Thursday, December 27, 2007

Reminder: Vote for Law of the Game!

There are only a few days left to vote for Law of the Game in the ABA Journal's Blawg 100. The voting ends January 2, 2008, and I would appreciate any additional votes between now and then.

Click here and vote for Law of the Game.

Have a Happy New Year!

Wednesday, December 26, 2007

Wisconsin's Game Tax - Sin vs. Luxury vs. Lunacy

The proposed "Game Tax" from Wisconsin state senator Jon Erpenbach has gained quite a bit of attention, and accordingly, I thought it was worth addressing a few key points. First, I'm sure many folks are wondering why they should care about a tax in a state in which they don't live. The simple answer is that tax ideas seem to spread. If Wisconsin adds such a tax, it will only be a matter of time before a dozen other states follow suit. In short, the long term picture is not pretty for gamers if one state begins taxing games.

The second question is what type of tax is this? There are two likely candidates, those being the "Sin Tax" and the "Luxury Tax." The concept of a sin tax is that because the government wants to discourage a behavior and because that behavior has a proven, clearly demonstrated, and direct negative impact on society, the government taxes the item to both discourage the behavior and offset the negative impact. For example, cigarettes are taxed because they are linked to lung cancer. Alcohol is taxed because drunk drivers kill thousands every year. Video games, however, would be taxed due to an unproven link to a theoretical change in behavior for a small number of users. The link is not nearly as defined as, say, drinking to drunk driving.

The other possibility is considering it a luxury tax. The idea here is that some things are just so extravagant that people should pay extra, or from a different viewpoint, that the people who want to buy certain things are well enough off that they can afford to pay more taxes. A good example of products often hit with a luxury tax are expensive cars. The assertion here would be that video games are a "luxury item," and therefore are so unnecessary that gamers should have to pay more for them. However, given that books, music, movies, and all other forms of entertainment are not subject to such a tax, it does not follow that any aspect of the "video game" so separates the medium from other forms of entertainment as to draw the line there.

This would appear to be nothing more than another cheap shot at a scapegoated industry for the basic purpose of continuing to fill the already bloated public coffers, which serves to continue to perpetuate the problem of government over-spending. Far be it for me to dictate public policy in Wisconsin, but a video game tax is simply not a logical answer to the issue presented. I'm certain there are many other ways to fund the "keep non-violent juvenile offenders out of adult prisons" program.

[Via GamePolitics]

Thursday, December 20, 2007 Holiday Podcast

If you have a few spare minutes for some holiday cheer, please check out the Holiday Podcast. It's full of nothing but personal holiday greetings from many people in the game industry and blog-o-sphere, myself included.

Tuesday, December 18, 2007

Real Money Transactions Can Lead to Gambling Problems

Worlds in Motion has an article up detailing a new surge in the efforts to legitimize real money transactions in MMO games. Generally, the idea is a good one, as RMT can provide the players what they want, as demonstrated through the vibrant black market, while the legitimization gives the developers what they want. In fact, RMT based games are widely successful in other parts of the world. However, given the current state of US gambling laws, increased RMT in MMO games where gambling exists could put the MMO providers on thin ice. Second Life has already seen attention for gambling, and other worlds may not be far behind.

The tricky issue to deal with is the conversions between the virtual goods or currency and real currency. This is something I've discussed at length in my SSRN Papers. From a broad perspective, if a game either lacks gambling or lacks RMT, then there should be no cause for concern. However, when both elements are present, it becomes more problematic. Second Life (while gabling was still permissible), for example, as a direct currency exchange, could be viewed no differently than online casinos. In fact, even if gambling were using a more barter-like system, where, for example, weapons were wagered in fights, there could be a gambling issue assuming the weapon has a real world value, for example, from the ability to buy or sell it for real currency. The even more complex situation arises where the market price can fluctuate, especially given the prospect of reporting winnings or losses for tax purposes.

Obviously, this issue could take a number of turns depending on what the developers end up implementing in future games. It will be interesting to see if more developers place outright bans on wagering to avoid the issue entirely.

Monday, December 17, 2007

The Involuntary Hiatus is Over; Happy Holidays

My sincerest apologies, readers, for the hiatus that just ended. It's rare that I have so many projects operating as such a pace where I simply cannot find any time to blog, but as the year draws to a close, many clients want to wrap up ongoing projects. However, I seem to have things back under control, and so my blogging should be back to normal.

I will also (hopefully) be able to make a pretty big announcement in the very near future.

And please remember to keep voting for Law of the Game until Jan. 2!

Most importantly, please have a happy holiday season.

Happy Holidays from Law of the Game

Thursday, November 29, 2007

Latest Microsoft Bandwagon Lawsuit: Halo 3 is Defective

Information Week is reporting that a San Diego resident is suing Microsoft and Bungie because Halo 3 "consistently causes the Xbox 360 to crash, freeze, or lock up while the game is being played." I have a number of problems with this allegation and this suit. First and foremost, if Halo 3 were truly "defective" or caused the problems alleged, it seems reasonable to assume that message boards and blogs alike would have been exploding with those types of complaints since October. I dare say it might have broken the internet due to the volume of vocal complaints. However, this is the first time I have seen any such allegation, between the Rooster Teeth forums, Bungie forums, and forums or anywhere on the gaming blog circuit. The suit states: "Although faced with repeated and mounting consumer complaints and inquiries concerning this operational flaw in Halo 3, the defendants have failed to recall Halo 3 or otherwise remedy its failure to function on the Xbox 360." I would love to see a full version of the complaint and/or the "mounting consumer complaints" that are being referenced therein.

This brings me to the second issue. What the plaintiff is describing sounds far more like the well publicized problem with the Xbox 360 console rather than any problem with the game. And if that is the case, then the plaintiff should be taking advantage of the warranty repair process rather than filing a lawsuit. Which brings me to the third and final point, that given the available evidence, this seems like a rather simplistic attempt to profit from the game that set the new single day sales record. I have no problem with using the legal system to remedy actual problems, but at first glance, this suit seems like it's either misplaced blame or a shot in the dark. Once the pleadings make their way onto the internet in full, hopefully some more light will be shed on this case.

[Via Joystiq]

Wednesday, November 28, 2007

ABA Journal Top 100 Blawgs

Law of the Game has been added to the ABA Journal's list of "Top 100 Blawgs." To view the complete list, click here. Selection to the list means that Law of the Game is one of the "top 100 best websites by lawyers, for lawyers."

From now until January 2, there will be voting to determine the "favorites" among the categories. It is in the "Black Letter Law" category. I'd greatly appreciate if if you would take the time to vote for Law of the Game.

Vote Here

About the ABA Journal:
The ABA Journal is the flagship magazine of the American Bar Association, and it is read by half of the nation’s 1.1 million lawyers every month. It covers the trends, people and finances of the legal profession from Wall Street to Main Street to Pennsylvania Avenue. features breaking legal news updated as it happens by staff reporters throughout every business day, a directory of more than 1,500 lawyer blogs, and the full contents of the magazine.

About the ABA:
With more than 413,000 members, the American Bar Association is the largest voluntary professional membership organization in the world. As the national voice of the legal profession, the ABA works to improve the administration of justice, promotes programs that assist lawyers and judges in their work, accredits law schools, provides continuing legal education, and works to build public understanding around the world of the importance of the rule of law.

Tuesday, November 27, 2007

Poker Bots Causing Real Trouble

From the same wonderful people who brought gold farming bots to life, online poker bots may soon come online to harass online poker players according to the Freakonomics blog. The difference between bots of yore and the potential new breed of bots is that rather than just replicate mundane in-game tasks, poker bots will actually have to outplay their opponents. However, once poker is "solved" like checkers was "solved," it would seem the bot should be able to beat humans over the statistical long run, although any given hand may go one way or the other based on the simple "luck of the draw."

As the article points out, poker sites claim they will boot bots. This may prove more complex than anticipated. Randomization can be incorporated into bot play, or a human may simply reference the bot's choice and play accordingly. Penalizing players who do "too well" over the long term isn't a viable option either, as a good player can simply do well on the long term.

There is one point of contention I take with the article, and that is the classification of poker as "pure skill" like "chess and checkers." This is simply not the case. While poker has a defined and significant skill element, there is still a draw pattern that is not any result of player skill. Chess and checkers have no randomization at all. The pieces always start in the same place, and both players start with identical position. While poker does have skill, the simple dealing of cards at the beginning introduces an element of chance. While I don't wish to argue the varying levels of chance vs. skill in this post, I cannot agree with anyone who classifies poker as a "pure" chance or "pure" skill game. It contains elements of both.

Bots haven't toppled other online games, but the poker bot theory may provide the greatest anti-bot challenge to date. Only time will tell how online poker sites decide to deal with bot players, but I doubt that bots will end online poker.

