party with vocal shareholders refuse a full IP/title purchase or exclusivity, but obviously want the title to be developed with the highest financial capital possible to maximise quality.

WHY DOES MICROSOFT CONTINUE TO SPREAD IP AMONGST IT'S THREE MAJOR PLATFORMS?

The Xbox 360, Xbox One and PC are all part of the Microsoft Gaming Division, so a plus one sale on any of those three is a plus one sale into one big cash pot. When a singular platform becomes redundant or no longer profitable, it will be less advantageous to continue support. The Xbox 360 platform still continues to sell reasonably well, so to cut support, from a business standpoint, is completely backwards.

In business this transition period is called "exponential/gradual severance" - think of two overlapping curves. One is slowly curving upwards (Xbox One) and one curving downwards (Xbox 360). Only when the two intersect in their profits/revenue generation would any business seek to slow down support, and though those curves are meeting very soon, they haven't quite yet.

DO THE PARTIES THAT OWN OUR BELOVED IP CARE AT ALL, OR IS IT ALL BUSINESS THEN?! WHY GIVE YOUR IP TO ANOTHER CORPORATION?!

Of course they care. If they didn't, they wouldn't fight to call them owned intellectual properties at all! But the truth is, an intellectual property that doesn't make any money is only valuable to the sentimental. You can either sell it on, and let it live in a different guise, or keep it (where it makes no revenue) and let it stagnate in nostalgia swamps.

Even making money through an IP sale is better than an idle idea!
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Double Jump Game Comics: http://doublejump.thecomicseries.com/
#3SigmaLongshot(Topic Creator)Posted 8/14/2014 9:13:21 AM
Thanks for reading, and I hope this at least (in part) goes towards the slowing of the endless IP/Timing/funding chatter.

Cheers chaps and fe-chaps!
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Double Jump Game Comics: http://doublejump.thecomicseries.com/
#4slowdog76Posted 8/14/2014 9:53:48 AM
they wont read all that sigma. you should know that by now. and even if they did, half of them will ignore it for whatever reason.

on a side note, or on topic....whichever way you want to look at it......I know the guy that made Z. remember that? it got released on Steam recently. He gets bugger all for it, though they did graciously let him download it for free early
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I hear and I forget. I see and I remember. I do and I understand.
Confucius
#5TBONE_OGPosted 8/14/2014 9:55:19 AM
Sticky requested.
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Always O.G.
#6SigmaLongshot(Topic Creator)Posted 8/14/2014 10:02:49 AM
Thanks gentlemen. I just thought it could help out people, considering half the topics on the first few pages are "why... timed...", or "how can .... when they could..." or something to that formula.

Slowdog, I didn't know the Z creator didn't get money for it. Another very famous one was before standard IP legislation, but - Tetris! Alexey Pajitnov was pretty much paid zilch for the longest time before he began his reclaiming of the IP (Russia was still not out of Communist phase). But twenty years and billions of dollars down the drain.... pah!
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Double Jump Game Comics: http://doublejump.thecomicseries.com/
#7AWarAmp84Posted 8/14/2014 10:12:14 AM
I have to give it to you Sigma, I've been lurking/posting on Gamefaqs on and off for years and from what I've read, you are definitely high up there as far a respect from me goes. Your topics are rarely biased and always informative. You actually sound like you have a brain. Keep it up!

Sticky requested.
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Not taking Gamefaqs seriously since 2004. Gamefaqs mods are a joke.
#8KipbondurPosted 8/14/2014 10:22:53 AM
I doubt it will, but it was a very good read. Very insightful
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GT: Kip Bondur
#9SigmaLongshot(Topic Creator)Posted 8/14/2014 10:27:41 AM
To the last couple of lads who gave me such nice compliments, hats off to you, gents. I'm always staggered by the sheer voracity of the people who scream the loudest - they often say that people that have the most active voices are the ones with the emptiest minds, but I don't care to make my opinion known on that philosophy. Hah!

I just wanted to help out for the people with a genuine confusion about what an intellectual property actually is, and why it's not so simple to "buy all the popular games off and keep them for yourself!"
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Double Jump Game Comics: http://doublejump.thecomicseries.com/
#10SigmaLongshot(Topic Creator)Posted 8/15/2014 6:34:18 AM
I'm going to bump this considering the recent influx of "timed console exclusivity? Whaa?!" topics that have been brought onto the front page again.
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Double Jump Game Comics: http://doublejump.thecomicseries.com/