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Chain of Rights in Game Development: Who Ultimately Holds the Rights to the Game?

In game development, intellectual property (IP) is the most valuable asset. Every aspect of a video game – from its source code, graphics, and music to characters and story – is protected by copyright or related rights. The chain of rights provides a comprehensive description of who holds which rights to the game and its components at any given time.

A clear chain of rights is crucial for legally sound marketing and to prevent future disputes. This blog post offers a legally robust explanation of how the chain of rights in game development operates and who ultimately holds the rights to the game. We will focus on clarifying rights related to engines, assets, music, external service providers, and AI-generated content.

Furthermore, we will explore central contract types and clauses that govern rights distribution. These include work contracts, license terms, the granting of rights of use, as well as non-disclosure (NDA) and IP clauses. We then examine publisher agreements with typical clauses like right of first refusal, exclusivity, and sequel/spin-off rights. IP management for merchandise, DLCs, add-ons, sequels, and genre spin-offs will also be covered. Additionally, distribution contracts and their impact on rights exploitation are discussed.

A dedicated chapter addresses cross-media rights, focusing on legal aspects when games are based on films, or films are adapted from games. Finally, a comparison with contractual structures in the music and film industries highlights similarities and differences. The article primarily focuses on German law but also includes a legal comparison with the US system and Asian licensing models. Important legal norms and court rulings from Germany and the USA are cited to support the explanations. This professional legal analysis is intended for clients in the games, media, and music industries seeking sound advice on the rights chain in game development.

Copyright Basics in Game Development

Understanding the chain of rights in game development begins with the fundamental principles of copyright law. According to German copyright law, the author of a work is always the natural person who created it (see Section 7 UrhG). However, a video game involves numerous authors: programmers, graphic artists, game designers, composers, and more. Each of these individuals initially holds the copyright to their respective contribution.

This means that copyright arises automatically with the creation of the content and always remains with the creator. Copyright is not transferable (Section 29 (1) UrhG). Unlike property ownership, for example, copyrights cannot be "sold" in Germany. Only rights of use, which permit specific ways of using a work, can be transferred (Section 31 UrhG).

Personal Intellectual Creation and Co-Authorship

For content to be copyright protected, it must be a personal intellectual creation (Section 2 (2) UrhG). Pure game ideas or simple concepts, like a rough game design document, are not yet protected. Only the actual design (graphics, level design, code, texts, etc.) qualifies for protection. Multiple individuals often contribute to a specific design.

If they create content together in an inseparable manner, they can become co-authors (Section 8 UrhG) and are jointly entitled to the copyright. In practice, however, each contribution to games is usually considered separately. For example, a programmer writes code (software is a distinct type of work under Section 2 (1) No. 1, No. 7 UrhG), while a graphic artist paints textures (works of art under Section 2 (1) No. 4 UrhG). This results in many individual copyrights to the game's components, which must later be combined into a unified chain of rights.

Moral Rights

It is important to note that, in addition to exploitation rights, authors also possess moral rights. These include the right to acknowledgement of authorship (attribution, Section 13 UrhG) and protection against distortion of the work (Section 14 UrhG). These personal rights always remain with the author and cannot be transferred or assigned.

While this plays a lesser role in game development compared to fine art (the general public rarely knows individual level designers by name), it can become relevant for game credits or subsequent alterations to artwork. In practice, employees or service providers are often contractually obliged to refrain from being named as the author or to consent to changes where legally permissible. However, such clauses must adhere to the limits of Section 14 UrhG; an author cannot completely waive protection against distorting changes.

Rights of Use and the Principle of Assignment of Purpose

Since copyright itself remains with the creator, the granting of rights of use is typically agreed upon in contracts. A right of use allows the owner to utilize the work in a specific manner (e.g., to reproduce, distribute, make publicly accessible, see § 15 UrhG for exploitation types). Rights of use can be granted simply (non-exclusive, allowing others to use the work in addition to the author) or exclusively (only the right holder may use the work, and the author himself can no longer use it) (Section 31 (2) UrhG).

In the games sector, the goal is for one company to ultimately possess all necessary rights exclusively to exploit the game worldwide. The principle of assignment of purpose (Section 31 (5) UrhG) is central here. This principle states that, in case of doubt, an author only grants as many rights as are necessary to achieve the contract's purpose. All rights of use not expressly granted remain with the author. Doubts in cases of unclear contractual provisions favor the author.

This principle has been confirmed by the Federal Court of Justice (BGH) in its established case law. Contracts on copyright usage rights must be interpreted narrowly, as it is presumed an author does not wish to surrender their rights beyond what is necessary. In practice, this means contracts must clearly and comprehensively list the rights of use the client or publisher is to receive. Otherwise, the developer could later argue that certain exploitation types (e.g., a new platform or a spin-off) were not covered by the rights grant.

Works Involving Several and Collective Works

A video game as a whole is often a multimedia work combining various forms (software code, graphics, music, text). Under German law, this does not automatically result in a uniform copyright to the "game." Instead, each author retains rights to their own contribution. However, the concept of the combined work or collective work exists (Section 4 UrhG).

If someone combines individual works to create a new work (e.g., a level designer integrates graphics, code, and music to create a playable level), this overall work may itself be copyright protected (as a collective work or database work). This occurs without diminishing the rights to the individual works. In practice, contracts ensure that the use of all individual parts is permitted, allowing the overall product to be used and marketed without interference. Ideally, this leads to one company (e.g., the developer studio or publisher) owning all relevant rights to use the game. The establishment of this rights chain, from the individual author through any intermediate stages to the final rights holder, is carried out through various contracts, which we will now discuss in detail.

Contracts with Employees and External Service Providers (Work Contracts, NDA, IP Clauses)

A key component of the rights chain involves contracts with those who actually create the game. This includes both internal employees of a development studio and external service providers and freelancers. These agreements lay the foundation for the company's ability to later dispose of the game's exploitation rights. We first examine the situation with permanent employees, then with external service providers/freelancers (work contract partners), and finally delve into typical confidentiality and IP clauses.