Wednesday, November 14, 2007

Kids, Cards, and Class Actions: The Xbox Live Lawsuit

Information Week is reporting about a class action lawsuit that resulted from a child using his parent's debit card to register for Xbox Live without permission. The damages are from an overdraft fee a year later when the automatic renewal occurred. While I'm sure many class action attorneys love the idea of being able to take a shot at Microsoft, this case makes me want to roll my eyes because it highlights three major points of personal responsibility, one of which is a legal issue.

First, the two non-legal points: financial responsibility and parental responsibility. Financial responsibility in the US has been a major problem as of late, especially given the debt trends in the country. However, I would assume most people monitor their cash flow to some extent. Accordingly, I find it hard to believe that the parent in this case didn't notice the original Xbox Live charge, and if he did, then it was irresponsible not to address the issue at that time and rather let it renew a year later. Second, the parent should be monitoring the child's activity, and it is ultimately the parent's fault the card was taken and used by the child. The parent should realize this at some point in the transaction before an entire year has elapsed.

This leaves the third issue, the concept of vicarious liability for the actions of your child, which I would consider a spin-off of parental responsibility. While this issue varies from state to state, many states do hold parents responsible for the actions of their children, be that vandalism or online piracy or, in this case, use of a parent's credit card. Given that Microsoft already refunded the charge, the vicarious liability would be limited to the bank overdraft fee, which still stems from the original action of the child. I'm not sure of the vicarious liability laws in the state where this action is being brought, however.

Ultimately, holding a parent liable for $35 in damages caused by the unsupervised action of their child seems like a pretty minimal penalty, and I would hope that the parent would take it as a very inexpensive lesson that they need to keep a closer eye on their child and their wallet. Instead, it has been turned into a class action suit against Microsoft. I can't predict the outcome of the case, but if it were entirely up to me, I would dismiss the suit without question.

[Via Joystiq]

Thursday, November 8, 2007

The "Jack Thompson Debate" Idea is Over-Rated

GamePolitics has run a number of stories on the rumor, later squashed, of a Jack Thompson debate at the GDC, in addition to the debate that already occurred. In fact, GP's recent poll is on this very topic. I'd like to voice an opinion that really hasn't surfaced in any of the gaming media on this topic.

The Jack Thompson Debate at GDC would be a waste of time and have no real benefit for the industry.

I'm sure more than a few readers may be outraged by this statement, but I have four specific reasons for my position.

1. It won't change Jack's position.
It has become readily apparent that no amount of reason, logic, or factual evidence, much less the vocal and emotional pleas from fans, will sway Mr. Thompson. He will, in all likelyhood, hold the same stance from now until his death in the distant future. And in the mean time, he will use every waking moment to fight what he considers the "good fight." Mr. Thompson is the definition of a zealot, and although another debate will likely serve point 4, it won't change Mr. Thompson's mind. In fact, I doubt his mind would change if he soundly lost a million debates.

2. It won't reach the mainstream media.
Ultimately, this whole issue is about the perception of the video game in the main stream media and in the main stream American's mind. A debate at a conference of game developers won't make it on CNN or FoxNews or MSNBC. At best, it will make its rounds through the game fan circles, the game media, and maybe the technology media crowd, who are already overwhelmingly opposed to Mr. Thompson's position. The impact on society at large would more than likely be negligible.

3. It gives Jack more free press and attention.
I know my mother always told me to ignore a bully. By bringing in Mr. Thompson for a debate, it will make him the center of attention. And, when asked about the event, I'm sure he will spin his take on the event to his benefit, no matter the outcome. It's another line for his resume that we don't need to provide.

4. Jack would lose, but the only benefit would be an ego boost to people in the industry.
Here's the one benefit, if you can consider it that. Essentially, no matter how large or small the loss, the industry will be happy. And perhaps a video of the event might make its rounds into more mainstream parts of society. But ultimately, it's an ego boost without an impact to the mainstream. We all need ego boosts sometime, but I really think the net benefit here is fairly minimal.

I must admit I am relieved to see that, so far, the GDC has not arranged for this debate to actually occur. To me, the circus that would follow the debate would detract from the conference, and ultimately prove to have little or no benefit to the anti-game censorship cause. However, that is just my opinion, and so feel free to disagree.

New Vernon Law Group Website


You may have noticed that the firm I work for has undergone a name change to The Vernon Law Group, PLLC. Accordingly, the firm needed a new web site, which I personally designed. I wanted to take this opportunity to invite you to visit the firm's new website at:

Please feel free to send any comments on the site or its structure to me.

Thursday, November 1, 2007

Silicon Knights v. Epic: Motion to Dismiss Denied, Discovery Begins

GameDaily is reporting that the Silicon Knights v. Epic case is moving ahead after Epic's motion to dismiss has been denied. While they have mentioned this is "common," they haven't actually explained what it means. A motion to dismiss is essentially a motion to determine that the case isn't one for which there is a remedy at law even if the facts are true as stated. In this case, it would be the basic equivalent of Epic saying that Silicon Knights hasn't made any actual legal claims in their case. The judge, by denying this claim, is simply saying that he believes there is a claim or at least there is the appearance of a claim that can be remedied by law. The reason that it is common for motions to dismiss to be denied is that there is rarely something presented that is so outlandish that it makes no resemblance to a claim that can be remedied at law. If you would like an example of a time when a motion to dismiss would be appropriate, I would direct you to this lawsuit against Michael Vick.

The motion to dismiss is not to be confused with a motion for summary judgment, which is basically asking for a ruling without a trial in favor of one party. Put as simply as possible, if Epic had moved for summary judgment, they would stating that even if the facts are viewed in the manner most favorable to Silicon Knights, Epic would still be victorious in its claim. Motions for summary judgment generally occur after discovery, so they could still occur in this case. There is also a motion for a directed verdict, which would come after the plaintiff presents its case and essentially says the plaintiff has not proven their case. To use the continuing example, after Silicon Knights rests their case, Epic could move for a directed verdict on the basis that Silicon Knights has not sufficiently met the burden of proof necessary for their claims.

In sum, the Silicon Knights v. Epic case is moving forward at this time. Law of the Game will being more commentary as more developments occur. If you would like to read more about these motions, or about other motions, please visit this Wikipedia article.

[Via Joystiq]

An Open Letter to Bungie

Dear Bungie,

I must say I thoroughly enjoyed the "Playlist of the Living Dead" extravaganza yesterday on Live. The infection gametype has always been one I've enjoyed, from its latest iteration in Halo 3 to the older iterations in games like Perfect Dark Zero and the TimeSplitters series. To me, it's more interesting than a standard deathmatch but doesn't actually require much strategy or teamwork, like some of the team games. It's a happy medium that doesn't appear often in the ranked rotations.

I would love to see the All Infection playlist get permanent placement among the other ranked playlists. I know many people would opt to play pure infection as a ranked alternative to slayer or team slayer. Given that the number of players is significantly more than the Lone Wolves playlist, it makes for a more "fun" big atmosphere. A possible alternative here would be a Lone Wolves 8-13 size ranked list, where infection is sprinkled in. Another point is that people like to be able to play ranked with their friends, and the allowance to have a party of 4 join the ranked lists was a great addition.

In conclusion, I'd love for the all infection list to become a permanent ranked list for Halo 3 multiplayer, or in the alternative, a large (8-13) Lone Wolves list where infection is roughly half the games.


Sunday, October 28, 2007

Guitar Hero III: Problems with the Detatchable Neck

Other parts of the blog-o-sphere are reporting some issues with the bundling of Guitar Hero III with wired guitars. I'd like to address a different problem that I've had, along with a number of others according to forum posts.

I'd like to preface by saying I really do enjoy the Guitar Hero series (although I have to admit my wife is better at the games than I am), and I've bought 4 games with 4 guitars to date (2 on PS2 an 2 on 360). However, after the issues with the X-Plorer, I'm surprised there was not more quality control with the wireless Les Paul.

I picked up my copy (360 version with wireless guitar) at GameStop at midnight and went home to play. Now, I'm not terrible at the game, and I was having some real problems once I hit tiers 4 and 5 on medium. I assumed I was tired, and went to bed. The next morning, both my wife and I started playing, and once I was able to watch the game more closely, I found that the red and yellow buttons were not registering being pressed. After disassembling and re-assembling the guitar, the problem continued. I tried blowing on the contacts a la NES cartridges circa 1988. While the responsiveness improved, it was still only in the 70-80% range. I exchanged it for a new guitar, which seems to be working in a 95% or higher error range, which is far more acceptable (though still less than ideal on a game that requires such accuracy).

