Business
Revenue Share in Chinese Game Publishing: A Worked Example
A revenue-share percentage means nothing until you know what it applies to. Chinese co-publishing deals on Steam typically give the publisher about half of China revenue, but whether “China revenue” is gross or net of Steam’s 30%, refunds and tax, and whether costs are recovered before or after the split, can move your receipts by thousands of pounds on the same headline number. This guide works through the arithmetic in GBP so you can read any offer you are given.
- Author
- EightSix Games
- Revised
- Reading time
- 6 min read
In short
- Define the base first: territory, storefronts, products, period, and whether Steam’s cut, refunds, VAT and withholding come off before the share.
- There are three kinds of payment, and a proposal may combine all three: a service fee, a revenue share and a recoupable advance or budget.
- Order matters. In the worked example, recovering £10,000 of costs from the pool rather than from the publisher’s share moves £7,000 from the studio to the publisher.
- Money leaving China for a UK studio loses 10% withholding tax and 6% VAT at source. Agree who bears the VAT and that you will receive tax certificates.
- Model weak, expected and strong outcomes, then have the contract checked against the model.
In this guide
01
Define the money being shared
Start with the territory (mainland China, with Hong Kong, Macau and Taiwan named separately), the storefronts, the products and the period. Then specify the treatment of the base game, DLC, bundles, keys, refunds, taxes, platform charges and currency conversion. “China revenue” and “net revenue” are incomplete definitions on their own, and the gaps are where the money goes.
| Term in the offer | What to pin down |
|---|---|
| “China revenue” | Identified how? Steamworks reports sales by region; agree that this report, for the mainland only, is the source |
| “Net” | Net of what, in which order: Steam’s 30%, refunds and chargebacks, VAT, withholding tax, currency conversion at which rate |
| “Existing sales” | Whether the share applies to all defined revenue from signature, or only to growth above a baseline you save beforehand. Assume all of it unless the contract says otherwise |
| DLC, bundles, keys | Included or not. Third-party keys are about a fifth of Steam units on average, and regional key arbitrage is a China-specific problem |
| Refunds | China refund rates run higher: 25% against 10% in one developer’s report. A share on gross would pay the publisher on money you returned |
Agree the source reports and the reconciliation. A statement you cannot follow from Steamworks receipts through deductions to the final split is a number, not an account.
02
Separate three types of payment
A service fee pays for specified work, whether or not the game sells. A revenue share gives a party a percentage of the defined base. A recoupable advance or budget is money the publisher spends first and recovers under an agreed calculation before or alongside other payments. A proposal may combine all three, and each needs its own line in your model.
What developers report for Chinese Steam co-publishing clusters around the publisher taking about half of China revenue while carrying local PR and creator costs; some describe 60/40 in the developer’s favour, others 30 to 70% depending on what the publisher funds. Advances to small teams, where offered, have been in the range of ¥100,000 to ¥200,000. None of these is a contract. They are the range against which to read an offer.
03
Work through the payment order
Illustrative arithmetic only, in GBP. Assume £100,000 of Steam receipts attributed to mainland China over the period, £30,000 of agreed deductions (Steam’s cut, refunds and tax) and £10,000 of approved recoupable marketing spend, with a 70/30 split in the studio’s favour.
| Costs recovered from the pool | Costs recovered from the publisher’s share | |
|---|---|---|
| Receipts | £100,000 | £100,000 |
| Agreed deductions | £30,000 | £30,000 |
| Recoupable spend | £10,000, taken before the split | £10,000, taken from the publisher’s share |
| Pool to split | £60,000 | £70,000 |
| Studio (70%) | £42,000 | £49,000 |
| Publisher (30%) | £18,000 plus £10,000 recouped | £21,000 less £10,000 recouped |
| Difference to the studio | £7,000 more |
The headline split is identical in both columns. The order in which costs are recovered changes the studio’s receipt by £7,000 on £100,000 of sales. On a game that does £1 million in China, the same clause is worth £70,000. That is why the question to ask is never “what percentage” but “what is the pool, and what comes out of it before I am paid”.
04
Put boundaries around costs
- Which costs can be recovered, listed in full before the term sheet, and who approves each one.
- A cap on recoupable spend, and a distinction between committed investment and optional spending the publisher may never make.
- Whether overhead, internal time, related-party suppliers or spending on other games can enter the account. They should not.
- Evidence for each charge: invoices and creator deliverables, not a line item.
- What happens if revenue is lower than expected or the agreement ends before costs are recovered. Define which obligations survive.
Model the downside explicitly. If the publisher contributes a budget, check whether it is a firm commitment or a spend ceiling. A marketing budget that is “up to ¥200,000” and fully recoupable is not an investment in your game; it is a loan you repay from the first sales.
05
The money has to leave China
Royalties paid from China to a UK studio suffer 10% withholding income tax and 6% VAT withheld by the Chinese payer (China Briefing). On the £42,000 above, that is roughly £6,700 gone at source before conversion. The contract should state who bears the VAT, oblige the publisher to supply the tax certificates you need to claim foreign tax credit at home, name the currency (write GBP or USD, never “dollars”), set the remittance timetable and specify late-payment interest. Confirm the treaty position with your accountant rather than relying on a reduced rate a partner quotes.
For mobile deals the order of deductions is longer still: the store takes 30 to 50% first, then tax, then the publisher recoups user-acquisition spend, and only then is what remains shared. Ask which costs come off before the split; it is negotiated, not fixed.
06
Make the statement reproducible
Agree a reporting period (monthly is normal), a payment date, the currency, the conversion method and your access to supporting records, including an audit right. A statement should let you follow receipts through deductions and cost recovery to the final distribution, and reconcile to your own Steamworks regional report.
Campaign attribution is a separate question. Steam UTM reports have tracking limits and should not be treated as a complete ledger of publisher-generated sales (Valve’s UTM documentation). Use the agreed financial records to calculate payments, and campaign evidence to judge whether the publisher is delivering what it promised.
Before signing, compare a weak and a strong outcome side by side, then have the contract checked against that model. The useful question is what your studio receives for the committed work, under terms it can verify. If you are still choosing between offers, how to choose a China publishing partner sets out the rest of the comparison.
Q
Common questions
- What is a normal revenue share for a Chinese publisher?
- Developer accounts for Steam co-publishing cluster around the publisher taking about half of China revenue while carrying local PR and creator costs; some report 60/40 in the developer’s favour, others 30 to 70% depending on what the publisher funds. The percentage matters less than the base it applies to and the order in which costs are recovered.
- Should the share apply to my existing Chinese sales?
- If the contract defines the base as all China revenue from signature, your existing sales enter the calculation. If you want the share to apply only to growth, save a baseline before activity starts and write it into the definition. Assume the former unless the contract says otherwise.
- How much tax is withheld on payments from China?
- Royalties to a UK studio suffer 10% withholding income tax and 6% VAT withheld by the Chinese payer. The contract should say who bears the VAT and require the publisher to supply tax certificates so you can claim foreign tax credit. Confirm the treaty position with your accountant.
S
Sources
Figures and rules in this guide come from the following. Where a figure is a practitioner estimate rather than a published rule, the text says so.