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How providers make money from royalties and fees
The monetization of the provider (content studio) is built around two axes: how the base is considered (GGR/NetWin/turnover) and how the income is divided (royalties/commissions/minimum guarantees). Below is a map of models, a "waterfall" of holds, examples of calculations and practical advice.
1) Key provider income models
1. Rev-share (revenue share) via aggregator
Base: more often GGR (bets − wins) or NetWin (GGR − adjustments).
Division: operator ↔ aggregator ↔ provider according to the contract matrix.
Pros: Fast market access. Cons: The total commission is higher than in direct integrations.
2. Rev-share in direct integrations
The same bases, but without the "average" aggregator commission.
Pros: better margins, window prioritization. Cons: more integrations, certifications and support.
3. Fee-per-use
Fixed for the period/geography/operator, sometimes with a traffic limit (tier cap).
It is used for white-label, custom brand slots, stand-alon native builds.
4. Minimum Warranty (MG) + rev-share
Operator/aggregator pays MG upfront; royalties "work out" MG, above - the usual rev-share.
Useful when exclusives, launching a flagship or entering a new market.
5. IP Licensing/Mechanical (outbound)
The provider gives the right to use the brand/mechanics → receives royalties from the turnover or fix for the period.
Option: cross-licenses between studios (mechanics ↔ art/brand).
6. Brand licenses (inbound)
The studio buys IP (film/sports/music) → pays royalties to the copyright holder (fix + interest or interest only) from its share.
A clean chain of rights (music publishing, likeness, local rights) is important.
7. Infrastructure commissions of the platform provider
If the studio owns an RGS/marketplace, it takes a platform commission from third-party studios (B2B2B).
2) What is the base: GGR, NetWin and Turnover
Turnover (bets) - total bets. For slots, the base for royalties is rare.
GGR (Gross Gaming Revenue) = Bets − Wins.
NetWin/NGR = GGR − (jackpot contributions) − (bonus costs) − (market taxes/fees) − (payment fees, where applicable).
It is taken into account under the contract: some operators exclude cost of bonus from the royalty base.
Rule: always fix the dictionary in the contract - which is deducted before/after calculating the shares.
3) Retention waterfall (typical)
1. Game economy: bets → wins = GGR.
2. Regulated deductions: GGR tax/turnover, contributions to funds.
3. Operating deductions: jackpots, bonuses/freespins (according to the rules), PSP commissions, chargeback.
4. Channel commissions: aggregator/marketplace.
5. Partner shares: provider, partner studios, brand owners.
6. Provider bottom line: royalties + possible MG/exclusive payouts.
4) Formulas and Examples
4. 1. Basic formulas
`GGR = Stakes − Wins`- 'NetWin = GGR − Taxes − Jackpots − Bonuses (allowed) − PSP fees'
- `Royalty = NetWin × Rate_provider`
- `Royalty = NetWin × (1 − AggFee) × Rate_provider`
- where'AggFee 'is the aggregator fraction (or mixed matrix).
4. 2. Mini-case
Bets: €10,000,000
Winnings: €9,400,000 → GGR = €600,000
GGR tax: 5% → €30,000
Jackpot contribution: 1% off bets = €100,000
Bonus-cost in the base: €20,000
PSP: €10,000 → NetWin = 600,000 − 30,000 − 100,000 − 20,000 − 10,000 = €440,000
Scenario A (direct): provider rate 40%
→ Royalty = 440,000 × 0. 40 = €176,000
Scenario B (via aggregator): aggregator commission 15%, provider rate 40%
→ Royalty = 440,000 × (1 − 0. 15) × 0. 40 = €149,600
Scenario C (MG €120,000/month + rev-share 40%)
If the estimated royalty is €149,600, the provider will receive €149,600 (MG "worked out").
If the estimated royalty is €90,000, the provider still receives €120,000, the balance is "caught up" in the next periods (according to the conditions).
5) Commissions and shooting nets
Aggregators/marketplaces: 10-25% of the base (sometimes floating tier grids: the higher the turnover, the lower the%).
Complex waterfalls: different bets on top operators/regions, bonus cosmetics off-base, separate conditions for jackpots.
Premium placements: fix for "featured," buy-in for tournaments, sponsorship of prizes - count ROI separately.