The issue almost certainly stems from the detachable neck's contact system, which is truly unfortunate since the removable neck was generally a good idea. I hope that Red Octane will resolve this issue sooner rather than later. The button problem seems to be appearing on many message boards, so I don't believe my problem is an isolated one.

On an unrelated note, it seems there's some sort of error in the track "One" on medium between the 85 and 90% mark. I at first thought it was the guitar, but having seen the same error with both myself and my wife with both the X-Plorer and Les Paul, I think there's something not working correctly in the track. And it's limited to the Medium difficulty. If anyone else notices this issue, please let me know, but I will acknowledge that I might be wrong on this track error.

Friday, October 26, 2007

A Jack Thompson Response

Bloggers in the video game realm know they've truly "made it" when Jack Thompson personally responds to a post. While I haven't been able to verify the identity 100%, the responses I received are generally consistent with Mr. Thompson's form, so I thought I would take this opportunity to respond to them, but without the name calling Mr. Thompson feels necessary to include.

jackthompson said...

Dennis McCauley got it wrong, of course and as usual. The FTC reg pertains to use of a credit card to verify a parent's identity, not a minor's age. Go read what he links to at the FTC on his site, and you'll find you're wrong.

It is a violation of bank card agreements to use credit cards as age verifiers, and obviously so since kids as young as 12 have credit cards and since junior can "borrow" dad's card. Pretty simple stuff, really, if your brain has not been fried by games.

The last time I sued Best Buy in this regard, they caved and settled and agreed not to sell M games to kids. They are in breach of the agreement, as well as violating Florida's anti-fraud statute. It's a shame you all don't know what you're talking about. Jack Thompson

October 25, 2007 5:35 PM

jackthompson said...

Actually, it is up to the government to decided these things, just as it is up to society to stop 7-11 from selling beer to 12 year olds. Duh. That's why we have a deceptive trade practice law in every state in the union. It's called democracy, gamer nerds. Deal with it. And grow up.

October 25, 2007 5:38 PM

It is so difficult to select a place to begin. I suppose I will start from the bottom, where you make the broad statement that it is up to the government to decide "these things." What you have stated is a philosophy on governance, not a fact. In your mind, the government should be free to control the hearts and the minds of the people as they so choose. In reality, our democratic republic has taken a small segment of the choices people can make and placed restrictions upon them. Alcohol, tobacco, and pornography are all among the things with restricted sales to minors. Movies, music, and video games are not. As I have pointed out repeatedly, there is no content beyond the level of the Saw movies in even the Manhunt games. If you had taken the time to experience them, you would know this to be the case. Therefore, if your basic supposition is that the government should add violent media to the category with alcohol, tobacco, and pornography, then so be it. But there is a logical fallacy in attacking content in only one medium when the same content exists in another medium which is equally accessible to the people you claim to be trying to protect.

Also, contrary to what you seem to believe, there are in fact people who do not agree with you on a philosophical level. In fact, there are even people who vote for the same candidates you do who do not agree with your basic ideology that the government should have unlimited control to censor content. Moreover, there are many people who believe the government is not some grand babysitter or pseudo-parent who should be making decisions for people. In fact, it has been argued that the usurption of personal responsibility by "progressive" government programs has been a key cause of the downward trend of society, tracing back to unnecessary government coddling in the New Deal.

That being said, your view is in such the substantial minority that it cannot be allowed to prevail. Tyranny of the minority cannot be tolerated (and if you're not familiar with the concept, I suggest you brush up on your Federalist Papers). In fact, your very position that violence is "obscenity" is fallacious under the Burger test for "obscenity":
The basic guidelines for the trier of fact must be: (a) whether 'the average person, applying contemporary community standards' would find that the work, taken as a whole, appeals to the prurient interest, (b) whether the work depicts or describes, in a patently offensive way, sexual conduct specifically defined by the applicable state law; and (c) whether the work, taken as a whole, lacks serious literary, artistic, political, or scientific value.

Emphasis added to the key element, the prurient interest. There is no sexual arousal associated with violence for the average person.

This brings us to the error in your "for the children" argument. If your goal were to simply keep these games out of the hands of minors unless their parents decided otherwise, I doubt seriously you would face much opposition. No one opposes movie theaters or Wal-Mart for policies of this sort. The difficult aspect is that your goals go well beyond "the children" to keep this content out of the hands of adults, whom are more than capable of making their own decisions, to the point that you eventually want to run many, if not all, game manufacturers out of business. (I'm still unclear if you would start to target less objectionable content, say Smash Bros. Melee, if you succeeded against the most extreme outlying targets.) Anyone who has monitored your commentary knows that you would just assume punish parents who buy T or M games for children under 13 and 17 respectively as you would prevent the kids from playing the games. Ultimately, that is the parent's decision, not yours, to make.

Speaking to your credit card reference, children under 18 cannot acquire credit cards on their own. I will grant you that Dennis's reference is not exactly on point, but the concept is essentially the same. Anyone under 18 with a credit card has been granted said card by someone of legal age, likely a parent or guardian. In that case, the person who has the card has given implied consent that the card be used, and thusly implied consent to purchase the M rated game. Ultimately, the account holder is still in control, and to dictate otherwise would mean that you are preventing people who are 18 from easily purchasing games from online retailers.

You also mention "junior can 'borrow' dad's card." If Junior has asked for permission, then the parent has granted permission to play the game. If Junior has not asked permission, then Junior has more to worry about than the content of the game as he's already committed fraud and identity theft.

Your comment about Best Buy "caving" really has little to do with the present situation. Large companies often choose to settle disputes to discontinue wasting time on what amount to nothing more than meritless nuisances. It it often cheaper and quicker than proceeding with legal action.

Finally, I do take some personal offense to the implication that games have "fried my brain." I've been gaming for nearly two decades, but I also have an undergraduate and two graduate degrees. If you continue to assume that you'll never encounter anyone on the opposite side of the debate with an an ounce of intelligence, you'll continue to have your simplistic responses outdone by intelligent gamers. Eventually, sensationalists in the media will tire of your particular issue, and you will be relegated to a historical footnote.

Wednesday, October 24, 2007

Jack Thompson: Online Game Sales = Deceptive Trade Practices!

I'm certain many of you, the readers, have seen the latest Jack Thompson coverage on Game Politics found here and here. Dennis was quick to point out the FTC provision about credit card ownership being adequate proof of age for online transactions, and the FoxNews contributor was quick to play the free speech card. However, there's an elephant in the room I'd like to address.

Everything Mr. Thompson has said about games applies to movies on DVD.

Anyone with a credit card can go to and pick up Saw I, II, or III (unrated, meaning the more violent cut than the theatrical one) just as easily as you can order Manhunt 2. The same applies to Best Buy, Circuit City, or whatever other entertainment online store you'd like to site. To the same ends, in-store id checks are equally lacking on these (and other) movie titles. While I haven't played Manhunt 2, I can only imagine the graphic content is probably on par with the Saw series, which is exceptionally brutal if you haven't seen the movies. Given that the research on the impact of media is mixed, and that movies have been found to affect young people like games by some studies, why ignore the movie industry?

There can only be a few answers:
1. Mr. Thompson is afraid of the people in the movie industry, as they would likely be viewed as "more powerful" than the game industry.
2. Mr. Thompson is giving undue weight to the unproven link between interactivity and a heightened impact.
3. Mr. Thompson has an unhealthy fixation on and unequivocal bias toward games, which cannot easily be explained.
4. Mr. Thompson's logic is flawed, for some other unexplained reason, so that he either ignores or actually favors violent movies. (Perhaps he is a Saw fan.)

The simple point being: If you would like to go on a crusade against the media, go on a crusade against the media, not one medium.

Ultimately, the decision should still be left to the parents, and the tools are in place for the parents to make those decisions. It is not up to the government, or Mr. Thompson, to make those decisions for society, parents who are failing to perform their duties as parents, or parents who are actively monitoring their child's media consumption. And if anyone is to be held responsible, it should be the inadequate parents, not the game manufacturers, game retailers, or game raters. I can only hope that the news media will tire of this issue soon, or that the American people will begin to realize that playing the "For the Children" card has reached a point where it should be accompanied by automatic scrutiny, as it is rarely actually being used to help the children anymore.

Even More Microsoft Machinima Rule Information: The Revised Rules

Microsoft has finally posted the long promised "Revised" Game Content Usage Rules. They are available here. Now that they are available, what has changed? The short answer is "Not much."

1. The "reverse engineering" rule was re-written to clarify "not normally permitted by the game." As such, things like the Halo 3 Forge or the Halo CE included editors seem to be acceptable.

2. One of the most notable changes is the specific reference to film festivals. You are allowed to enter film festivals, even those with prizes, with machinima. However, this seems like a fine line as there is also a specific note as to contests. Generally, the difference seems to be securing Microsoft's permission for the use.

