Connected Games:
With Growth, Comes Policy Challenges
University of California – Hastings College of Law
Michael D. Gallagher
Chairman
Entertainment Software Association
ABA| March 2, 2015
Industry Growth – Strong Pipeline
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Industry Popularity Growing
Number of Degree Programs
Retention rate of more
than 88%
By comparison, the 2014
nationwide average of
first- to second-year retention
rates for public and private
institutions conferring BA and
BS degrees was 64% and
70% respectively
Industry Growth – Strong Pipeline
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33% of Students Enrolling
in Video Game Design
Programs Are Women
Video Game Programs
Have Greater Gender
Diversity Than Other
Science and STEM
Programs
Points to Strong Future
for Diverse and
Welcoming Industry
Online-enabled Games Go Big
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Here, There,
Everywhere…
Streaming Comes to Games
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Twitch attracts 100M visitors per month and
is growing at 10-15% a month
Sony PlayStation Now service
Forrester Research expects cloud game play to
reach 66M U.S. households by 2017
Policy Challenges
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But connected game play also implicates a
variety of challenging policy issues:
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Data Security
Privacy
Network access for retired games
Net Neutrality
Unclaimed Property
Virtual Currencies
Data Security: WH Proposals
Three (or four) White House Proposals:
• Cybersecurity Information Sharing
• Data Breach Notification
• Expanded Law Enforcement Powers
• White House expected to announce
“Consumer Privacy” legislation
Data Security: Info Sharing
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This legislation is intended to enable
cybersecurity information sharing between
private and government entities, as well as
among private entities.
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Authorizes private entities to disclose cyber threat
indicators to private information sharing and
analysis organizations and to the Department of
Homeland Security, only to be used for the
purpose of protecting an information system from
cyber threats.
Data Security: Breach Notice
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Sets up a national data breach notification
standard
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preempting most existing state law on breach
notification.
Looks generally similar to several other federal
bills that were introduced in the Senate in the last
Congress, though it applies to a broader range of
personal information
Data Security: Law Enf. Access
The White House has also recommended
changes to federal law to aid law enforcement
of cyber attacks.
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Add CFAA offenses to the list of racketeering activities under
RICO.
Broaden the remedies available under 18 U.S.C. § 2512,
which criminalizes the sale of surreptitious interception
devices.
Update CFAA
Privacy – Data Localization
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Requirement to store PI locally
Beginning this September, companies
collecting PI from Russian consumers will
need to store that PI in Russia.
A similar measure failed to pass in Brazil, but
it could reemerge in draft regulations
Data localization requirements complicate the
ability to offer a global online service
Network Access: Abandoned Games
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Copyright office accepts exemption proposals
every three years (DMCA Rulemaking)
In 2012, ESA successfully opposed a proposed
exemption for console hacking
This time, exemptions proposed for console
hacking and “abandoned games”
Network Access: Abandoned Games
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EFF has filed an exemption proposal for socalled “abandoned games” where:
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Server access is necessary for “authentication” to
play the game at all; or
Server access allows for multiplayer
“matchmaking” services, and
The game or its multiplayer functionality have not
been available for six months.
Comments are due March 27
Net Neutrality
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FCC Order – reclassify under Title II
Tougher approach than FCC first considered
Likely to be tied up in litigation
ESA’s perspective:
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Low latency, high bandwidth connections are key
Keep Internet free from anti-competitive and
discriminatory practices
Unclaimed Property
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States have long required escheatment of
various forms of property where rightful
owner is unknown or has failed to claim
ULC is revising its model act to address new
forms of property, incl. gift cards, unused
subscription fees, and virtual currencies
ESA actively engaged in rewrite process
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Seeking appropriate exclusions for in-game items,
incl. virtual currencies, and digital codes
Virtual Currencies
FinCEN and the NY Dept. of Financial Services
have recently looked to regulate BitCoin.
• Regulation of “Virtual Currencies” could
ensnare in-game currencies, if not properly
scoped
• Generally, ESA argues that regulations should
not cover “non-convertible” VC, which cannot
be returned for cash.
Virtual Currencies (Cont’d)
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In October 2014, ESA filed comments with the
NY Dept. of Financial Services
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NY proposal contains a welcomed carve-out for
digital units used solely within online gaming
platforms
ESA requested clarification that rules would not
apply to games that allow gamers to obtain digital
content or to exchange “points” for memberselected goods (t-shirts, coffee mugs, etc.)
Connected Games:
With Growth, Comes Policy Challenges
University of California – Hastings College of Law
Michael D. Gallagher
Chairman
Entertainment Software Association
ABA| March 2, 2015