Employed Developers and Employees

In Germany, the principle also applies to employees: the employee programmer or graphic designer remains the author of the works they create. Unlike in the USA, there is no general "work for hire" rule in copyright law that automatically designates the employer as the author. German copyright law only recognizes automatic rights transfers to the employer in special cases.

Computer programs are an important exception: Section 69b UrhG stipulates that the employer receives the exclusive right of use for a computer program created within an employment relationship, unless otherwise agreed. This provision significantly simplifies the chain of rights in the software sector, as the employer does not have to individually assign rights to the source code from each developer; this is done by law. Example: If a permanent employee programs the code of the game engine or gameplay modules, the studio automatically acquires the exclusive rights to use the code in accordance with Section 69b UrhG. However, Section 69b UrhG only applies to software. Other creative contributions to the game (graphics, 3D models, dialogue texts, story, sound effects, music, level design, etc.) are not strictly computer programs and therefore do not fall under this automatic regulation.

Contractual Transfer of Rights in Employment Contracts

To address this gap, employment contracts in the games industry include IP clauses. These ensure that the necessary rights of use are also transferred to the employer for all non-software works created by the employee. Typically, such clauses state that the employee "grants the employer the exclusive rights of use, unrestricted in terms of time, place, and content, to all copyrighted works created in the course of their work." Such a clause covers, for example, concept graphics drawn by the employee or written story dialogue.

It is important that the content, duration, and territory of the rights grant are comprehensively described to comply with the principle of purpose transfer. In most cases, the employer seeks all conceivable exploitation rights (reproduction, distribution, public availability, editing, etc.) worldwide and for the entire term of protection (in Germany, 70 years post mortem of the author). The contract often includes a passage such as:

"The employee hereby transfers to the employer all exclusive rights of use to all work results, in particular to computer programs (§ 69b UrhG), graphics, texts, audiovisual sequences and other created works. The rights are transferred for all known and unknown types of use, unrestricted in terms of time, space and content. The employer is entitled to edit the works, redesign them, assign titles and combine the works with others. The employee waives the right to be named as the author. In addition, the employee shall consent to a separate written transfer of rights upon request, insofar as this is required for legal validity under foreign law."

Such a clause effectively makes the employer the economic rights holder of all content created by the employee. However, it should be noted that a complete "purchase of rights" as in the Anglo-American area (Work Made for Hire) is formally a granting of rights of use under German law. The copyright itself remains, at least in theory, with the employee. In practice, however, the employee no longer has any exploitation rights and therefore no control over the use of their work.

Moral Rights in the Employment Relationship

The moral rights of employees are a complex point, as they cannot simply be contractually "switched off." However, an employer desires the freedom to edit works without the author asserting Section 14 UrhG (prohibition of distortion). In practice, agreements are often made that the employee waives the exercise of their moral rights to the extent permitted by law.

For example, employees may agree that the company can make changes to their graphics or texts (e.g., to translate them or adapt them to technical requirements). Attribution is also frequently waived by contract, as games are usually published under the studio or publisher's name, not with each individual contributor's name. Such waiver clauses are effective as long as the core moral rights of the author are not undermined. Case law, for instance, allows an author to waive the right to be named if it serves their interest to remain anonymous. They may also pre-approve changes, provided there is no risk of distortion. Such clauses are common in the games industry to give the employer maximum flexibility.

International Aspect – Employees in Other Countries

Many studios operate globally with team members in different countries. It is crucial to note that copyright rules in employment relationships vary by country. In the USA, the concept of "work made for hire" applies: if an employee creates a work within their employment, the employer is considered the rightful author from the outset under US copyright law (17 U.S.C. § 201(b)). The employee then holds no copyright. A work-for-hire can also exist in the USA for freelancers if a written contract expressly states this and the work falls into one of the permissible categories (e.g., "part of a collective work," which can classify a game as a collective work). This system means US games companies are generally considered full authors and rights holders of developed games. Ownership of software can be quite different depending on jurisdiction.

A similar principle exists in Japan, subject to conditions: The work must have been created in the course of business duties and published under the company's name, with no agreement to the contrary (Art. 15 Japanese Copyright Act). Copyright then transfers to the employer. However, computer programs are excluded in Japan, requiring contractual regulation. In China, the legal situation is also interesting: Chinese copyright law generally assigns copyright to the creator, even an employee, unless the work was created in fulfillment of official duties and it was contractually stipulated or an internal regulation states that the employer is entitled to the rights. Many foreign companies therefore explicitly agree to transfer rights to the company in Chinese employment contracts.

Summary of Employee Rights

For a German studio, it is essential to have a written agreement with each employee covering all conceivable rights of use, despite Section 69b UrhG, which only covers software. Internationally active studios must consider which law applies (contracts often stipulate German law even for employees abroad, but this applies only to a limited extent). It is important to prevent any "legal loopholes," such as an artist abroad who might still retain rights under local law. Contracts should clearly stipulate that the work's result is available to the company for comprehensive use.

External Service Providers, Freelancers, and Work Contracts

Many developers and publishers utilize external service providers. These can include a freelance concept artist, a composer, a dubbing artist, an outsourcing studio for 3D animations, or even test players and consultants. These external partners do not have an employment relationship; their collaboration is usually governed by contracts for work or service contracts. From the perspective of the rights chain, the risk here is even higher than with employees, as full copyrights remain with the external service provider without clear contractual regulations! Sections 69b UrhG or work-for-hire provisions do not automatically apply, as there is no employment relationship. Careful attention to avoiding bogus self-employment is crucial.

Contract for Work vs. Contract for Services

First, the terminology: In a contract for work (Section 631 BGB), the service provider owes a specific result, typically the delivery of an agreed work (e.g., "creation of 10 3D character models according to specification X"). In a service contract (Section 611 BGB), the service provider only owes the effort of an activity, not a guaranteed success (e.g., "Consulting as a game design expert for 3 months, through regular meetings and feedback"). In the game industry, creative services are almost always formulated as a contract for work and services because concrete results are expected. This also impacts rights: typically, a contract for work and services directly includes the agreement that rights are transferred upon delivery of the work and payment of the fee.