3. The music/soundtrack/sound effect issue is more resolved, and for Halo fans, Halo 3 is specifically noted as having a usable soundtrack for machinima. This, as I noted in previous articles, falls about in the manner you would expect. The soundtracks are often licensed, and it's more noticeable in some games (i.e. PGR where the tracks are named) than in others. Microsoft seems committed to making notice of this on a game by game basis on the site/forums, which seems like a more reasonable course of action than an outright ban.

4. The phrase "You'll know it when you see it." appears a lot. On the plus side, this leaves a lot of room for interpretation. On the negative side, this leaves a lot of room for interpretation. I suppose we'll find out more as this is enforced, both as to the content and as to "Microsoft approval" on contests.

5. The backstory/lost chapters rule has changed significantly. You are now allowed to tell any story, but if your story contains elements from the game's story arc or surrounding content, then you're providing Microsoft a license to use that content. This is actually a fairly good solution to a real problem, even if it seems as though the machinimist is losing the rights to their "story." There have been many cases (mostly in the film and literary arenas) where someone writes a story, then without knowing, someone else writes a related story. Or, a writer sends a script in, the script is returned and the film company makes a similar movie. This often results in a lawsuit. What Microsoft is trying to avoid is the instance where they already have a story planned, and then one or more machinimists create something similar, Microsoft releases their content and the machinimist sues for infringement. If you want to work in Microsoft's universes, you have to accept that Microsoft may use a similar story, and you're giving up recourse if that happens. On the other hand, if you create something totally original, you've given up nothing.

6. You can let other people build on your work, but it's governed by the same rules as your work. Basically, it's a trickle down license.

7. They actually provide a contact email for people interested in getting a commercial license or for film fesitval sponsors who want approval. The address is gamevids*at*

All in all, while the changes are not unexpected or dramatic, they are all positive and address many of the concerns of the machinima community.

Related Stories:
Past Microsoft Machinima Rule Coverage
Blizzard Machinima Rule

Short Notice

I do apologize for the shortage of content as of late on Law of the Game. My time has been largely consumed by client projects and the development of a new website for The Vernon Law Group. I will certainly have a post directing you to the new site once it is public. In the mean time, though, it appears there will be another week or two of 1-2 posts per week instead of my more usual 3-5 posts per week. Thank you.

Wednesday, October 17, 2007

Mergers, Acquisitions, and Divestments for Game Developers Part 2: Mergers and Acquisitions

Continuing from Part 1, this article addresses the concept of mergers and acquisitions, which are undoubtedly important to the smaller developer. For those outside the industry, or who don't hav a business background, the overwhelming question is probably a simple "Why?" Part of it seems to be a trend in the industry, a trend which has happened in many other industries before. Large game companies (i.e. EA, Ubisoft, Microsoft, Nintendo, Sony) like to acquire up and compning developers for a number of reasons, such as adding fresh thought to the development process, adding new intellectual property to their roster both from the standpoint of the software and the brand that accompanies it, and a broader mass appeal, not to mention the added revenue. From the standpoint of a start up developer, a big studio taking over gives you many of the perks that come with being in a big company, and may remove many of the financial concerns and burdens that occur with a smaller business. Of course, if your small business is more like, say, id software, or if you happen to have a genius like, say, Miyamoto* break off to form a small development company, then you're probably not looking into being acquired.

So, what are mergers and acquisitions? Well, it's two different means to the same ends: two companies combine to form one. A merger is where two companies come in on more equal footing, and merge into one new entity. An example would be SquareSoft and Enix becoming SquareEnix. An acquisition, on the other hand, is typically used to describe a large company absorbing a smaller company, such as when Microsoft originally acquired Bungie. In both types of transactions, the mechanism is controlled by the contract, and often times they all work about the same, other than the respective sizes and bargaining powers of the entities. Hence, Mergers and Acquisitions (or M&A, as they're often called in the legal and business worlds) are typically discussed as a single concept.

This brings us to the basic workings of the concept. Generally, this starts either by one company deciding it wants to acquire another, or two companies mutually deciding they're be better off joining forces. From there, the deal is negotiated through, once again, the contract. There may be some additional regulatory issues if there's a cross-border transaction or if both companies are publicly held, or if the new company would result in some sort of a monopolistic anti-trust monster, but generally, there won't be too much government interference to worry about, unless a location happens to require particular permits. There is also always a tax element to pay attention to, but that applies on both a local and national level (as well as a state level in many places). Once all of the details are ironed out in negotiations, there is some sort of closing to sign the documents, and then the companies are re-assembled according to the terms of the agreement. As this is such a flexible process, given the flexibility of the agreements and the dramatic differences between potential parties, this is another occasion where tips are more appropriate than a guide.

1. Keep your position in perspective. Remember that no two transactions are alike, and your place respective to the other party in the deal may reflect directly on your bargaining power. If it's a merger, you probably can't force the other party into too many different directions. In an acquisition, I tend to believe the little guy often has more power than the big guy. Typically, in an acquisition, the big guy wants the little guy, and the little guy may be able to get a few extra perks because of that desire. Of course, individual situations do vary.
2. Each side needs independent counsel. Much like I stated in the previous part, everyone needs to have their interests represented independently. More than that, independence removes the appearance of impropriety in case the deal falls apart down the road.
3. Organization is the absolute key. Negotiations in these deals can, and do, drag on for months at a time. Without a pretty thorough organization, things will be overlooked. Your legal representation should handle organizing the documents and keeping you apprised of the word for word changes in redlined versions, but checklists help with the bigger picture.
4. Remember: Contracts are flexible. When it comes right down to it, most any outcome can be written into the contract. If you want to maintain separate offices, that can be done. If you want salaries locked in for 5 years, that can be done. If your big sticking point is making sure there's a frozen yogurt machine in the breakroom, that can be addressed too.
5. Build in a mechanism to resolve future issues. As much as every attorney wants to be sure the document accounts for every contingency and every alternative, inevitably something will come up. If a way to resolve issues is built into the contract, hopefully it will keep the deal from falling apart over unresolved problems, be they with healthcare or office attire or the number of action figures allowed in a cubicle.

In the grand scheme of things, M&As are pretty routine. They have been happening in business forever, and there are plenty of professionals who have significant background in these transactions. Now that the game industry is one of the biggest kids on the block, more traditional business issues will continue to arise in the industry and be well publicized, just as the recent events noted in Part 1 were.

*Note: There's no indication this would ever happen, but he's a recognizable example of the concept. This is not meant to create some grand rumor about a new studio in the works.

Monday, October 8, 2007

Bragg v. Linden Settles, Still No Virtual Property Precedent

In an astonishingly anticlimactic ending to what could have been the landmark first case on virtual property, Bragg and Linden have entered into a confidential settlement agreement. And while I wouldn't hold my breath waiting for the agreement to be leaked online, even if it were, there would still be no precedent set on virtual property from this case. I imagine it's only a matter of time until some other case does just what many of us expected from Bragg v. Linden, but we will have to wait and see what case does just that.

Previous Law of the Game Coverage can be found here.

[Via Virtually Blind, Game Politics]

Friday, October 5, 2007

Mergers, Acquisitions, and Divestments for Game Developers Part 1: Divestment

Given the recent news in the corporate realm for developers Bizarre Creations and Bungie, I thought it would be a good time to discuss some basics of corporate transactions. Accordingly, this will be the first of two articles on Mergers, Acquisitions, and Divestments. Given that today is Bungie's "independence day," I thought it would be appropriate to start with divestments, even though the industry seems to have far more mergers and acquisitions.

The basic concept is a spin off. An element of a company, for one reason or another, is pushed into an independent entity, or to another acquiring company. In the event of the latter, the points on mergers and acquisitions are equally relevant.

It would be almost impossible to outline every element of a divestment, and no two divestments are identical just based on the differences between companies. Rather than try to explain the process in depth, this article will give a short outline and some points to keep in mind if your group is being divested.

Generally, a divestment starts with a decision from some level of the corporation that the group needs to be spun off. Once the decision is ratified by the necessary people, then a new entity is set up to move the group into. The assets of the group are then sold to the new entity, and someone is appointed to be the head of the entity. The staff is then re-hired to the new entity, but typically all of this happens in a very short period of time with essentially no lag between the old and the new. Often, the original parent takes an interest in the new entity in exchange for the things being given to the new entity. The alternative is generally a promissory note of some sort, whereby the new entity will pay off the things they're getting from the old company.

