Ready player one? We speak to industry insiders to find out how videogame developers are shaping the future of entertainment (and how attorneys can get in on it too).
Speak to anyone in the know about videogames, and it will quickly become clear that it is an industry on the verge of something big. Games market data company, Newzoo, estimates that there are more than two billion gamers globally, more than a quarter of the population of our planet. That’s larger than the populations of North America, South America, and Europe combined. The origins of the market can be traced back to the 70s, when developers capitalized on advancements in computing to produce iconic titles such as Space Invaders and Pong. Greg Boyd, partner and co-chair of the interactive entertainment group at Frankfurt Kurnit Klein & Selz recollects: “I grew up in the 70s and 80s, so I grew up right when videogames were just starting to emerge into popular culture. You don’t get to be present for the birth of many art forms, and in that sense it’s entirely unique.”
“Last year, the industry grew to $155 billion worldwide, and it’s predicted to reach a value of a quarter trillion dollars in the next few years."
The industry’s growth since then has been undeniably seismic. “Last year, the industry grew to $155 billion worldwide, and it’s predicted to reach a value of a quarter trillion dollars in the next few years." Boyd tells us. And where there is growth and disruption, so too are there law firms ready to capitalize. For Gina Reif Ilardi, general counsel at esports company Vindex, “it’s much more interesting to work in an evolving sector, especially where the law hasn’t quite caught up with the industry.”
Legal professionals are there to help their clients navigate a regulatory landscape that is constantly shifting. “And that’s even more so when it’s in its infancy” Josh Bilgrei, managing director at Whistler, adds. “If you are a corporate lawyer, a lot of times you are looking at the same agreement, or making some slight tweaks, but this is a truly evolving industry that is changing day-to-day. You need to be OK with the unknown.” Fellow managing director, Tad Gruman, echoes his comments, emphasizing that “they are literally making the laws. If you’re a real legal nerd, this is one of those areas to get into because you could help shape policy – it’s really fascinating.”
While gaming and esports may be a thriving industry today, this wasn’t always the case. “When I started in 2003/04 people thought it was a joke,” Boyd recalls. “They had in their memory the crash in videogame popularity in the 80s and they thought it was a fad. And that attitude persisted, especially in older people, long after videogames surpassed film and television in terms of money and cultural relevance.” Of course, that’s not to say the movie industry is dead, but rather “if you look at how under 30s spend their time, it’s gaming that is becoming the primary form of entertainment,” Boyd highlights. “That’s something that a lot of the population is still surprised by, just because of the speed at which it has happened.”
For lawyers in the entertainment sector, the emergence of the videogame market has changed the landscape beyond recognition. As Gruman emphasizes: “It used to be that videogame law was a part of a larger entertainment practice, and a small part at that.” Yet with the value of the videogame industry now surpassing the movie and music industries combined, entertainment practices at law firms are changing. Gruman makes clear that the videogame industry “is no longer just a part of an entertainment practice.” With users now able to watch movies, play sports, listen to music, and talk to friends, all while “technically being in a videogame” the market is standing on its own two feet. As Gruman puts it: “It’s no longer just a part of entertainment, it is entertainment.” Microsoft’s recent $70 billion acquisition of games giant, Activison Blizzard, makes for compelling evidence of the industry’s explosive trajectory.
In real terms
As general counsel at online gaming platform Roblox – a company that this year became the largest gaming company in the world – Mark Reinstra is well placed to provide insight into the sector. “The fun thing about lawyers,” he reflects, “is that they can get really excited about theory and its practical application. Whether you're talking to a group of engineers or salespeople or whomever, you’re trying to figure out how you can modify the service or the product to address the law and still reach the goals that the organization is looking for.” In fact, Reinstra adds, it was exposure to the videogame industry that prompted the switch in-house: “I was a corporate attorney at Wilson Sonsini in San Francisco for 25 years, representing early-stage high-technology companies” Reinstra explains, “to sit-in at a board level at Roblox, and get an idea of the issues these companies face, and be a part of shaping what’s ahead, is what made it so exciting to switch from outside to inside counsel.”
As a sector, esports and gaming requires the input of lawyers with expertise in a range of legal practice areas. In fact, as Reinstra adds: “An in-house attorney’s role is really the practical application of the law, and the only way to do that is to have a really solid foundation in the law.”