Rights of Use Clauses in the Contract for Work and Services

An external graphic designer who designs characters, for instance, initially holds the copyright to their drawings. Therefore, all necessary rights of use must be transferred in the contract. A typical clause might read:

"The Contractor shall transfer to the Client the exclusive right to use the works created under this contract (including all designs, graphics, models, animations, texts and other content) without restriction in terms of time, space and content. The granting of rights includes all known types of use, in particular the right to reproduce, distribute, make available to the public, exhibit, present, broadcast and the right to edit and further develop the works. The client is entitled to use the works in the context of the computer game [name/title] as well as for products based on it (e.g. sequels, extensions, merchandise) at will and also to grant or transfer rights of use to third parties. The agreed remuneration covers all rights of use."

Such a comprehensive formulation ensures that the studio or publisher can use the material supplied by the freelancer as desired, including modifications (important, for example, if the 3D model is later modified for a sequel) and follow-up products. It is also important to mention merchandising and other media, as this could otherwise be considered a different type of use. For example, an illustrator could theoretically prohibit their character designs from being printed on T-shirts if the contract only mentions "use in the game." Therefore, usage beyond the game (merchandise, trailers, spin-offs, etc.) is ideally also covered.

Work Contracts with "Delivery Step by Step"

In extensive projects, work contracts are often structured with milestones. It is customary, especially in larger contract developments, to transfer the rights step by step with the payment of each milestone. This means that once a part of the work is completed and paid for, the rights to it are transferred to the client. This prevents the client from investing money only to end up without rights if the project is cancelled.

Conversely, the service provider receives payment for each delivered part and retains a right of retention over the delivered files until payment is made. This model (step-by-step transfer) has the advantage that the client can already use partial results should the contract end prematurely. Otherwise, the client might have paid a lot, but all rights would still reside with the service provider, which would be problematic if, for example, graphics are already integrated into the game. Legally, step-by-step contracts often agree that the rights of use are automatically transferred exclusively to the client when each milestone is accepted and paid for.

Guarantee of the Rights Chain and Warranties

Particularly with external service providers, the contract must stipulate that only their own or appropriately licensed content is supplied. The developer does not want to risk a freelancer incorporating third-party material (e.g., copying a texture from the internet) to which they have no rights. For this reason, IP clauses almost always include an assurance from the service provider that the delivered works are free of third-party rights and that they have obtained all necessary rights. It is often specifically mentioned that the service provider may not, for example, use any protected brands, logos, copyrighted templates, or pieces of music belonging to third parties unless approved by the client.

If the service provider uses resources (e.g., stock assets, libraries), they must guarantee that their use in the game is covered by contract. An indemnification clause is also agreed: If a third party makes a claim for infringement, the service provider indemnifies the client against all damages and costs. Such clauses are particularly important in an international context, for example, when service providers come from countries where copyright is handled differently. The risk is contractually passed on to the service provider. For more details, see contracts with voice actors, streamers, and test players.

Special Cases: Musicians and Collecting Societies

A typical stumbling block in the rights chain involves musical compositions from external composers. Many musicians are members of collecting societies like GEMA. If a composer has a rights administration agreement with GEMA, they have already transferred almost all usage rights to their future works exclusively to GEMA. This means that even if the composer contractually grants the developer studio all rights to the game music, they cannot fulfill this promise because GEMA (on their behalf) oversees, for example, public performance rights or reproduction rights for sound carriers.

In such cases, the studio must settle music usage with GEMA, which can be expensive and complicated, especially because a game typically does not publish independent music recordings. For this reason, care is often taken to ensure that commissioned composers are not members of a collecting society. The contract with the composer then expressly states that they assure they are not a member of a collecting society (e.g., GEMA). If they are, they must inform the studio, and the contract may be terminated if necessary. German case law has developed the so-called "GEMA presumption": It is presumed, in favor of GEMA, that it manages the rights to a piece of music if the author is a GEMA member and the piece has been published. This means that, in a dispute, a game developer would have to prove the composer is not a GEMA member to avoid payment. Hence, the precautionary measure of not commissioning GEMA members in the first place, or only by special agreement. This example demonstrates the importance of an unbroken chain of rights: a carelessly engaged composer with GEMA ties could lead to the game not being allowed to be shown with music at trade fairs or streams without GEMA fees, for example. Appropriate contractual clauses and checks in advance are therefore essential.

Non-Disclosure Agreements (NDA)

Non-disclosure agreements (NDAs) are concluded with both employees and external service providers. In the games industry, potential partners often sign an NDA even before detailed discussions begin. In this agreement, they commit to keeping all confidential information about the project secret, not passing it on to third parties, or using it for their own purposes. An NDA is indirectly relevant for the rights chain; it doesn't protect copyrights but prevents ideas or unpublished assets from being leaked without authorization. For example, a developer might want to prevent a freelancer from publishing concept art for a new game on their website before the game's announcement. NDAs often also contain clauses clarifying that all documents and materials remain the client's property and must be returned or deleted at the end of the collaboration. It is also stipulated that confidentiality continues after the collaboration ends (often indefinitely, or at least until the public release of the project).

IP Clauses and Rights to Preliminary Work

In some cases, a service provider brings their own pre-existing materials into the project (e.g., a self-developed tool, their own template). Here, contractual IP clauses can regulate who owns these pre-existing materials and how they may be used. It is common for the service provider to retain rights but grant the studio a right of use if incorporated into the game. Contractors also ensure they receive reference rights; in the creative industry, a freelancer wants to show created work later in their portfolio. Many contracts explicitly grant this right, but only after the game has been released and often in a limited form (e.g., excerpts, no complete source code or entire assets in the public domain).

Interim Conclusion: External Contracts

Contracts for work and services with external parties pose a potential risk to the rights chain if not watertight. All copyright usage rights must be clearly regulated and transferred from the service provider to the client. Additionally, assurances must be obtained that no third-party rights will be infringed, and confidentiality must be ensured. If this is successful, the freelancer's contributions seamlessly integrate into the rights chain, allowing the studio or publisher to exploit the overall product without restrictions.

Special Features: AI-Generated Content

AI-generated content is a comparatively new topic in the rights chain. Artificial intelligence can now generate graphics, dialogue texts, or even music. Many developers use tools like neural networks for procedural landscapes or item descriptions. This raises the question: who holds the rights to a work generated by AI? And are there any copyright rights at all?

