Developer-First Deal Structuring
Choose the support model that best serves the creators and their product
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- 94%
Begin with the desired creative output and the people capable of producing it, not with a predetermined demand to buy a company. Diagnose the developer's binding constraint—capital, publishing, distribution, staffing, or platform access—and choose the support model that directly addresses it. That model may be a publishing agreement, partnership, investment, or acquisition. If ownership is divided, identify which intellectual property and teams matter most to each party and construct a split around those incentives. Microsoft wanted Halo and Bungie's developers, while Take-Two received Oni and Bungie's back catalog. The mechanism works by minimizing unnecessary integration while directing capital, distribution, and platform support toward the product with the greatest strategic fit.
Origin
Ed Fries described Microsoft's approach while explaining how Microsoft and Take-Two divided Bungie's teams and intellectual property in the 2000 acquisition.
Core principles
- 01Start with the talent and product rather than a mandate to acquire
- 02Match the transaction structure to the developer's actual needs
- 03Align asset allocation with each party's strategic incentives
- 04Supply resources without replacing the creator's vision
How to run it
- 1
Start With the Creator
Identify teams with exceptional work and a credible ability to create differentiated products. Avoid beginning with an acquisition quota.
Pro tip Use prior shipped work as evidence of creative and technical capability.
Watch out A large budget can encourage indiscriminate dealmaking if quality is not the first filter.
- 2
Find the Binding Constraint
Determine what prevents the team from succeeding independently, such as financing, distribution, marketing, or platform access.
Pro tip Ask what form of support the developer would choose if every option were available.
Watch out Do not assume ownership is necessary when publishing or financing would solve the problem.
- 3
Choose the Support Model
Select a partnership, publishing agreement, investment, or acquisition according to the team's needs and strategic fit.
Pro tip Prefer the structure that supplies required resources while causing the least cultural disruption.
Watch out Forcing every relationship into an acquisition can destroy value before production begins.
- 4
Map Party-Specific Value
List the people, products, intellectual property, and obligations that each negotiating party values most.
Pro tip Separate historic assets from future-facing products and development teams.
Watch out Treating the company as an indivisible package can block an otherwise workable agreement.
- 5
Design the Asset Split
Allocate teams, IP, and completion obligations so each party receives strategically useful value. Preserve incentives for cooperation after closing.
Pro tip Include transitional commitments when unfinished products cross the asset boundary.
Watch out An apparently favorable split can still fail if one party cannot complete or commercialize its assets.
- 6
Resource the Creative Goal
Provide the acquired team with the capital, distribution, marketing, and technical support required to reach the intended market.
Pro tip Measure success through the product's reach and quality rather than integration speed alone.
Watch out Resources should amplify the team's vision, not become a pretext for replacing it.
In the wild
Microsoft wanted Halo and Bungie's developers, while Take-Two already owned part of Bungie and valued the existing catalog. The negotiated structure gave Microsoft the Halo IP and development teams, while Take-Two received Oni and the back catalog. Microsoft also agreed to finish Oni before its developers moved to Redmond.
→ Both parties obtained assets aligned with their strategic interests, and Microsoft secured the team and title that became central to Xbox.
Common mistakes
Acquiring Because Capital Is Available
A large budget is not a strategy. Start with exceptional creators and a specific constraint that the transaction can solve.
Using One Deal Structure for Every Studio
Publishing, financing, and acquisition address different needs. Imposing ownership when another model would work adds avoidable risk.
Ignoring Transitional Obligations
Dividing teams and IP without assigning unfinished work can leave one side holding assets it cannot complete.
Is it for you?
Best for
Platform owners and publishers seeking differentiated content from talented independent teams.
Not ideal for
Transactions driven primarily by cost reduction, financial engineering, or rapid operational consolidation.
From the transcript
“our goal was to find the best game developers in the world and support them with whatever way was best for them.”
“So basically all I got was the Halo IP plus all the developers, and he got Oni and the back catalog”
From the episode
Bungie (with Xbox Co-Founder Ed Fries)
Ed Fries