Some important points to consider if your group is being divested:
1. Don't panic. Don't take it personally. Ultimately, this is just a business decision, and it's hard for a lot of people to separate "business" and "personal." If you treat it as a business decision and stay calm, it will make the transition a lot easier.
2. Get independent counsel. Odds are that a company large enough to have a divestment usually has an in house counsel or a law firm they do most of their deals with whom you've met or been used to dealing with. No matter how much you trust them, you want your own, independent counsel from an unrelated firm who has experience with transactions. When it comes right down to it, you want to have someone who is in your corner and has no possibility of having a divided interest. There is really no scenario under which this is a bad idea.
3. Make sure you get the important stuff in writing. Promises that are not in writing are generally not going to be honored. That is the unfortunate truth. However, if you took point 2 to heart, you will likely have an attorney you hired saying the same thing. If they promise you can take your really popular game series with you, from engine to trademark, make sure it's in a signed writing.
4. The whole thing is governed by the contract. This relates back to point 3. Typically, the writing in question is going to be the contract itself or an exhibit to the contract. There are really two important things to remember here:
1. If it's not in the contract, it's not going to happen.
2. A contract is an infinitely flexible document, and pretty much anything you want can be drafted into it, given a little work and, in some cases, creative thinking.

5. Make sure to resolve everything. One thing counsel should be able to offer you is experience, and that experience means most every little detail and strange contingency should be addressed in the contract. Keep in mind there is more to deal with than just the IP you created in the company. Things like what happens to employee health benefits, office furniture, parking spaces, etc. are all important. Moreover, if you're keeping the same office space, there will likely be a number of lease issues to deal with, or if the company owns the building, a lease will need to be drawn up. Even issues like interim working capital may be in the agreement, if separate funding is not occurring. Because there are so many details and contingencies, point 2 is really relevant from the time the decision is made since even the location and/or structure of the new entity can have different effects on things like taxation.

All in all, transactions like this occur daily in the corporate world, and so the basic concepts apply to all industries.

Two comments to the Bungie deal specifically:
1. If you're expecting the Bungie IPO to follow shortly, it seems unlikely in the immediate future given the choice of an LLC as an entity. Not to say it couldn't happen, but the choice of an LLC seems to suggest that isn't an immediate goal.
2. This might give more viability to the Halo DS theories.

Thursday, September 27, 2007

The Halo 3.5 Conspiracy Theory

As an almost complete departure from my normal content, I wanted to share a theory I had about Halo 3. This post contains some very mild spoilers, so if you're still not a good way through the campaign and trying to avoid EVERY spoiler, you may want to wait before reading it.

Spoiler Dead Space

Anyone who's played most or all of the campaign solo knows that you only play as Master Chief, and the Arbiter is around as an NPC some of the time (co-op is different, but I believe that that's placement of convenience rather than story cannon). In fact, the "dropping" of the Arbiter story line has been complained about in a number of reviews. This leads me to the theory:

There will be a Halo 3.5. Or Halo 3-2. Or Halo 3: Directors' Cut.

The storyline will basically be the Arbiter's cannon story during the activities of Halo 3, filling in all the gaps of absence in the Chief's escapade. And after all, why not? It would only be addition to the story, which would take a comparatively small development time. It might even be able to be sold as downloadable content off the marketplace. And it would make even more money off negligible changes to the Halo 3 engine. And then they can re-sell "Halo 3: Game of the Year Edition" with the Halo 3 and Halo 3.5 content. Yes, it's a very Bethesda-esque route (much like Oblivion has done), and it's one Bungie avoided in the past (given the theory that Halo 1.5 would be released with Xbox Live multiplayer). But it could happen, and that's just my theory.

Tuesday, September 25, 2007

MMOG = Massive MoneyLaundering Online Game?

A point I brought up in my 2005 paper, which was recently touched on by Symantec according to an article, is the possibility for money laundering through MMO games. The idea is simple enough: push money through virtual transactions to lose the connection to crime. According to the report:
"... a criminal enterprise could open several thousand MMOG accounts. Each could be used to trade with other players in the purchase or sale of in-game assets, the funds from which would ultimately be withdrawn from the accounts. Since thousands of accounts may engage in millions of transactions, each with small profits or losses, it would be difficult to trace the true source of the funds when they are withdrawn. These transactions can be conducted worldwide without the oversight that typically accompanies international bank remittances. In fact, in February 2007, China's central bank and finance ministries called upon companies to stop trading QQ coins and virtual currencies, presumably to curb the unregulated exchange of currency."

I estimate that Symantec's solution to the problem is with greater security and client verification. However, a more simplistic approach would be taxation on virtual revenue, even if the concept is opposed by players. Think of it this way: Right now, income from sales in MMO games is supposed to be reported as ordinary income. Many people neglect to do this whatsoever. If, instead, there was automatic reporting to the IRS (or other country's tax agency, based on the residence of the player) of income derived from MMO sales, then the tax agency would know to expect payment from said individuals. Moreover, it ties a person to the MMO account, eliminating the possibility of spreading one person over 100 accounts and going unnoticed. Of course, this would have to be based on a cash out value, as has been suggested before by both myself and Bryan Camp. In any event, the process of losing money in the transaction generally makes different things less appealing as money laundering vehicles, and thus virtual taxation could be one answer to the problem.

[Via Kotaku]

Friday, September 21, 2007

Virtual Worlds Become Virtual Nations?

An interesting piece was recently posted on Virtually Blind by Israeli attorney Jonathan J. Klinger. The crux of his argument was:

For example, earlier this year, Michael Carlton, CEO of online sportsbook Victor Chandler, was arrested in Israel. An Israeli court asserted jurisdiction over Carlton, a foreign citizen, and stated that as long as a portion of the illegal activity (here, gambling) occurred in Israel, there is no need for universal jurisdiction, and the website operator is subjected to the Israeli law (State v. Carlton, Hebrew decision). The court stated that it was in Victor Chandler’s responsibility to bar all communication from Israel since the activity they offer is illegal for Israeli citizens to participate in.

Using the same rationale, any employee of Blizzard or Linden Lab could be subjected to the Israeli penal code, as they are allowing illegal conduct (under Israeli law) to take place on their servers. Blizzard could face harsher liability as it distributes World of Warcraft actively in Israel, while Second Life is only available for download.

The only solution to these legal problems is to separate players according to countries, or even states (as some state laws in the US differ regarding pornography and violence). Any other solution may cause a conflict of laws, and subject the industry to liability twice: the first is the constitutional tort, where legal expression is barred though there is no local legal reason to bar it (e.g. ageplay in the U.S.) and the second is potential criminal prosecution by another state which may prosecute company leaders for user actions that are actually legal in the home country of the company.
I, however, do not agree. Moreover, I believe the precedent set by Isreal should be looked at with disdain by the legal community. Take note here that I'm departing from an actual analysis, which the above quote limits itself to, and moving into theoretical alternatives that would generally be beneficial to all those involved.

I want to begin with a meta-theoretical statement. The purpose of virtual worlds is to bring people together. As such, the solution that either people must be divided on geographical lines or game providers must be subjected to liability is a pure frustration of purpose. Of course, the concept of making a "virtual world" an actual nation is equally blasphemous. In fact, it seems at though negative consequences could easily result from creating "independent nations" within nations that exist on servers. So, what solutions are available to the problem? Clearly the social conscience of a person in Texas cannot be made to match a person in Isreal or Japan or France. That idea is equally impracticable, and in the same vein, the pipedream of creating "universal rules" to govern the internet is impracticable. Moreover, the idea that we allow complete free speech to govern our online worlds only gives rise to the most deplorable of content, as child predators would take refuge under the "free speech" of the digital world. There is also the final consideration that, ultimately, the server space is private property. The Grid belongs to Linden. Azeroth (all of the various iterations on the various servers) belongs to Blizzard.

So where does this leave possible solutions? Governing in-world conduct being left to the worlds owners, how should jurisdiction be handled? I think it is time for a paradigm shift an analyzing jurisdictional elements with virtual worlds. Put simply: Server location dictates jurisdiction. While this idea won't bode will with the "minimum contacts" proponents out there, the theory does have a logical base. Ultimately, the activity occurs on the server, not at the user end. I can click buttons all day long on my personal computer, but without the server end, there is no net effect. As such, the server is the critical component. This is the basis for a client-server model, and this is, in my opinion, how it should be treated under the law. This provides the maximum certainty for the developer.

This, of course, leaves the issue of performing an activity illegal in one country on a server located in another. Ultimately, issues like these will have to be resolved by the governments, rather than putting the developer in the line of fire or forcing the defeat of the purpose of virtual worlds. So, for example, if a 3rd world nation hosts "Child Porn: The Game," it will be up to the international community to pressure that country to abolish the game. (Moreover, with something as pernicious as child pornography, local governments could likely track subscriptions and users in order to find offenses in the local countries. I can't say I favor invasion of privacy, but I also can't say I oppose using any means necessary to remove dangerous predators from the streets.) On the other hand, with something as hotly debated as online gambling, rather than leaving the user and developer in difficult and awkward positions, it would have to be resolved between nations. Ultimately, either the moralists would win, or the simple positive economics would. In either case, the burden is on the government, or indirectly on society as a whole, rather than punishing the developer or the user based on what are largely ambiguous lines.