Copyright Status of AI-Generated Works

According to the current legal situation in Germany, purely AI-generated content is not protected by copyright. Section 2 (2) UrhG requires a personal intellectual creation, meaning a human creation. A machine or software cannot be an author. So, if a quest text is created using a text generator (without significant human editing), this text is not copyright protected. No one – neither the developer nor the AI tool provider – has copyright to it, as there is no human creator. Consequently, any third party could theoretically use, copy, or publish this text without asking the developer. The same applies to AI images from tools like Midjourney: if used 1:1 in the game, they are unprotected and can therefore be freely copied by others. For the rights chain, this means a break in the exclusivity claim: while the studio has no third-party authors to assert rights, it also lacks enforceable copyright itself. This means there is no basis to prohibit third parties from using the work. Especially if a game relies on striking AI-generated character portraits or artwork, a competitor could use these graphics without a license – a significant risk for marketing and monetization (e.g., merchandise). More information on the risks from AI asset production can be found here.

Strategies for Dealing with AI Content

Practical experience has yielded initial solutions. It is advisable to always rework AI-generated content to add a human level of creation. For example, a game artist could use AI-generated concept art as a basis, but then manually paint over it, add details, and creatively redesign the result. This introduces the human editor's own creative traits, making the end result a protectable work. The author would then be the human editor. This approach—AI as an aid, not an autonomous creator—allows for efficiency gains through AI without completely abandoning legal protection. However, it must be clear that the scope of protection only covers the human-contributed elements. The more substantial the human element, the more secure the eligibility for protection.

If AI content is used with minimal or no editing, it should be reserved for non-essential areas, such as randomly generated NPC dialogues or background graphics where exclusivity is less critical. The team should document what has been fully automatically generated and what has been human-adapted to clarify which parts are copyright protected. Legally compliant publication of AI images requires specific attention to labeling and copyright status.

Contractual and Licensing Issues with AI Tools

Another aspect involves AI generators, which are often used based on the provider's terms of use (e.g., OpenAI, Midjourney). These terms regulate who is entitled to the exploitation rights to the output. Providers often grant the user comprehensive rights to the generated output. This does not change the fact that no copyright arises, but at least contractually the developer may use the output, and third parties (the AI provider) will not make claims. However, many tools have clauses requiring, for example, that users do not make illegal prompt inputs or use output for certain purposes. Here, a new point in the chain of rights emerges: license terms of the AI provider. A violation (e.g., if someone trains the AI with stolen images) can breach the license and theoretically grant the provider the right to prohibit use. For AI textures or AI sound effects, there is also the question of whether the AI provider may continue to use the output material or store it in its data sets. This can be problematic regarding data protection or confidentiality, especially with sensitive internal content like level designs or secret character designs. This is why large studios are starting to train their own AI models on internal data to prevent any leaks.

Third-Party Copyrights in Training

An even more complex issue is whether using AI-generated content can infringe third-party copyrights. AI models are trained with vast amounts of data (images, texts, etc.), often collected from the internet. Copyright-protected works are inevitably copied and processed during this training. Depending on the jurisdiction, the training itself may be considered permissible data mining (in the EU, Section 44b of the German Copyright Act (UrhG) contains a limitation rule allowing automated analysis of lawfully accessible works under certain circumstances). However, there must be no reservation of use – many artists now include "do not train" notices in their images or use metadata/watermarks to prohibit training. If an AI model has been trained in violation of such prohibitions, the training results could be tainted. There has been a landmark ruling on AI training data by the Hamburg Regional Court.

This means for game development: if you use a third-party AI model, you cannot be sure whether it has been properly trained. If it later emerges that, for example, an AI image contains clearly recognizable elements of a protected third-party work of art (because the model has practically "reproduced" it), the author of the original could assert claims. Although the likelihood of a generic AI tool accidentally copying someone else's work is low, there have already been cases where AI images featured characteristic traits of certain artists, potentially affecting their copyrights.

The major gaming platform Steam (Valve) has reacted: Valve refuses to publish games with AI-generated content as long as the legal situation remains unresolved. In a well-known case, a developer received a rejection from Valve for his game because it contained AI-generated graphics that apparently drew on copyrighted third-party material. Valve demanded proof that the developer owned all rights to the works contained in the AI's training data set – a practically impossible request, as the developer had not trained the AI model himself. This strict stance indicates that some market players perceive the risk as high and do not wish to tolerate unauthorized AI content to avoid encouraging infringements.

Conclusion: AI in the Rights Chain System

For developers, this implies that if AI is used, it should be done with caution. Contracts with external service providers could include clauses regulating AI use. For example, a freelancer might be prohibited from using an AI tool to create commissioned work without consent. Internally, companies should determine when AI is used and how to ensure that the results are either harmless (because they are in the public domain or of low value) or can be protected by human processing. Until legislative or judicial clarification (copyright protection of AI works is debated worldwide), the following applies: it is better to use AI as a creative assistant than as the sole artist. This way, the rights chain remains under human control. When exclusive rights are required (e.g., for main characters, story illustrations), it is generally safer to refrain from using AI content and instead use AI for generic content. The future of copyright in the digital world concerning AI image generators is still evolving.

Publisher Agreements: Transfer of Rights, Exclusivity, and Typical Clauses

Once a game has been developed or is in development, a publisher typically becomes involved. Publishers handle the financing, marketing, and distribution of a game, demanding extensive rights in return. The publishing contract is therefore central to the rights chain: this is where it is decided who ultimately holds the rights to the finished game and to what extent. We will examine the typical clauses of a publisher contract from a legal perspective, especially regarding IP (intellectual property) and exploitation rights. Topics include the transfer of rights of use, exclusivity, options for sequels (right of first refusal), sequels/spin-offs, and other standard industry regulations.

A rough distinction can be made between two models: Contract development (the publisher commissions the developer to create the game via a contract for work and services, usually with the publisher retaining the IP) and the license model (the developer has a finished or highly developed game and "only" grants the publisher distribution and marketing rights, with the IP often remaining with the developer). In practice, many hybrid forms exist. It is essential that the contract clearly defines which party is or will be the owner of the rights to the game. For indie developers, navigating international publishing contracts is particularly important.

Intellectual Property of the Game: IP Clause

A core element of every publishing deal is the IP clause, which determines who owns the intellectual property rights to the game. There are two extremes and various intermediate stages:

Scope of the Rights of Use (Scope of License)

The decisive factor is that the right of use granted to the publisher is defined in terms of content, time, and territory. As a rule, a publisher aims for the following points:

A rights reversion clause is especially important if rights have been granted very broadly. For example, worldwide rights might be granted, but the publisher fails to utilize certain territories (never releases the game in Japan, for instance). In this case, some contracts stipulate that rights for unused regions revert to the developer if the publisher does not release the game there within a certain period. Alternatively, it may be stipulated that the developer can publish there as a substitute or use a third party if the publisher takes no action.

Exclusivity and Non-Compete Clauses

Exclusivity is the norm in publisher agreements. This means the publisher has the exclusive right to distribute the game in the agreed forms; the developer may not use another publisher or distribution channel for the same game in parallel or subsequently (as long as the contract is in force). Exclusivity primarily refers to the aforementioned rights of use: if these are agreed as "exclusive," exclusivity is inherent.

However, non-compete clauses often extend beyond this. A typical example is a clause prohibiting the developer from developing or publishing competing games during the contract term (and sometimes for a certain follow-up period). The rationale: The publisher invests in marketing the game and doesn't want the developer to simultaneously release a very similar game, possibly on their own, that would compete. A draft contract might state: "The developer will not develop, distribute or support any other video game that directly competes with or cannibalizes the success of the contracted game without the publisher's prior written consent." Such clauses must be narrowly defined. What does "in competition" mean? It is often limited to the genre or the IP. For example, if the developer releases a fantasy role-playing game with the publisher, the non-compete could prohibit the developer from making another fantasy role-playing game with a similar theme for another publisher at the same time. These clauses are critical for non-compete clauses in start-up contracts.

Sometimes exclusivity goes so far that the developer is generally not allowed to publish any other games as long as they are working on the financed project, simply because their capacity should be fully dedicated. Particularly for smaller studios with limited staff, a publisher wants to ensure all resources flow into their project. This type of non-compete is almost equivalent to an exclusivity-first-look contract with the publisher and can severely restrict the studio.

Enforceability of Non-Competes

In Germany, post-contractual non-compete clauses are more difficult to enforce for self-employed persons than in Anglo-American countries. Overly extensive, indefinite prohibitions could be seen as a violation of § 138 BGB (immorality) or as a disproportionate restriction of professional freedom if no compensation is paid to the developer. Therefore, reputable contracts ensure time limits (e.g., non-compete applies until X months after the game's release) and scope limitations (only similar games, not every activity). Note: In some US jurisdictions, non-compete clauses against individuals are now restricted or prohibited by law (e.g., in California), though they are more likely to apply to companies. In practice, this point is often seen as less problematic, as developers rarely run two competing projects in parallel on their own; but it can become important if the studio wants to pursue other ideas.

Exclusivity of rights vs. involvement of third parties: Another aspect of exclusivity concerns the publisher itself. The developer wants the publisher to exclusively market its game in the genre or be fully invested. As a rule, you can hardly prohibit a publisher from also distributing competing products (a publisher often releases several similar titles). What does occur, however, are "key man" clauses or priority clauses, aimed at ensuring the developer's project is not neglected. For example, the contract could stipulate that a certain producer from the publisher remains assigned to the project, or that the marketing budget must be at least X amount – these are indirect ways of ensuring "exclusivity" of attention. In essence, however, the publisher has exclusive rights to the game, and the developer undertakes not to grant any competing rights.

Financing, Remuneration, and Exploitation of Rights

While this article primarily focuses on rights, the issue of rights is closely linked to financing and remuneration in the publisher contract. Those who pay for development typically have a stronger argument for controlling rights. Additionally, remuneration models often define the extent and duration of the publisher's rights usage.

Advance and Royalties

It is common for the publisher to pay the developer a development advance (a type of budget or milestone payment) and, in return, retain the lion's share of proceeds until the advance is recouped. After that, developers and publishers share profits according to an agreed formula (royalties). The legal effect of this financial structure is that the publisher has a strong interest in fully exploiting the game. It also means the publisher may retain the game even if the developer is dissatisfied, as long as the game generates revenue. Cases exist where a game is profitable, but the developer takes a long time to break even due to unfavorable royalty conditions, while the publisher holds all rights.

Linking Rights to Payment

It is important for developers to include clauses affecting rights in the event of payment defaults. For example: "If the publisher fails to make due payments (e.g., milestone installments or royalty payments), the developer is entitled to terminate the contract for cause and demand immediate reversion of rights." This provides protection if the publisher becomes insolvent or breaches obligations. The developer could then reclaim rights to the game and seek a new partner. Without such clauses, the developer could be left with a half-finished game and no rights if the publisher defaults.

Term of the Contract

A publishing contract often has a defined term, such as "x years from first publication" or "until the end of the protection period." If the term is limited, it should also stipulate what happens afterward: ideally, the rights should be transferred back to the developer. Sometimes publishers retain certain rights even after expiry (such as continuing to distribute the game, but no longer exclusively). In any case, the term is a tricky point: a short contract returns the IP to the developer eventually, while an open-ended contract means the publisher can benefit from the game "forever."

Right of First Refusal / Option Rights

Clauses for future projects deserve special mention. Many publishers grant themselves an option on the developer's next game, or at least on sequels. The best-known model is the Right of First Refusal (ROFR), essentially a right of first refusal: the developer must give the publisher the first opportunity to publish the next game (or a "successor" to the current game) before negotiating with others. A typical formulation would be:

"The Developer shall grant the Publisher a right of first negotiation with regard to the next video game planned by the Developer after completion of the game that is the subject of this Agreement. The Developer shall offer the concept of the next game to the Publisher in writing. The Publisher shall have 60 days from receipt of this offer to submit a contractual offer for the publication. If the publisher refuses or if the deadline expires without an offer, the developer is free to offer the game to third parties. If the publisher accepts, the parties will enter into negotiations on a new publishing contract on terms customary in the industry."