Tip: prescribe floor/ceiling at the final effective rate (Effective Take Rate) and quarterly true-up recounts.
6) Royalties for brands and mechanics
1. Inbound brand (you take IP):- Model: fixed for the period + percentage of your share (for example, 10-20%).
- Risks: Double "scissor" effect - your margin drops.
- Control: KPI on placements, right to extend/terminate, map of territories.
- Model: percentage with NetWin "alien" title or fix per slot.
- Important: patent purity, clear room development, restriction on genres/constellations.
- Exchange of "mechanics ↔ art/characters" with mutual royalties and mutual promo.
7) How income is distributed across the portfolio
The 80/20 rule: 1-3 flagships give the lion's share of royalties.
LTV tail: Stable mid-runners support cash flow and display.
Series and franchises: save marketing, speed up listings and occupy "tiles" from operators.
8) P&L provider (simplified)
Income:- Rev-share (via channels), MG/exclusives, royalties from licensing mechanics, custom building services.
- Production (art/code/game design/QA), RGS/hosting/CDN, certification/labs, localization/LQA, marketing (creative/streams/tournaments), BD/legal, brand royalties (if any).
- Count ETR (Effective Take Rate) - the share that reaches you after all the waterfalls.
- Track CAC for carrier placement and payback by title.
9) Metrics and reporting in contracts
Base definitions: GGR, NetWin, list of valid holds.
Reporting calendar: monthly/quarterly, CSV/API format, UTC time zone, build/version register.
Audit and controversial cases: rights to check, SLA responses, interest for delay.
Geography and showcase: where exactly the title is available, obligations for "placements."
MG and true-up: netting and renewal order.
10) Typical mistakes and how to avoid them
1. Blurred NetWin definitions. - Rigid glossary in the contract, examples of calculations.
2. "Hidden" holds. - List of pre-/post-deductions, limits on PSP/bonus bones in the database.
3. No سقlingov and true-up. - Enter tare grids and quarterly recalculations.
4. IP risks by brand. - Full chain of rights, local nuances of music/face/trademarks.
5. One distribution channel. - Diversify: 2-3 aggregators + direct operators.
6. No build/version register. - Loss of certification and controversial write-offs.
7. Unaccounted for "cost to feature." - For the "showcase" often pay: lay this budget.
11) Checklists
Before the transaction with the aggregator/operator
- Base definitions and retention waterfall.
- Rates by region/operator, unit matrices.
- SLA reporting and API access.
- Audit Power, Dispute Timing, Currencies/FX.
- MG/Exclusive terms and "feature feet."
By Brand/Mechanic
- Net rights chain, territory, term, media classes.
- Royalty formula and caps/minimums.
- KPI on placements, right of termination.
- Separation of marketing responsibilities.
Financial contour
- ETR per channel.
- MG/exclusives cache plan.
- Reserve for certification/localization/jackpots.
12) 30-60-90: plan to strengthen monetization
0-30 days
Audit of all contracts and calculation bases; ETR vault by channel.
Single pattern of retention and reporting waterfall.
Pilot of shooting nets with 1-2 aggregators.
31-60 days
MG pilot launch on flagship, A/B "feature buy-ins."
Legal package on brands/mechanics (inbound/outbound), templates.
Dashboards: NetWin→Royalty, FX, lag invoices.
61-90 days
Expansion of direct integrations (5-10 key operators).
Rebuild portfolio for LTV (series/franchise), cross-promotional grids.
Revision of shooting ranges and true-up, conclusion of the ETR plan for the year.
13) Short FAQ
Why is it sometimes considered from GGR and not NetWin? Simpler and more transparent, but more expensive for the operator in "heavy" markets; NetWin is more honest, but more complicated.
Is MG always profitable? No: this is cache support and risk for the operator. Duration, return clauses and placement KPIs are important.
Should you take an expensive brand? Only if it opens storefronts/regions and pays back its rent in your share.
How to understand that the aggregator's commission is "fat"? Read ETR and compare with direct integrations; consider the "price" of feature-sharing and coverage.
Royalties and commissions are not "percentages," but the architecture of a money waterfall. Studios that clearly define the base, diversify channels, smartly use MG/exclusives and manage IP win. Transparent formulas, tiered grids and reporting discipline turn a complex grid of partnerships into predictable cash flow and sustainable growth.