Will this paradigm shift happen? It seems doubtful given the overwhelming analysis of jurisdiction to the contrary. However, I think that we have reached a time in which the old analysis need to be seriously re-examined based on the dramatically different world and virtual worlds that technology has created.

[Via Virtually Blind]


I thought many of the readers out there might be interested in the Metanomics 2007 programs going on in Second Life. They are hosting a number of speakers, including my former professor Bryan Camp from the Texas Tech School of Law.

Those interested in the study of Metanomics should try to attend some of their seminars. For the uninitiated, their FAQ gives the following overview:

“Metanomics” refers to the study of the business and policy aspects of the “metaverse” of virtual worlds. Metanomics can focus on issues arising within virtual worlds, such as how developers manage the economy of a game world (like World of Warcraft), or how residents of virtual worlds manage and regulate business. Metanomics also includes the study of how real-world businesses can use virtual worlds as part of their strategy, and how real-world law and regulation might apply to virtual-world activities. Finally, metanomics includes the use of virtual worlds as laboratories in which to study real-world business or policy issues.

Metanomics can take an "immersionist," "augmentationist," or "experimentalist" perspective. Immersionist metanomics attempts to understand business and policy issues from entirely within the virtual world in question, with little reference to the outside world. Augmentationist metanomics views the metaverse as simple an addition (augmentation) to the real world, and examines how its appearance affects business practice and regulatory policy. Experimentalist metanomics uses the metaverse as a laboratory in which to conduct controlled experiments that can tell us something new about the real world (such as eliminating capital gains taxes actually does increase investment and productivity).

[Thanks to Robert Bloomfield for the tip!]

Monday, September 17, 2007

Oklahoma Video Game Law Defeated

The Video Game Industry can now add Oklahoma to their list of victories against game laws, as an opinion was released today in Entertainment Merchants Association v. Henry, Case No. 5:06-cv-00675 (W.D. Okla.). The opinion grants the plaintiff's request to have the enforcement of the act permanently enjoined.

The opinion makes it quite clear that there is no grounds to support this law. For those unfamiliar, the Oklahoma version of the law placed a $1,000 fine on any dissemination of video games with "inappropriate violence" to minors. This language even included a parent giving a game to a minor. The opinion made a few distinct points on the issues at hand:

1. Video games are protected speech. No particular peculiarities of the medium nor amount of user control can change this legal fact.

2. Regulating violence is a content based restriction on free speech, and therefore presumptively invalid and subject to strict scrutiny. Violence, unlike sexual content, is not regulating obscenity.

3. Video game violence does not compel youth to commit violent acts, nor is there "substantial evidence" of a link between video game violence and youth violence. To quote the opinion on the latter, "Beyond Defendants’ generalized statements, there is a complete dearth of legislative findings, scientific studies, or other rationale in the record to support the passage of the Act. Defendants’ argument that “common sense” dictates that playing violent video games “is not good for children,” and that the onus is on Plaintiffs to prove otherwise, completely fails. (See Defs.’ Resp. at 9.) The First Amendment does not allow prohibitions based on “common sense.” See Kendrick, 244 F.3d at 578; Granholm, 426 F. Supp. 2d at 663-64."

4. The standard on violence in this act was so very vague that it was fatal to the act itself, in addition to the numerous other flaws pointed out. "The Act “does not satisfy the rigorous constitutional standards that apply when government attempts to regulate expression. Where First Amendment freedoms are at stake . . . precision of drafting and clarity of purpose are essential. These prerequisites are absent
here.” Erznoznik, 422 U.S. at 217-18.

The question from here is whether the government officials in Oklahoma see fit to continue to waste taxpayer money and the court's time in addressing this issue, as California seems determined to do. I have long supported the proposition that parents should be controlling their children's media consumption, not the government, and this seems to be another step in the right direction.

Tuesday, September 11, 2007

The Blizzard Machinima Rules

Following in the footsteps of Microsoft, Blizzard unveiled their own "Machinima Rules" late last week. The approach taken by these rules, however, is the complete opposite of Microsoft's approach in my opinion.

First and foremost, their primary concern (like Microsoft's) is that the use isn't commercial. Rather than going the strictly non-profit route, Blizzard essentially gives the stamp of approval to the method that Rooster Teeth made popular (even though Rooster Teeth has no Blizzard-derived machinima at this time). Specifically, there has to be a free version of the video available, even if there is a pay version with, say, better download speed or, I assume, in higher resolution. There's also no restriction on donations.

Second, there is no restrictions on elements of the game. You're either allowed to make your movie or not. So, the sound effects and background music appear to be fair game.

Third, Blizzard has placed a pretty harsh, but simple, content restriction that all movies keep within the "T (Teen)" or "PG-13" type content level. (Blizzard specifically cites "T," but it seems relatively safe to assume that that equates to a PG-13 rating.) While this is much stricter than Microsoft's restriction, it's also a fairly established bright line. According to the ESRB, "Titles rated T (Teen) have content that may be suitable for ages 13 and older. Titles in this category may contain violence, suggestive themes, crude humor, minimal blood, simulated gambling, and/or infrequent use of strong language."

Fourth, Blizzard explicitly allows the use of movies in various contests, but a license is required. However, it seems that as long as the content rules have been followed, a license should come with little resistance.

Fifth, educational use is specifically allowed. I find this comforting, but many people would argue that "fair use" would allow educational use regardless. "Fair use" can be read narrowly or broadly, and I think the clarification here does a lot of good in that regard.

Sixth, they place a 10 second restriction on sponsor inclusion. This seems to go toward the "no commercial use" ends more than anything, and I expect few will have a real problem with this restriction.

Finally, they make no mention of a commercial license per se, but do give a specific contact e-mail address for questions.

With Microsoft and Blizzard on board, I am left to wonder how long before other companies follow suit. I also wonder if Microsoft may follow some of Blizzard's leads in the revisions of their rules which are supposedly being drafted. In any case, this is generally good news for the various WoW machinimators out there.

[Via WOWInsider, Machinima for Dummies]

Microsoft Machinima Rules Updates

Just a few, new key updates:

1. There will soon be a standard contact form for commercial licenses.
2. There has been some mild clarification on reverse engineering, but still nothing definite. In short, if you can extract assets without doing anything illegal or abnormal to the game, it may be fine. A more detailed description is available in the original post.

[Via Machinima for Dummies]

Friday, September 7, 2007

The ESRB "Review Process"

A recent PC Magazine interview sheds some light on the ESRB rating process, which leaves a lot to be desired. While I am a firm proponent of industry self-regulation, I have often been puzzled at the ratings some games get. For example, when I saw that Smash Bros. Melee was rated "T for Teen," my immediate thought was "What next, Barbie's Mystic Horse Adventure 7 being rated M?" For those not familiar, while Smash Bros. is a "fighting" game, it's no more violent than a typical Saturday morning cartoon and contains no blood at all, whatsoever. In any event, now that the ESRB has stated how the games are "rated," it makes more sense.

To summarize the interview, game publishers send in a DVD of selected scenes and a lot of paperwork to get the game rated. In fact, the process is outlined in detail on the ESRB website. The point being that the ratings board never plays the games. Yes, you read that right. The people who rate video games do not play the game they are rating. It would be the equivalent of basing movie ratings on a form and a trailer. Context would be wholly absent.

I can see the logic the ESRB is using. First, playing the games would require a release candidate, which could delay the process. Second, it would take their "trained reviewers" much longer to play through the games in full than it would to review some paperwork and a DVD. Third, and finally, it's entirely possible that some, if not a large section, of the reviewers may not be able to complete the games at all. Moreover, the system they have going has rarely been faulted (see Hot Coffee).

On the other hand, I get the impression that ratings for media content are more accurate when the reviewer takes the content in context and on the whole, rather than seeing mere snippets. Perhaps the better approach is to have the ESRB hire "designated gamers," and have the reviewers watch the game being played for some period of time in addition to the forms and DVDs in order to contextualize the game. Perhaps then Smash Bros. Melee would have been rated a more appropriate E or E10+ rather than T. On the other hand, perhaps the powers that be would just assume most games be rated a tier higher than the content actually is, either to give parents more discretion or to insulate themselves from complaints. In any event, with the recent Manhunt 2 controversy, I expect that this issue will likely be blown well out of proportion by certain people in the media and politics. If anything, it creates a harsher rating system, not a weaker one.