This clause secures first access for the publisher. A more stringent variant is a matching right: even if the developer receives an offer elsewhere, the publisher may match the offer and is then awarded the contract. This effectively binds the developer as long as the publisher agrees. From the developer's perspective, such clauses are risky if the relationship with the publisher is difficult; it's hard to break free because you always have to give the old partner a chance, and other potential publishers may be deterred if they know they could be outbid. Regarding financing, this topic relates to binding effects and term sheets for startup investments.

Exclusivity for Sequels and Spin-Offs

Closely related is the question of sequels and spin-offs. If a publisher controls the IP, it will naturally also want to release sequels itself (often the most economically attractive option). Strictly speaking, a publisher contract that has transferred the IP to the publisher does not need a separate sequels clause – the publisher owns the brand and can commission any developer to create a sequel without asking the original developer. However, it may be contractually agreed that the original developer has a right of first refusal to develop the sequel. This is the flip side: the developer, not the publisher, has the right of first refusal for the follow-up contract. Such agreements are rare; it is usually the developer who tries to include a chance for follow-up orders ("Publisher will give the developer appropriate consideration for sequels").

In cases where the developer remains the IP owner, it's the other way around: the publisher would at least like the option of distributing a sequel. An option clause often appears here: "In the event that the developer develops a sequel or add-on to the game, the developer will make the publisher the exclusive offer to market this product on terms no less favorable than those of this agreement." This binds the developer in that they cannot simply approach the next best provider with the success of the first game without giving the previous publisher a fair chance. For detailed contractual conditions, see contractual framework conditions for live service games.

Spin-Offs and Secondary Uses

A spin-off could mean, for example, using the game engine to build a game in a different genre (e.g., an RPG is turned into a strategy game spin-off with the same characters). If the publisher is the IP owner, this usually covers such modifications, which are strictly speaking adaptations of the original work, typically covered by the acquired rights. If the developer was the IP owner and only licensed the specific game to the publisher, the question arises: Does this include spin-offs? Only contractual clarity can help here. You either list spin-offs as part of the licensed rights (unusual, as spin-offs are hypothetical), or you leave it to the developer but give the publisher a right of first refusal.

Example to illustrate: A development studio publishes a successful platform game with publisher A. Now the studio plans to make a racing game (kart racer) with the same characters. If Publisher A owns the IP outright, the studio cannot realize this project without A; A decides whether and with whom a racing game is created. If the studio had kept the IP, it could theoretically make a racing game spin-off with publisher B, provided the contract with A does not prohibit this. However, A could feel violated if B now profits from the established characters. Publishers therefore try to cover these cases contractually. One possible clause is that for the duration of the contract and X years thereafter, no game with the same characters/world may be published without A's consent, regardless of the genre. Such restrictions protect the publisher's investment.

Example clause spin-off prohibition: "The Developer shall not, without the Publisher's consent, develop or publish, either itself or through a third party, a video game based on the same characters, storylines or game worlds as the Game that is the subject of this Agreement, unless it is an expansion that is subject to this Agreement." This wording would effectively exclude spin-offs, unless the publisher approves it (probably in return for participation or as a separate contract).

Other Important Clauses: Guarantee, Liability, Termination

In addition to IP and license clauses, publisher agreements contain other conditions that indirectly influence the rights chain:

These examples demonstrate the complexity and detail required in publisher agreements to cover all eventualities of cooperation and separation. From the rights chain perspective, the publisher aims to secure the most comprehensive and exclusive rights possible, while the developer strives not to relinquish more rights than necessary and to have safeguards in case of problems. German law (UrhG and BGB) provides the framework, always considering the principle of purpose transfer: rights are transferred only as far as necessary. Therefore, precision benefits both sides. Legal aspects of equity deals in start-ups also influence the contractual landscape.

Distribution Agreements and Their Effects on the Exploitation of Rights

Beyond the development and publishing phases, the distribution or distribution agreement level forms another part of the rights chain. Distribution contracts serve to distribute the finished game to the end customer. While a publisher often also organizes distribution, constellations exist where development, publishing, and distribution are handled by different entities. For example, a developer may self-publish (no external publisher) but work with a platform like Steam or a physical distributor. Alternatively, a publisher might use local distribution partners for specific regions. These distribution agreements influence how the rights to the game are commercially used, even if they no longer change copyright ownership (which was determined earlier). However, they are crucial for the exploitation of rights and monetization. General T&Cs, regulation, and compliance also play a role here.

Direct Digital Sales (Platforms, App Stores)

Today, most games are distributed digitally via platforms: PC games via Steam, Epic Games Store, GOG, etc.; console games via the online stores of Sony, Microsoft, Nintendo; and mobile games via Apple App Store or Google Play. In all these cases, the rights holder (developer or publisher) concludes a contract with the platform. These are usually standard distributor agreements or the platform's general terms and conditions, offering little room for negotiation.

Granting of Rights to Platforms

The game's owner grants the platform a distribution license, entitling it to offer the game to end customers. Typically, platforms retain a percentage of revenue (e.g., 30%) and pass the remaining 70% to the publisher/developer. These agreements contain clauses such as: "The publisher grants the non-exclusive right to make the game available to end users by download for a fee or free of charge and to make reproductions and promote the game for this purpose."

Here you can see: The platform does not receive exclusive rights, unless a separate exclusive deal has been agreed (e.g., PC exclusivity in the Epic Store, regulated in a separate contract). In the standard case, the publisher can also offer the game on other platforms simultaneously. The game remains in the platform's catalog until one party (often the publisher) removes it.

Contractual Conditions of the Stores

The obligations and restrictions in such platform contracts are legally relevant. For example, all major stores require the publisher/developer to guarantee that they hold all rights to the game and that no illegal content is included. Should there be any legal violations (e.g., copyright infringement or offensive material), platforms reserve the right to take the game offline (keyword: content policy). This aligns with the rights chain: if any element in the game has an unresolved rights issue (e.g., music license), the game could be removed from the store.

