Legal Challenges for the Gaming Industry: 2010 and Beyond

In January 2010 alone, gamers have already witnessed the start of two major events that could reshape the gaming industry: American Needle and the FCC talks on net neutrality.  With the first month of 2010 now behind us, Laws of Play would like to take an educated guess at the types of legal challenges that will change gaming in 2010 and beyond:

Spy Games (Privacy)
Not long ago, games existed in a sphere of their own. Whether on a disc or in a cartridge, games were self-contained experiences that never ventured outside the television or computer screen. Today, it’s nearly impossible to find a game that doesn’t incorporate some form of user account. Whether it’s Xbox Live, Steam, OpenFeint, or games built on social networking platforms, today’s games are hopelessly intertwined with our social lives.

Unfortunately, the more tangled games become with social networks, the more opportunities arise for developers to obtain consumers’ personal data.  Often times the data collected is completely innocuous and can even improve the performance of future applications, such as aggregate data regarding the configuration of gaming PCs.  However, with modern games obtaining access to photo galleries, friends lists, and sometimes even financial data, the risks associated with improperly kept data drastically increase.  While it is unlikely that any of this data will be abused by game developers (save for potentially undesired targeted advertising), it is possible that some developers may not secure access to this data as carefully as they should.

There has not yet been a significant breach of consumer data stored by a gaming company, but the likelihood of an incident occurring continues to increase as DRM schemes and online games collect more data on gamers.  Information privacy is an area of law that is still testing its boundaries and I wouldn’t be surprised to see online gaming targeted by legislators and scholars in the near future.

Digital Gold Rush (Rights to Virtual Goods)
Modern games have not only increased access to consumer information, but have also increased their reliance on user-generated content.  From the emergent narratives of MMOs to entirely new games built on existing engines, developers are relying on user-generated content to extend the life of their products.  However, in many cases, it is still unclear who owns the intellectual property rights to this creative content.

The legal landscape in this area is exceptionally tricky.  While there has been some guidance regarding map packs, the complex legal issues surrounding machinima, emergent narratives, and game modifications are ready for some long-overdue clarity.  While some developers are modification-friendly, others strongly discourage the practice.  Perhaps most confusingly, some developers enforce their Terms of Use agreements to promote or discourage user-generated content in a seemingly arbitrary manner.

While many issues related to virtual goods can be handled with existing contract and copyright law, the industry is at a point now where both gamers and developers could greatly benefit from clear, standardized EULA and TOS provisions.

Balkanizing the Internet (Net Neutrality)
Net neutrality is a hot topic with just about everyone these days, but gamers have taken particular notice for good reason: An estimated 65 million online gamers could be drastically affected by future regulation.  Interestingly, there are gamers on both sides of the net neutrality argument.

Pro-neutrality gamers argue that without net neutrality, ISPs will be free to charge gamers additional fees to play games online or even block access to some games and online services altogether.  The most commonly cited example is Comcast’s prior practice of throttling bittorrent bandwidth, which prompted a cease and desist order from the FCC.  Additionally, some developers in favor of net neutrality argue that it is the only way to ensure that ISPs do not bargain for gaming exclusivity deals, which were common on mobile networks prior to the iPhone and are currently seen on game consoles.

Gamers against net neutrality argue that excessive government regulation of ISPs will decrease competition and innovation, which could be more harmful for online gamers in the long run.  Furthermore, these gamers argue that latency (and not bandwidth) is the major concern for online gamers and ISPs have little incentive to throttle online gaming services when services like bittorrent are a much larger burden on networks.  In fact, limiting bittorrent traffic could even increase the performance of online gaming.

Aside from gamers, some developers argue that ISPs will be better equipped to reduce or eliminate piracy with no or limited FCC interference.  By monitoring network traffic, ISPs would be able to stop the illegal transfer of games.  In theory, reducing losses due to theft would enable developers to charge a lower price for games–a benefit for both developers and gamers.

Ultimately, there are valid arguments for gamers on both sides of the debate and it will be interesting to see what the future holds.

The Digital Seven Seas (Piracy)
Piracy is a perennial issue that concerns nearly all digital media producers.  Although recent litigation has delivered serious blows to some of the worst offenders (The Pirate Bay), the illegal transfer of games still occurs regularly on bittorrent, peer to peer networks, and usenet.  As the cat-and-mouse game between developers and pirates continues, gamers will be forced to deal with increasingly complex DRM schemes, more tightly controlled gaming platforms, and potential deep packet inspection.

The online trade of grey market games is also increasing at a staggering rate.  While many of these transactions are carried out successfully, others have caused serious headaches for gamers and developers.  For a better understanding of the grey market game trade, read this prior Laws of Play post.

Ballet Hero (Choreographic Works)
It is no secret that both Sony and Microsoft are eager to introduce products that compete with the family-friendly Nintendo Wii. While Sony and Microsoft’s console offerings are targeted at the traditional gamer, Nintendo tapped into a much larger market by eliminating the largest barrier to entry for most would-be gamers: the controller.  Eager to keep up, Microsoft has announced Project Natal, an interactive body-tracking device for the Xbox 360, and Sony has announced some sort of odd motion-tracking-wand-thing.

In what may be the oddest prediction of this post, it is feasible that gamers and developers may have to begin considering copyrights in choreographic works.  Soon, game developers wanting to produce dancing or wrestling games–among others–may have to consider licensing choreographic works.  Could Ballet Hero be the next big hit?  How about a Macarena-inspired party game?  Perhaps a new dance craze will sweep the nation based on a series of moves found in Nintendo’s Wii Dance.

It’s too soon to tell whether games featuring choreographic works will gain traction, but developers may have an all new class of works to both license and protect.