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be used to trade with other players in the purchase or sale of in-game assets, the funds from which would ultimately be withdrawn from the accounts.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each with small profits or losses, it would be difficult to trace the true source of the funds when they are withdrawn.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.