How the Wrong Decision in Schwarzenegger v. EMA Could Cripple Video Game Innovation

Opinion

In 2005 the Terminator signed a bill to outlaw the sale of “violent” video games to anyone under 18 years of age in California. Granted, he was wearing his off-set persona as the Governor of California, but this irony flows through a case the U.S. Supreme Court is about to hear entitled Schwarzenegger v. EMA.

California’s attempt to create a new exception to the First Amendment for supposedly violent speech was promptly enjoined by a federal judge, and the 9th Circuit Court of Appeals quickly concurred that the law was unconstitutional. As such it came as a bit of a shock to the video game industry when the Supreme Court decided to hear the case this fall.

There are two significant problems with the law in question. First, the definition of a “violent video game” is very unclear. The law adopts classic definitions for sexual obscenity, but those terms don’t make a lot of sense in the context of a video game. Does killing Nazis on the beaches of Normandy in a WWII game reach a level of violence “offensive to the community?” Troubling also is the State of California defending its law by citing social science research that considers Super Mario Brothers to be a violent video game. (See pages 3 and 28 of the Electronic Frontier Foundation’s amicus brief in Schwarzenegger vs. EMA.)

The larger problem with the law is that it is likely to have broad unintended consequences in the development of the video game industry as online business models become more prevalent. The original bill sponsor and the Entertainment Software Association (ESA) imply that the act was only intended to apply to the retail sales of boxes at local stores. However, the law as written is quite broad. It simply states that a “person may not sell or rent a video game that has been labeled as a violent video game to a minor.”

The classic “boxed” video game business is quickly giving way to hybrid channels where a box version of a game available at your local store is also available as a download or even potentially as a freemium offering. The California law, if allowed to go into effect, would destroy the freemium model. Why? Because the core of this business model is to allow millions of gamers to play for free in the hopes that some percentage buy virtual goods.

In short, the freemium model requires unfettered initial access to the game by millions. The only sure way to prevent minors from accessing forbidden games online is to require a credit card validation up front. But that’s also a big deterrent for many adults: virtually no one who uses the Internet believes that giving a card number to a game maker would not eventually result in a charge to that card. Destroying the frictionless access that adults have to free-to-play games that might be considered violent would drastically decrease innovation in the online games world, as the base of potential users would no longer be large enough to convince developers to take the risk on new games.

Video games are quickly becoming a mainstream phenomenon that breaks new ground in go-to-market strategies and business models. Misguided attempts to limit “under-age playing” come at the expense of creating a vibrant online economy far beyond gaming. For example, innovators like Boxee learn from companies like Atari/Cryptic, Outspark and hi5 to push the boundary of what your television set does. Do we as a society want to limit the economic models that these types of companies can explore, or even inadvertently keep them from creating new and interactive experiences around content like Band of Brothers or political commentary about the war in Afghanistan?

At a time when proponents of Sharia law are exercising a heckler’s violent veto over the “Everyone draw Mohammed” meme, we can not stand idly by while legislators and lobbyists make value judgments about content that create significant unintended consequences. For these reasons we at Vindicia filed an amicus brief in the Supreme Court in support of the video game industry. We hope the Supreme Court affirms the lower courts and finds this law unconstitutional.

Gene Hoffman, Jr., is chairman and CEO of Vindicia, which provides strategic online billing solutions to merchants selling digital content, including online game publishers such as Activision Blizzard and Atari/Cryptic. Follow @hoffmang

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