The model depends on two things. First, studios must be willing (and able) to hold up their end of the bargain, whether or not the initial project is a dream job. Those that can't will fall by the wayside. Second, publishers actually have to make good on their promises, and recognize that an independent, unshackled studio does better than one in chattel. That's the hard part, but it has happened.
Take Radical Entertainment and The Incredible Hulk: Ultimate Destruction. Rather than sullenly phoning in a blah franchise product so they could move onto their own IP, Radical produced a clever and well-received game that moved a lot of units. And as the ducats were rolling in from Hulk, Vivendi was rolling the dice on Radical, rewarding them with enormous creative freedom in their next project, the original-IP Prototype. Having earned Vivendi's faith, Radical is now challenged to justify it by working on exactly the game they want to make. Assuming Prototype succeeds, both companies win again, inventing a new property that may become a lucrative franchise itself.
The whole by-carrot approach means developers first have to work on something that represents a safe financial bet for the publisher - something like an Incredible Hulk tie-in, something possibly rather dull, something that may put drastic limits on originality and is almost certainly tied to a brutal schedule. What's more, the developer not only has to work on this humdrum project, it has to produce sales volume if it wants its carrot.
This is a get lemons/make lemonade situation. And hugely successful, creatively independent studios commonly manage it. Treat an unwelcome project as a chore, and the game will come off as one; treat it as an opportunity, and your future products will benefit. Radical experimented with urban open-world settings in Hulk and is now putting that to use in Prototype. BioWare did those D&D licenses and Star Wars: Knights of the Old Republic, gathering best practices for Dragon Age and Mass Effect. Irrational produced SWAT 4 and Tribes: Vengeance, applying the lessons they learned to BioShock.
I Ate The Damn Broccoli, Now Leave Me Alone
The flaw in this model is publishers don't exactly have a history of good developer care and feeding. The system has no checks or balances, few ways to ensure the publisher won't get nervous and crack down in violation of its own agreement. Or, to be fair, that liberated developers won't immolate their own projects in a frenzy of creative abandon. Industry vet Ernest Adams warns of both:
