Seems like Blake raised a bit of a ruckus last week with his post about the Atari Pong Developer Challenge. On the surface the challenge looks like a good opportunity for developers, but iOS developer Brian Robbins points out a few issues potential entrants should note, particularly the ownership of the entered game ideas – even for non-winners.

Atari asserts full ownership over everything you submit to their contest. This means that whether you win or lose the contest, Atari has full rights to develop your idea, and more importantly, you will no longer have the ability to develop it yourself. This is true even if you don’t make it past the first round of the competition!

This becomes even troubling for the semi-finalists. Where in the first round entrants only need to submit an idea, semi-finalists must develop their idea into a playable version, devoting significant amounts of development time and resources into the project, yet they still have no guarantee on receiving any monetary compensation, and again, Atari will completely own anything they submit, whether or not they advance.

In the interest of fairness to Atari, it should be noted that this is a contest to create a Pong game. A game that Atari already owns the name, style, and gameplay of. Still, owning all entered ideas, even if they don’t win, seems overreaching.

On the subject of how a winning game producer would get paid, there are also issues with how much money can be earned, as Mr. Robbins points out.

Horrible Royalty Structure – Atari recently tweaked the royalty structure for the contest but sadly their attempt to address this does very little to improve the contest for developers. They have changed this from a royalty that only lasts for 1 year, and increased it to a royalty that lasts for 3 years. This still avoids the heart of the issue with trying to entice developers in with promises of a larger prize. The “winners” each get their share of 20% of the revenue of the final released app, however that 20% is shared amongst all finalists. This means, if Atari selects 10 finalists, as they plan to, each winner will only receive 2% royalties on final app sales, and that will only last for 3 years, or until the cap for their prize is hit. In order for the top winner to receive their full $50,000 payout, the game will need to receive revenue of $2.5 Million in the first 3 years. This is a huge revenue target that very few iOS games have been able to reach.

Further, Atari has left intact all of the deductions off of royalties, which include, among other things, marketing costs. This means that any money Atari spends promoting the app is deducted from the resulting revenues, before any of the “winners” get to earn their royalties.

Atari has positioned this contest as a great way for indie developers to make a name for themselves and win significant prizes along the way. However, their contest rules are anything but indie friendly. They assume ownership of everything that gets submitted, even if it isn’t a winning entry, they then hide half of the prize money in a royalty structure that will make it extremely difficult for the winners to ever realize the full value.

It’s not all bad news though. There may be a few young and eager developers that Mr. Robbins thinks could come out ahead on the contest.

There is a small group of people for whom this contest could be an okay deal, and that’s very young developers for whom the $5,000 payoff for becoming a finalist would be worth the 5-weeks of development time it will take to build the playable version and trailer will be a significant payoff. This means even the smallest professional or semi-professional developers are out, as the cost of spending 5 weeks on something easily outweighs the $5k payoff.

So as with any contest, read the fine print and know your options. While there is an opportunity here, the harsh conditions and risk of even entering will rule out the contest for most developers. But if this contest is right for you, and you understand the limits, Pong away.

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