Stores also have review processes (console manufacturers, in particular, conduct thorough legal checks before approving a game). Aspects like youth protection, trademark rights (e.g., are all brand names in the game licensed?), personal rights (avatars, real people?), and copyright are considered. The platform wants to ensure it won't be held liable for aiding and abetting later. In the Apple/Google ecosystem, disputes occasionally arise over joint liability (e.g., apps infringing patents or copyright). Lawsuits have occurred in the USA, but platforms generally view themselves as mere intermediaries.

End User License (EULA)

In digital distribution, the end customer never becomes the owner of a copy (as was previously the case with a physical DVD) but only receives a user license. Most often, an EULA (End User License Agreement) is displayed when a game is first launched, which the player must accept. It typically states: "The player is granted the simple right to install and use the game for personal use on their devices. They may not reverse engineer it, reproduce it other than for installation, create derivative works, cheat, etc." This EULA represents the final stage of the rights chain: from the publisher (as rights holder) to the consumer (licensee). It severely restricts the user's rights to protect the intellectual property of the developer/publisher (e.g., prohibiting commercial use of game content or selling virtual items outside permitted channels).

For digital contracts, platform T&Cs may stipulate minimum content for such an EULA. In some cases, the EULA is integrated into the platform T&Cs (e.g., Steam's subscriber agreement includes acceptance of the Steam Terms of Use). In others, the publisher provides its own EULA. In any case, for end customers: They do not acquire any ownership rights to the game or digital content but only a limited right of use according to the rights holder's specifications.

Physical Distribution and Retail Contracts

In addition to digital distribution, the physical sale of games (on data carriers like Blu-ray, cartridges, etc.) remains a relevant market, especially for console games and collector's editions. This is where retail and distributor contracts come into play. The publisher often contracts with a distribution company specializing in warehousing, logistics, and delivery to retailers. This company acts either as a sales agent (sells on behalf of the publisher for a commission) or as a wholesaler (buys games from the publisher at a wholesale price and sells them independently).

From an IP perspective, the distribution agreement grants the distributor simple rights of use for reproduction (pressing of data carriers) and distribution, usually on an exclusive territorial basis. For example, a contract could stipulate that distributor X has the exclusive right to distribute the game in retail outlets in Germany, Austria, and Switzerland. In return, the distributor undertakes to provide specific services (marketing support, minimum purchase quantity, achievement of sales targets) and pays either a lump sum or ongoing fees based on sales. It is important to note that such contracts do not grant any further rights: The distributor does not receive the IP to the game, only the limited distribution right. The contract usually contains clauses that terminate all distribution rights at the end of the contract (except for the sale of remaining stock). The IP remains with the publisher.

Effects on the Exploitation of Rights

Exclusive distribution agreements can geographically divide exploitation opportunities. For example, a different publisher or distributor may handle the game in region A than in region B. This fragmentation is desirable for utilizing local expertise but requires careful coordination of the rights chain. The main rights holder (often the original publisher) must ensure all local partners are contractually bound and observe the same restrictions. For example, an EU distributor may not simply sell copies in the USA if another partner has exclusive rights there; corresponding territorial restrictions and perhaps contractual penalties enforce this. However, antitrust law also applies: absolute territorial restrictions are problematic in the EU single market; there must be some leeway for free trade (keyword: parallel imports). Contracts must therefore be designed to protect the chain of rights without violating competition law.

Additionally, distribution agreements should include minimum performance requirements, such as the distributor ensuring broad distribution within a certain period after release. Otherwise, a weak distribution partner could hinder the game's exploitation. For this reason, a right of termination or recall is often agreed upon: If the distributor fails to deliver agreed performance (e.g., doesn't achieve minimum sales or marketing commitments), the publisher can terminate the contract and reclaim distribution rights. This ensures the IP holder retains control of the exploitation chain, and the game is not blocked in the market by third parties.

Licensing to Platform Holders (Console and Co.)

A particular aspect of distribution involves contracts with platform operators such as Sony, Nintendo, or Microsoft. Some act purely as store providers for digital downloads, but with consoles, they have a dual role: they control the platform (via hardware and operating system) and often charge license fees per game. A developer or publisher must put a game through a platform licensing process (keyword "certification"). This requires a license agreement allowing the publisher to publish the game on the respective console. This includes the platform's trademark rights (logos like "Official Nintendo Seal," etc.) and technical specifications. The platform owner does not receive any content rights to the game but typically demands:

These contracts can also address exclusivity. For example, if Sony pays for timed exclusivity, the publisher will promise not to offer the game on other platforms for a specified period. Such deals are ultimately marketing tools but take legal form as an additional agreement (e.g., a "timed exclusive" clause). After expiry, the publisher can publish on other platforms. The ECJ takes a detailed position on games law, which impacts how these agreements are structured.

In summary, distribution agreements play a major role in the practical exercise of rights. They regulate which partner brings the game to the end customer but do not change who owns the rights; this always remains the developer/publisher in accordance with upstream contracts. Properly drafting these contracts ensures that the rights chain extends all the way to the end user: from author to developer, publisher, distributor, store, and finally the player, who receives a simple license to use the game. Any break – whether a missing right in a territory or a contractual loophole – can jeopardize monetization. Licensing of middleware and game engines also plays into this.

Cross-Media Rights: Games and Films, Series, and Other Media

Video games are part of a larger media ecosystem. Successful games are adapted into films or series, and conversely, many games are based on existing film, TV, or book brands. These cross-media exploitations require detailed license agreements to clarify who holds which rights to the respective media content. We consider two directions here:

  1. Game is based on external IP (e.g., film or book) – the game developer therefore uses third-party intellectual property.
  2. Game is adapted into a movie/series – a media company uses the game IP for a new work.

Games Based on Films, Books, or Other Brands

Many video games utilize worlds, characters, and storylines from films, TV series, comics, or literary models. Well-known examples include numerous superhero games (Batman, Spider-Man), Harry Potter games, or games based on films like Jurassic Park or Star Wars. In all these cases, the original IP (intellectual property) does not belong to the game developer but to another rights holder (film studio, author, brand). The developer or publisher must therefore acquire a license from the original IP owner to create a game based on it. This extends beyond games to turning computer games into board games.