[Thanks Jonathan!]

[EDIT: Reader Andrew Eisen, in the comments, points out: "Additionally, ESRB staff, including raters (time-permitting), play the final version of both hand-picked and randomly selected games to verify that all the materials provided by the game's publisher during the rating process were accurate and complete."

My thought is that, while true, and a new addition to the process, it still isn't for the purpose of actually rating the game, or putting elements in context. It's just like a double-check once the game is rated, and only occurs sometimes rather than on all games rated.]

Thursday, September 6, 2007

Skill, Chance, and the Unlawful Internet Gambling Enforcement Act

Prior posts on this site about and Kwari have both raised some eyebrows about my particular interpretation of the UIGEA as it relates to games of skill and games of chance. As such, I thought this would be an appropriate time to discuss both types of games, and the reasoning behind my conservative approach to the UIGEA.

Put simply, there are three types of games in the world: games of pure chance, games of pure skill, and games somewhere in between that employ both elements of chance and skill. There are readily available examples of all of them. Lotteries, roulette, and bingo are games of pure chance. All in all, no matter what system you think you're using to select your winning numbers, it's pure luck. You cannot affect the odds of which number will be picked. To be a true "pure" skill game, there must be no chance involved whatsoever, and to that end there are very few, prime examples being chess, checkers, and othello. In any of these games there is no chance element as every move and rule is pre-defined and determined by the rules. After all, rolling a dice, drawing a card, or spinning a spinner are all "chance" elements, even if they are not always treated that way under the law. Between the two extremes lay a spectrum of other games with varying degrees of chance and skill weighing upon the outcome, be they board games or casino games or video games. As such, some games which can be played in either way to be classified as one or the other. Blackjack is typically lumped into the games of chance, even though a card counter would argue otherwise. Poker has been classified both ways. Competitive board gaming, such as Scrabble or Monopoly, would likely be classified as skill since the chance element is so minimal. Of course, these interpretations also vary by county, and the major difficulty with the internet is addressing these games on a multi-national level.

This brings us to the difficult proposition of classifying video games, the vast majority of which I believe fall into the "in between" category. Granted, arcade games are likely games of pure skill, Galaga or Donkey Kong or House of the Dead for example. However most anything else has some chance element to it in a multiplayer context, even if it is minor. The most relevant example would be spawning. In a FPS that has respawning, spawns are the luck of the draw. While many people claim FPS games to be pure skill, there is no amount of skill that can alter the result of spawning in someone's crosshairs. Similarly, in any RTS map, say Starcraft, that has unequal resources at the starting point, there is an element of chance. In a similar fashion, the terrain from a given spawn point may give some players an advantage. The most often cited counter argument is Counter-Strike, where there is no real "spawning." However, even Counter-Strike can have a random element to it if either team is filled out with random players. Even the most skilled players will be severely disadvantaged round after round if their team is arbitrarily filled up with an inept hodgepodge of other gamers. It would be the equivalent of filling out an NFL team with random fans who happen to be in attendance at the game and making them play. Thus, only in the event where both teams are controlled can Counter-Strike be a true "skill" game.

Skill games are not defacto illegal under the UIGEA. In fact, it's rather ambiguous on that matter. When laws are ambiguous, the courts are free to look at elements like legislative history, and one of the key issues the UIGEA hoped to address was online poker. As such, I have been erring on the side of caution in my analysis. Why? Poker has fairly equal elements of chance and skill (skill which includes reading your opponents, an element absent from Blackjack). If poker is covered, then arguably, anything short of a pure skill game could be lumped into the UIGEA if the courts so decide (absent the Skill Games Protection Act). Moreover, the overwhelming sentiment in the US congress seems to be anti-gambling, and thus I would be inclined to surmise that future legislation or interpretation would follow this same thought process. Accordingly, most of my articles have erred on the side of caution in pointing out chance elements that could push certain games into the UIGEA domain. As such, the articles reflect the direction I think the law can go rather than how I would personally interpret it or how I hope it would go. I hope that serves to clarify the two above referenced analyses.

Friday, August 31, 2007

Kwari: The First True "Gambling" FPS

Your "buy in" is the purchase of ammo. Your health bar is your wager. You lose money for damage taken, and gain money for damage inflicted. This is the basic concept behind the first true "gambling" First Person Shooter, Kwari, and it seems like a mild adaptation of the basic concept in poker to a completely new game and genre. This is truly a game of skill that you wager upon.

However, while the concept is a step beyond the model employed by sites such as, the legality is still questionable in the United States. As I've pointed out before, the Unlawful Internet Gambling Enforcement Act ("UIGEA") was created, at least in part, with online poker particularly in mind. Hence, the Skill Game Protection Act ("SGPA") is proposed to specifically exempt games for skill, which includes poker, from the UIGEA. However, the SGPA hasn't passed, and so therefore it is reasonable to assume that the UIGEA still encompasses games of skill until the courts say otherwise, even though the UIGEA is quite ambiguous on the matter.. As such, even though Kwari is purely a skill game, it may be covered. But, the overwhelming ambiguities in the UIGEA may provide Kwari with a loophole, or the SGPA would almost certainly exempt Kwari from the UIGEA.

There's also a bigger tax implication for players. If you are a master of Kwari and can walk away with thousands of dollars a month, is it ordinary income or gambling winnings? I think the argument can certainly be made that winning in Kwari is no different than what, say, Tiger Woods wins in golf or what any other professional athlete is paid. On the other hand, poker winnings are gabling winnings in the eyes of the IRS. The classification of Kwari winnings could easily go either way, and mean a significant difference in taxable income depending on the result.

[Via Joystiq]

Revised Microsoft Machimima Rules Coming "Soon"

It would seem that more and more people in the blog-o-sphere are joining the Microsoft Content Usage Rules coverage, most recently the EFF and the blog for the book Machinima for Dummies. Both of these parties were privvy to a conference call sometime yesterday in which it was revealed that Microsoft is updating the Content Usage Rules (the "Machinima Rules"), and revised rules should be made public "soon." I personally hope that these rules address some, if not all, of the major issues I have pointed out in my coverage of the Machinima Rules. Once the new rules are posted, I will post a revised analysis.

For more information see my previous coverage of the "Machinima Rules":
Microsoft's New Content Usage Rules: A Small Step for Machinima
New Microsoft Machinima Rules Revisited
Microsoft Machinima Rule Podcast
More Details on the Microsoft Machinima Rule

Thursday, August 30, 2007

Chinese Editorial Calls for Increased Regulation of Virtual Goods

An editorial on China View has some rather harsh words for the online gaming industry in China, specifically for those in the "black market" of virtual goods. The sibling to the gold farming issue in China is the theft and resale of virtual goods.

The article brings up a number of interesting points, but also seems to confuse the "virtual theft" concept with the "gold farming" one, although both issues have been met with cries for regulation, along with the already regulated "underage gaming" issue in China.

The editorial, however, leaves me with mixed feelings. On the one hand, it is always positive to see people outside the gaming establishment finally realize and accept that these virtual goods, be they land in Second Life or an Infinity Blade in World of Warcraft, do have a "value." Moreover, the idea of protecting players from theft is definitely a positive one. On the other hand, the idea of additional government regulations never seems to be the most appropriate approach. While this could be in China rather than the US, I still can't help but feel the regulations are inappropriate.

The major difficulty would be the near impossibility of government alone policing those systems, but on the flip side, the game providers lack any real enforcement tools if and when they can track virtual wrongdoings. The logical outcome would be a necessity for cooperation between government and game providers, but I think the mandates should come from the game providers, not the government. After all, the government does not seem to, on a basic level, understand these games. This would only lead to ineffective legislation that would breed resentment in the gaming community or lead to a downward trend in the games overall.

Regardless of your stance on game regulation, the wisdom of self regulation is evident in many industries, from law to medicine. In this case, where a real crime is involved, similar cooperation has worked for other industries. Of course, only time will tell if any actual regulation is attempted, but given the trend to monetize virtual worlds, some sort of "law enforcement" is almost inevitable.

[Via GamePolitics]

Wednesday, August 29, 2007

More Details on the Microsoft Machinima Rule

A Microsoft attorney who goes by DonkeyXote has posted a discussion of the Microsoft Content Usage Rules in his blog. Before reading my continued commentary on the issue, you should probably read his five clarification points.

The clarification process, I can only imagine, will continue for quite some time as new issues continue to pop up from the Machinima community. There are a couple issues that specifically need some attention in the near future.

