As we all saw, E3 looks to have gotten it’s mojo back, and I can confidently say that the industry as a whole looks to be in a state of good health. Of course, E3 is a trade show, where the industry gathers together to path each other on the back, and drool over all the new goodies in store, but combine this with the recent NPD Report indicating that nearly 2 out of every 3 Americans had played a video game in the past six months, and we’re really on to something here.
And while the focus has been mainly on games, game developers, publishers, etc., I’d like to take a step back and look at an industry that’s also reaping the rewards of a new found enthusiasm in the gaming: Legal.
A key driving factor to increased legal involvement in the gaming industry stems from the still evolving, but rapidly accelerated business model (read: microtransactions) that game makers rely on. In the past, the path was simple, developers develop, and then hand the titles over to the publishers to push out into the market. A great majority of developers’ legal fees when towards contracts with publishers, and that was the end of the road. With the advent of social media, digital downloads, and increased involvement from developers themselves, comes an increased desire and need for legal council.
Patrick Sweeney, a lawyer specializing in the interactive media and entertainment firm, Nixon Peabody says, “There are more developers looking to step up to the plate with self-funded or partially funded games that they are able to monetize on better terms than the traditional model.”
Likewise, Mark Skaist, a 17 year vet of the video game industry, and partner at Stradling Yocca Carlson & Rauth comments, “Now that developers are doing things themselves, they have me working on rights clearance and other distribution related issues.”
Taking a look at Sony’s recent skyrocket, Free Realms, here we have a prime example of the increased need for experienced legal counsel. Boasting an impressive 1 million registered users in just 17 days, it’s quite clear that Sony needed to have all their bases firmly covered before wading into the new business model waters.
Sony turned to the firm of Latham & Watkins partner Roxanne Christ to take them through these rigorous waters. Christ and the firm are the folks responsible for establishing the rules that deal with players’ digital wallets, and end-user agreements, as well as relationships with external development studios. “The shift to micro-transactions as a revenue model for the game raised legal issues that needed to be addressed,” says Christ.
The market, as well as the increased need for expert legal council hasn’t gone unnoticed by the legal industry. Last year, the LA based firm Sheppard Mullin established a video game industry practice specifically tailored to address video game companies, developers, and publishers on issues of patent, entertainment, labor, and tax issues. Amongst Mullin’s list of clients, one can find industry giants Sony Online Entertainment as well as Activision, which the firm represented in a patent infringement claim.
In 2007, the aforementioned Nixon Peabody acquired the firm of Offner & Anderson, a four attorney video game industry specialty shop. Co-founder David Anderson says that his firms clients outgrew their exclusively corporate capabilities. “We got to the point where we could better sever our clients at a bigger firm where were could provide them access to litigation and other practices,” Anderson says.
As the state of play continues to evolve, and more and new firms spring up, as well as the old stalwarts begin to take a look at alternative business models, my prediction is that we’ll also see an increase in legal firms that take a special interest in guiding and supporting these groups in charting relatively new waters.
Tags: free realms, game developers, game makers, gaming industry, legal counsel, NPD, video game industry