License Agreements for Third-Party IP

At its core, such a game is a merchandising product for the original IP. The license agreement grants the game publisher certain rights of use to the IP, limited to the "video game" medium. Typical features of such contracts:

From a developer's perspective, such licensed titles present a challenge: you have less creative freedom and must strictly adhere to licensing conditions. At the same time, well-known brands offer a market advantage (a known franchise attracts customers). For the rights chain, this means that the final ownership of the rights remains with the external licensor. The game publisher acquires a temporary, limited license. Ultimately, the publisher cannot freely dispose of "its" game; the licensor holds the decisive strings.

Case law: A prominent US case illustrates the importance of clear boundaries: the publisher of the novel "The Godfather" (Mario Puzo) granted film rights to Paramount Pictures in the 1970s. Decades later, Paramount licensed the production of a "The Godfather" video game to EA. Mario Puzo's heirs sued because video games were not mentioned in the original contract; they demanded a share of game revenues. The legal dispute ended in a 2012 settlement, with Paramount paying compensation to the Puzo estate. This case shows: if new types of use (in this case, computer games) were not considered, the author or original rights holder can still make claims. For this reason, license agreements now cover all conceivable media, or at least assign them individually, to avoid such conflicts.

Games as a Source for Film Adaptations and Adaptations

The flow also goes in the other direction: successful video games are adapted into films (e.g., Tomb Raider, Resident Evil, Uncharted), series (e.g., The Witcher, The Last of Us), or comics and novels. Here, the game developer or publisher is the licensor. If a Hollywood studio wants to make a movie based on a game, it needs the approval and cooperation of the game IP owner.

Option and Filming Contract

It usually starts with an option. The film studio concludes an option agreement with the game publisher, granting it the exclusive right to develop a film adaptation within a certain period (e.g., 18 months). During this time, the studio writes a screenplay, seeks directors, financing, etc. When the project becomes concrete, the studio "triggers the option" and the actual filming contract is signed. This contract regulates:

Once the film adaptation is completed, both sides hold the rights: the film producer holds the copyright to the film work, while the game publisher remains the owner of its original game IP. However, new elements are often created in a film adaptation (new characters, events). Contracts regulate who owns these. It is usually agreed that such new elements may be used jointly: The film studio can continue them in films, and the game publisher can adopt them for future games. This way, both benefit from the universe's expansion without separate chains of rights.

Cross-Promotion and Parallel Exploitation

Cross-media projects also specify how mutual promotion should occur. For example, the contract could stipulate that the publisher releases a movie-tie-in DLC in the game for the film's release, or that the game is referenced in the film. Also important: sequence and timing. Cases exist where a movie is produced based on an unreleased game; then the studio needs assurances that the game will actually be released (and the brand will become known). Conversely, the publisher wants the movie to arrive in time to boost game sales. Such dependencies make cross-media agreements complex.

Example: The Witcher is a special case: Originally a novel, CD Projekt RED licenses the game rights (but does not retain the film rights). Later, the author licenses the series rights to Netflix; the successful series is based more on the novels, but the games still benefit indirectly. If CD Projekt had acquired the film rights, they would have shared in the series. This constellation demonstrates: IP management across media boundaries requires foresight. Nowadays, many game publishers try to keep all cross-media rights to their own brands in-house – see, for example, Ubisoft, which founded its own film studio to film games like Assassin's Creed itself (thus retaining control).

To summarize, cross-media expansion requires very precise contracts. Both sides – games and film/music – must define who has sovereignty over characters, stories, and brands to avoid later disputes. If the rights chains are properly dovetailed, a brand can flourish in many media without unclear rights hindering exploitation.

Comparison of the Industries: Games, Music, and Film – Contracts and Structures at a Glance

The games, music, and film industries all rely on the exploitation of creative content. Therefore, many parallels exist in their contractual structures, but also significant differences due to the characteristics of the works and market practices. Finally, a comparison of the rights chains and contractual standards of these three industries:

Common Basic Principles

Differences and Special Features

Example Sentences of Typical Clauses in Comparison

To illustrate contractual parallels, here are some comparative typical clause formulations from all three sectors:

These examples show that similar concepts exist across industries but are adapted to the medium in each case. The music industry, for example, has separate contracts for composition and recording, while game developers must cover both in one contract. Film contracts focus heavily on credits and artistic task allocation, while game contracts tend to emphasize milestone delivery and technical acceptance. The Blockchain in computer games introduces new layers of complexity.

Fazit: Who Ultimately Holds the Rights to the Game?

The initial question was: "Chain of rights in game development – who ultimately holds the rights to the game?" The answer is: it depends – and it should never be left to chance. The chain of rights in game development results from numerous contractual agreements. Ideally, these are structured so that a clearly defined rights holder possesses all necessary exploitation rights to the game and can use them freely. In practice, this can vary:

For clients in the games, media, and music industries, the rights chain is a matter for the boss. Every agreement – whether with employees, service providers, publishers, platforms, or licensors – influences who ultimately holds which piece of the rights puzzle. A game can only be fully exploited commercially if the chain is unbroken and clearly defined ownership and usage relationships exist. German copyright law provides a guideline with the purpose transfer principle: rights are only transferred as far as necessary. This applies to contracts: You must consciously and explicitly regulate what is needed. It is also advisable to consider future scenarios: new types of use (VR? cloud gaming?), new markets (Asia?), cross-media exploitation – all of this should be included in contracts where possible to avoid unpleasant surprises later on. When founding a game development studio, this due diligence is critical.

Who ultimately holds the rights to the game? As a rule, the contractual partner who financed or initiated the development, often the publisher or the studio itself. However, it is important to note that this company only truly holds "all" rights if it has involved all contributors. Any forgotten consent or negligent clause can lead to someone else claiming a slice of the pie. The best safeguard is to draft contracts with foresight:

In a short period, the games industry has adopted the contract culture developed in film and music over decades. Today, publishing and developer contracts are highly complex but also open to negotiation. Those who understand and actively shape their rights chain ultimately hold the reins. Ideally, the question "Who holds the rights to the game in the end?" is not left open but can be answered clearly: The one who has contractually acquired them with foresight – in agreement with the authors and for the benefit of all parties involved.