"Famous Last Words"

Making the Deal with Your Agent - Part I (March 2008)

Dear Jim:

We were approached by a games agent who wants to represent our studio. Any suggestions for how we should proceed?

Looking for Projects

Dear Looking:

This month and next month, we'll be looking at issues related to agents in the games industry.

Agents are a part of life in every segment of entertainment. Actors, directors, writers, composers, recording and touring musicians, athletes, and other creative talent frequently have representation whose job it is to maximize their clients' earnings.

As the games business has matured, as deals become larger and larger, as the development landscape becomes more competitive, as the number of studios continues to grow, and as studios have found homes in all corners of the globe, agents have been selling their services to developers, and developers have been signing on.

Each studio must decide for itself whether an agent can add value – if so, who is the best fit for the representation – and what is fair compensation for services received.

Here are some suggestions covering how to evaluate an agent and determine whether representation is right for you:

1. Before meeting with the agent, conduct a heart-to-heart talk with your partners and decide what services an agent can bring to your table.

Do you need business development help? Publisher credibility? Negotiating assistance? Project management oversight? A chance to develop original games? Once you analyze your studio's areas of need, it will be easier to decide whether an agent is the way to go (or not), and whether any particular agent is a good fit.

2 Determine whether there are licensing requirements for agents in your potential agent's home state. If so, check to see whether they comply. Many states, notably for the entertainment industry, California and New York , license and regulate employment agents. The agent who is looking for projects for you may be subject to the same regulatory requirements as the employment agency that places receptionists and secretaries. These laws also regulate how agents conduct their business, for example, how agents treat their client's money. Penalties for failure by an agent to comply with state law may be steep. For example, in California , if an unlicensed agent is sued by a client, the agent may be required to return 100% of commissions collected from the client during the previous year. Checking compliance with laws governing agents in the agent's home state can be a good first step in evaluating your agent candidate.

3. Interview the agent just like you would interview any employment candidate. Always remember that the agent is working for you (and not the other way around)!

Invite the agent to come to your studio. He or she should be willing to do so – after all, it is a sales call for the agent. Ask each partner, and your trusted advisors, to meet one-on-one with the agent. Don't be afraid to ask the tough questions. Explore all aspects of the potential relationship, the services that will be provided, the agent's experience and background, contacts, other clients, biggest deals he or she has represented, publishers with which he or she has made deals in the last three years, any litigation or arbitrations in which the agent is a party, etc. Dig deep to learn all you can about the agent. Pay attention to both verbal and non-verbal communication. Are you comfortable with the agent's personal style? How the agent handles these interviews may tell as much as the answers to your questions. Remember, if you hire the agent, he or she will be representing your studio!

After everyone completes their interviews, compare notes. Discuss the observations and conclusions drawn by each of your interviewers.

This comprehensive process is important. If you decide to sign on, chances are you will be locked into some sort of exclusive long term relationship (well – long term for the games industry anyway!). It's kind of like a polygamous marriage. The studio is singularly dependent on the agent, but the agency may have many other clients for whom it is providing representation. It is important that you have confidence in the agent and in your decision to engage the agent.

4. Ask for and check references.

Conduct detailed reference checks. Ask questions. How is the agent to work with? Is he or she reliable? Are phone calls returned? Does the agent do what is promised when promised? What are the areas in which the agent could improve? What are the best qualities of the agent? What would the reference change about the agent? Dig down when talking to the references.

Go beyond the references offered by the agent. If you know the agent's biggest deals, or significant deals of the last three years, contact the developers. If you have contacts, contact the publishers. Ask how the agent was to work with. Did everything go smoothly. Did the agent add value? Is this agent someone the publishers look forward to seeing – or do they shudder when he or she is on the phone.

An agent, like any professional, can be tough and demanding – but knowledgeable, reliable, and respected. That can be the best combination.

Following these steps can give you a leg up in deciding whether this agent is right for your company.

Next month, we'll look at the term (duration) of your agent agreement, key man issues, how agents should be compensated (and for how long), and other issues to consider when looking at an agent.