Video games are among the top entertainment industries worldwide, grossing billions of dollars in revenues each year. In 2017 alone, the industry boasted $120 billion – Variety compared that to the film industry in 2019 reaching $100 billion for the first time, and it towered over the sports industry that year at $75 billion. Variety noted the climb in video game sales continually spiked during the pandemic as people looked for new and more intensive forms of home entertainment during global lockdowns.
Few know or understand what goes on behind the scenes of this gigantic industry. Deep in the legal world, you’ll find a complicated system of overlapping practice areas, complex licensing law requirements, intellectual property and copyright law — along with a staggering amount of contract law.
Dave Ratner, a partner at Creative Law Network, said his video game clients are often on smaller online platforms like Steam and need a wide variety of legal services. His experience in entertainment law covers film, publishing, music, software and fashion. But Ratner says video game law is a particular challenge as the many practice areas overlap and blend together in unusual ways.
“Think about the copyright,” said Ratner. “That’s the visuals, the music, if there’s text that’s in the game — or there’s texted dialogue — all that gets protected by copyright.” Ratner said on top of all that, the name of the game needs to be trademarked. “If there’s a logo or tagline that’s associated with the game, those are also subject to trademark protection.”
Ratner said it all has to be licensed as well. All of these legal protections are done through contracts, and Ratner mentioned the contracts side of video game law is a centralized practice area for the industry. He stressed the importance of contract law, saying it often involves clients in the industry seeking out the best possible deals on technical elements.
Contracts in video game law intersect frequently as developers nail down details of the finished product’s distribution and rights. “The distribution is a pretty crucial and a big negotiating point — but also control, because if you think about it, if you’re the original creator and you are licensing this to a larger company that is going to distribute online, that porting requires them to … interpret the data and maybe make some changes.”
Ratner explained the control over that data and distribution is often tricky to nail down during contracts negotiations. “So how much control does that original visual creator have in that interpretive process?” he asked. “Obviously, the original creator’s going to want complete control,” Ratner answered, “so those sorts of things are frequently negotiated.”
The sale of physical games became less feasible during the pandemic. According to Ratner, that decrease in physical game sales added a new layer of complexity to the contracting process. “Are they distributing pretty heavily or distributing in hardcopy when there’s no way they’re selling physical items that they’re distributing into a Best Buy or a GameStop? So there’s an additional step in the process that is contracted one way or another — and it can be with a middle-man distributor. So, each step, each kind of two-party transaction, or every time we have a party, we’re adding another contract.”
During the full lifecycle of a video game, from conception to distribution, there are multiple layers of contracts woven together — almost resembling the complex circuitry of a motherboard. “There’s a lot of detail that we dig into. But it’s a great example of how all those things intersect,” said Ratner. He outlined how intellectual property also plays a large role in video game law and how that practice interplays with contract and licensing law.
“Intellectual property is assuming a license of the intellectual property, namely the originator or creator, owns the intellectual property and licenses it to a company that is going to put it out on the mainstream platforms,” Ratner said, explaining the intellectual property can be licensed but that it can’t be transferred or destroyed unless a sale or legal transfer has been negotiated. He said creators can sell or fully transfer over their own rights, but such instances aren’t as common. “But it’s something to consider when you’re thinking of conceiving a deal.”
Ratner mentioned the occasional foray of video games into movies. One of the largest examples of a video game made into a movie is the Resident Evil series, which was adapted to six feature films with theatrical releases. Game Rant reported in May that the movie series turned the game into Capcom’s best-selling franchise. Game Rant pointed out the franchise also includes “animated films, comic books and novels.” Each of those franchise elements likely involved the entire suite of legal practices Ratner outlined.
“For a lot of different industries — because you can make a book into a movie, you can make a TV show into a movie, you can make a comic into a movie, you can make a video game into a movie — all those transactions have a lot of similarities,” Ratner remarked. “Because you’re generally working with a producer who is putting together the package, they will bring together the director, the screenwriter, the actors, or whether it’s live-action or just voicing over a show — a producer will bring all those parties together to make a film.” He noted that after all of those elements are complete, there is still the question of distribution, similar to the iterative process for video games.
But for movies in the last year, distribution has been drastically interrupted as well. “The distribution will change drastically because we’re not really seeing movies in theaters, or not as much as we used to.” To bridge distribution gaps during lockdowns in the pandemic, HBO Max, Disney Plus and other subscription-based online movie and TV streaming platforms are now offering theatrical releases the same day they premiere in theaters.
Ratner said that while movie distribution is experiencing several changeups, the process to protect intellectual property, copyright and trademarks remains similar to that of video games.
For Ratner, knowing each industry is what’s most important when serving the entertainment world. “Understanding the industry standards … [and] all the types of parties involved is what makes this whole thing work.”