1. The Universe Expansion Rule
I suppose the real question is how remote is remote enough to be allowed? While I can understand the point DonkeyXote makes in his post, it doesn't speak to the machinimist trying to develop his story. It was a point Laird and I specifically discussed in the recent podcast. For example, I'm certain making use of any of the game's characters is not allowed. But what about a story going on in the same timeframe in another part of the universe? What about a parallel universe? Do you need to re-name all of the character models? Speaking to a more practical level, is the Red vs. Blue storyline remote enough? Sponsors vs. Freeloaders? Halo Unyielding? It would be much easier on the community if a clear framework were applied to this rule.

2. Reverse Engineering/Modifying the Engine Rule
The rule itself is vague enough that "reverse engineering" could involve modifications made using, for example, the tools in Halo CE, Halo 2 Vista, or what appears to be in the Halo 3 Forge. While I would anticipate that this isn't "modifying" the engine, I think the community would feel more comfortable if Microsoft said that these things were allowed.

3. The Contest Rule
Are all contests disallowed? And if so, what is a "contest?" Is entering a video in the YouTube Debates a contest? You do have the basic elements of a "contest," but the prize has no monetary value. A clarification as to the term contest (for example, that it has to have a prize worth $XXX) would likely be quite helpful.

All in all, it is nice to see one of the drafters of the rule address the issue in his blog, and hopefully he will continue to field questions like these as they arise.

Monday, August 27, 2007

A Tale of Two Worlds: New U.S. Gambling Laws and the MMORPG

Back in late April I finished an article titled A Tale of Two Worlds: New U.S. Gambling Laws and the MMORPG. That article has been published in the now available August edition of the Gaming Law Review. I must admit that some of the substantive MMORPG analysis is a bit simplistic (mostly in defining the volume of real money transactions as they relate to World of Warcraft), in part due to to audience considerations, but the legal analysis is quite thorough. While my SSRN revisions are still under review, the paper is available to those who may have access to the journal through academia or other means.

For those interested, here is the reference information:

A Tale of Two Worlds: New U.S. Gambling Laws and the MMORPG
Mark Methenitis
Gaming Law Review. Aug 2007, Vol. 11, No. 4: 436-439


Full Citation:
Mark Methenitis. Gaming Law Review. 2007, 11(4): 436-439. doi:10.1089/glr.2007.11404.

Gaming Law Review, Volume 11, Number 4

[UPDATE: Just to clarify, the simplification was in the following regard: I assumed, for the purpose of the paper, that Blizzard's ban on real money transactions was completely effective, rather than just mostly effective. The concept of the "black market" complicated the comparison to a high degree and would have easily doubled the length of the paper. It also plays to a greater assumption that Blizzard will, in all likelyhood, continue to crack down and may eventually wholly eliminate real money transactions, even those on the "black market" type level.]

Wednesday, August 22, 2007

HR1201: Freedom And Innovation Revitalizing U.S. Entrepreneurship Act of 2007 (The Modchip Law)

A good friend of mine has been following the mod chip issue, and reminded me of a bill that I thought had died in Congress. In reality, the Freedom And Innovation Revitalizing U.S. Entrepreneurship Act of 2007 (HR 1201 in the 110th Congress) is in committee. Why is this bill important? It would soften many of the copyright restrictions faced in the electronics world, most notably, it would seemingly take mod chips out of the Digital Millennium Copyright Act's jurisdiction.

There is one important part of this bill.

"(g) Certain Hardware Devices- No person shall be liable for copyright infringement based on the design, manufacture, or distribution of a hardware device or of a component of the device if the device is capable of substantial, commercially significant noninfringing use."

A mod chip would seem to fall into this exception, since, as noted previously, there are noninfringing uses for mod chips. Whether homebrew software and region unlocking, among other uses, are "substantial" and "commercially significant" remains to be seen. However, if this bill passes, then it will undoubtedly be tested in that regard.

Also worth noting was the previous list of allowed uses of circumvention technology, found here. It would seem some in the gaming community have presented game related exemptions, but the proposals have all been denied (see the rejected proposals at the bottom of the document). It would seem that if the relevant game consumer groups can get valid proposals with adequate evidence before the next decision is made, then perhaps circumvention for the purpose of region unlocking may be added to the list. It is at least a possibility.

[Thanks Geonex88]

Microsoft Machinima Rule Podcast

Last evening, I was invited onto a podcast to discuss Law of the Game and the new Microsoft Machinima Rule. The podcast is ClassyDude's Emporium of Chat, found here.

The podcast's description is here, and a direct download of the episode is here. It's also a news item on Halo.Bungie.Org.

I'd also like to offer one clarification. Toward the end of the podcast, the topic of receiving a letter from Microsoft came up. I think I could have more clearly explained that the person you are being contacted by is probably a lawyer, and having your own representation is highly advisable in regard to contacting Microsoft about any letter they send you. However, if you cannot afford a lawyer, you can choose to contact them yourself, but be aware you are talking to Microsoft (and probably a lawyer) and that you should be apologetic and polite without incriminating yourself.

Anyway, the podcast is a bit lengthy, but if the Microsoft Machinima Rules are of interest to you, then I think you'll enjoy it.

Tuesday, August 21, 2007

New Microsoft Machinima Rules Revisited

As I've been monitoring the reaction to the new machinima rules Microsoft put out last week, I'm seeing far more negative doom and gloom reactions than I had anticipated. As such, I thought it might be an opportune time to address a few of the more common reactions I've seen to hopefully put the rules in perspective.

1. It was legal before, and now they're punishing us?

Surprisingly enough, what you were doing before was actually illegal. Specifically, it was copyright infringement. This isn't nearly as nebulous as re-skinning an engine, an issue I plan to go further into in the third part of my copyright discussion. You are using the game, exactly as it was, to create a new work. This new work is a derivative work, and creating a derivative work without a license is, in fact, copyright infringement. Microsoft was simply not enforcing their rights to that point in most cases. Simply because something happened does not mean it was legal.

2. This is the end of machinima.

This is by no means the end of machinima. In fact, it makes the whole operation far more clear cut for people who use those Microsoft games in their series. It just means that more creativity will have to go into the series to avoid the "expanding the universe" rule, and more audio production will be involved to make up for the sound effects. Moreover, these rules only apply to the Microsoft games on the list. If this is really an issue, use a different engine. Much like I noted in the SouthPaw Manifesto, if you don't like something, don't buy/use it. Of course, I think you will be hard pressed to find a game developer, at this point in time, who has said "Please use my game to make as many videos as you like, and feel free to profit on them as much as you can."

3. No wonder Rooster Teeth ended Red vs. Blue. They must have had advance notice!

I really can't speak to whether Burnie and crew had advance notice, but I am fairly certain Rooster Teeth has a commercial license. You might have noticed a little one sentence reference to "commercial license" in the guidelines. A license like this will give you the freedom to do whatever you like within the scope of that license. However, there are two caveats: 1. You have
to get a commercial license for your production group; and 2. Microsoft doesn't exactly hand them out like candy. In fact, the only license that has been granted which I know of is the Rooster Teeth license. This does not mean that other licenses won't be granted, but they are not a simple thing to get your hands on. So, if you think you can get one, you need to ask Microsoft, and then negotiate the terms accordingly. Otherwise, you need to follow the new rules.

4. It is impossible to produce anything under these rules, especially without accepting donations.

If this were 2003, I would probably agree with you that the donation requirement essentially negates the concept of online machinima as the distribution costs will likely bankrupt you. However, YouTube at least makes it possible to get your content out there. I think many machinimators need to ask themselves: Am I in this to produce something, or am I in this for the money? If you really want to get your material out there, it can certainly be done. Yes, you have to pony up the money for the hard materials of your hobby: PC upgrades, games, systems. However, the distribution can now be done for free. And the fan community? Free message boards are a dime a dozen.

If you can produce something truly great, the rest will fall into place. I would imagine if Microsoft found some starving machinimist who had a brilliant series running on YouTube or GameTrailers or some other free site, they would be far more likely to grant a commercial license based on the existing content than they would be to just another face in the crowd. Actors, musicians, writers, and other artists don't just become instantly wealthy. They have to work at their art. Just keep that in mind as you're working on your next project, without the donations.

5. This is a huge step backward for machinima.

Actually, this is just the opposite. A game company is finally saying "You can make machinima. You just have to follow some rules." Most developers have remained totally silent on the issue, and there may come a time when they choose to respond with a lawsuit rather than the conditional permission Microsoft chose.

So, the big M has spoken, and the world hasn't ended. Machinima still exists, it's just not as straightforward as it was when it wasn't legal. And once everyone has time to adjust, I'm sure we'll see some great new work. For those of you who had a series that violated the rules, I'm sorry you had to kill off your project. But look at this as an opportunity to make your own work even better, not as a big corporation squashing your dream. In the end, compromises like this are more than likely going to be the future of the medium. I'm personally glad they didn't decide to end machinima with their games altogether.