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Competition, copyright, and business models in the gaming industry

Posted on    by Weiwei YI
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Competition, copyright, and business models in the gaming industry

By 13 December 2023No Comments

On the 14th of November 2023, CREATe hosted a “UK video game roundtable event: Preservation, copyright, business, and culture”. The afternoon session was titled “Competition, copyright, and business models: what can academia and policy learn from the industry, and how can we help?” The roundtable was the second of two games-related events on the same day, with the Video Game Preservation Workshop in the morning led by Professor Kris Erickson and Dr Amy Thomas. The roundtable followed  recent publication of the working paper ‘Gaming without Frontiers: Copyright and Competition in the Changing Video Game Sector’ by Ayşe Gizem Yaşar, Amy Thomas, Kenny Barr and Magali Eben. The roundtable involved discussions on a wide range of topics at the intersection of competition law, innovation, and intellectual property in the gaming industry. Under Chatham House rules statements in the blog are not attributed to specific speakers.

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Microsoft Image Creator prompted with “diverse academics and industry representatives discussing the gaming industry in the style of Theodore Gericault’s Raft of Medusa.”

 

The session started with a discussion of ongoing consolidation and integration in the gaming industry, and its impact on market dynamics. This led to further talks about cloud gaming and subscription models that change distribution and influence market power. The effects of large platforms’ fees and market control on smaller game companies followed. After this, a unique aspect of the gaming industry, where consumers (players) are actively involved in the creative process, was discussed. This relates to the phenomenon of how user creativity influences the development and success of games. The conversation then shifted to balancing the protection of innovation by companies with the encouragement of user-generated content.

Regarding competition and market dynamics, there was an analysis of competition in the gaming industry, focusing on the distribution of market power and its effects. This included discussions on app store fees and their impact on the industry. Participants further explored how different business models affect competition and innovation. One speaker mentioned how technology and the expectations of players and studios lead to the adaptation and evolution of business models. This encompasses changes from a one-time purchase model to a continuous service model, differentiated pricing, extensive accessibility, and the impacts these have on player engagement and game development.

Under the topic of legal and policy considerations, attendees talked about current regulatory approaches and their adequacy in addressing the unique challenges of the gaming industry, including smart regulation and its implications. Discussion on interoperability, especially in the context of emerging virtual worlds and metaverses, was also featured. Factors such as diverse business models (decentralized and centralized), different ecosystems, resale and marketing strategies for brands, B2B and B2C licensing agreements, technical standards and limits, and the potential conflict of interests at the preparation stage might impact stakeholders’ motivation to achieve interoperability.

In terms of business models specifically in the metaverse, there were discussions on understanding the novel concept and ideas on how to keep users interested, and how developers can benefit from continuous mutual communication with users. Factors such as self-identity and expression in Web 3.0, and new business models such as live events were discussed. This led to consideration of the involvement of brands and their marketing strategies in the gaming context. The ways brands are integrating into gaming and virtual worlds, the commercial and marketing opportunities this presents, and, more importantly, the balance between brand control and user freedom in these virtual environments were key emergent themes.

Insights regarding the challenges and opportunities in game development were shared. These include the funding and development challenges faced by small game developer groups, especially in the context of increased competition and evolving market expectations that favour content that has already proven to be successful. Other funding models such as early access and crowdfunding were also discussed. Some participants identified the skills shortage in the industry and its impact on development and innovation, in the context of general layoffs and the UK visa policy post-Brexit. The need for education and training programs tailored to the gaming industry was also a topic of discussion.

Participants shared their opinions on game development platforms and engines, and how the new pricing terms of a game engine have caused a loss of trust among game developers. The potential of trendy platforms like Fortnite Creative and Roblox was noted for their accessibility and integrated routes to market. Concerns also included the potential negative impact of the term change on the educational use of game engines. Other concerns impacting game developers include the risks associated with unilateral changes in software licenses, the heavy dependence of video games on third-party middleware, and the alternative strategy of developing in-house engines to mitigate risks associated with external engines and licensing.

Regarding the impact of technology and innovation, our contributors explored the role of AI and other emerging technologies in game development and how technological advancements are shaping the future of the gaming industry. Industry guests highlighted the current cautious approach toward using open-source AI tools in game development due to unresolved legal issues. There was a discussion on the current landscape of the use of AI for concepting and middleware, emphasizing the need for a layer of human creativity in production, even with AI advancements. In an extensive discussion about the role of AI in game creation and its implications for copyright protection, the discourse focused on whether AI-generated games could qualify for copyright protection.

At the end of the roundtable, participants expressed the need for regulators to understand the gaming industry’s nuances and to avoid overregulation, particularly in emerging areas like the metaverse. They also underscored the importance of proportionality in regulation, highlighting the distinct nature of the gaming industry from social media.

The session concluded with participants expressing their views on the future of the gaming industry, the role of AI, and their aspirations for light-touch regulation to foster innovation while ensuring fair competition and consumer protection.

This roundtable kicks off a new dimension in CREATe research into the gaming industry. CREATe’s games industry team will be continuing the conversations with industry participants as well as academia and policymakers. If you are interested in this research, do not hesitate to reach out to Magali Eben.