Videogames are, in essence, various bits of intellectual property bundled together. From game titles and branding to stories, characters, and original music, lawyers with a depth of knowledge in IP are needed to help protect the investment that game publishers put into the making of a video game. “A publisher just wants to protect their portfolio, their ideas, and their characters” Ilardi explains. The other side of that coin is that videogame companies that want to include real-world likeness to products or celebrities in-game also need to license that IP.
“In a sports game like FIFA, you’ll be negotiating with the leagues to make sure you have permission to use their players and logos.”
As Ilardi points out: “in a sports game like FIFA, you’ll be negotiating with the leagues to make sure you have permission to use their players and logos.” This can cause problems for emerging videogame companies “who may not even know that they can’t just put a coke in there, or they can’t use the NFL logo,” Bilgrei explains. This, invariably, leads to negotiation and litigation, something that Bilgrei points out is “normal in evolving industries: sometimes you’re running so fast, you don’t know until you know.”
“From my perspective, one of the biggest shifts has been that the main areas of growth for publishers are now in-game,” Ilardi tells us. This includes advertising, one of the most highly regulated aspects of the industry, with huge numbers of videogames - particularly free to play mobile games - making use of in-game advertising as a source of revenue. Bilgrei views this as an extension of a long running trend: “Advertising started with TV, then it went online, and then to social media. Now, if you’re a company and you want to advertise to a younger audience, you’re going to be thinking about videogames.”
Advertising in videogames is subject to the same restrictions as any other product. ‘Truth in advertising’ laws in the United States ensure that advertisements used in and for videogames cannot include deliberately misleading content. This might include anything from hidden costs to depictions of characters or items that can only be accessed via in-app purchases. Indeed, virtual currencies – the currency used to buy and sell items in-game – can become subject to federal gambling laws if they can be exchanged for items of monetary value outside of the game. Establishing legally compliant virtual currencies is likely to be a growth area for lawyers working in the industry.
Privacy and data security
When it comes to privacy and data security, Ilardi tells us that the main issue “is not the data we collect, but what we do with it.” Designing systems that comply with various regulatory frameworks and “that fit with almost any privacy regime” is one of the key responsibilities for lawyers working in the space. That’s no easy task given the international scope of many gaming platforms and developers. As Reinstra highlights: “Being in 180 countries, there are many different sets of regulations, some of which overlap and some of which conflict, that we must navigate through in order to provide a platform that is worldwide.”
Data is collected by videogame companies often with the purposes of improving user experience, but developers must tread carefully, especially when it comes to content directed at children. As Taylor Miller, managing director at Whistler, highlights: “As the space has grown, market-based and legal-based accountability in that regard has become a more controversial topic.”
For companies like Roblox, which are built around what is known as User Generated Content (UGC), there are further hurdles. On UGC sites, users of the platform build their own games which can then be played and shared by other users. “For us, as a UGC platform, the issues we face might not be exactly the same as those faced by a company that’s building a bespoke game, where they are the ones who are in control of the content creation” Reinstra explains, “we certainly spend a lot of time looking at content that is uploaded onto the system, both through AI approaches as well as human moderation, to monitor what our users are exposed to.”
Where millions of people congregate online to shoot, race, strategize, and fight, professional competition has emerged in the form of esports. “When we were growing up, videogames were something that was played on your couch with your friends” Bilgrei reflects, “and now all of a sudden, my kids are watching other people play video games, and it’s a sport.” Indeed, esports have taken the world by storm. In 2019, The Fortnite World Cup launched in New York with a total prize pool of $30 million. “The prize pool is a ridiculous amount of money. It’s more than any other contested human endeavor,” Greg Boyd tells us, adding that “in 2018, Epic games provided $100 million for esports tournament prize pools.”
It’s yet another aspect of the gaming world that’s unchartered from a legal perspective. From whether esports players can be classified as athletes under the law, to what rights you have to get from publishers to host tournaments, “there’s no roadmap” Ilardi emphasizes. For legal professionals, work with Esports clients can encompass team formation and investment in teams and leagues. “The NBA has NBA live gamers now that they are signing to their NBA live 2k teams. And there is an entire league set up for NBA live 2k,” Gruman explains. “That’s a whole different bag of worms, as now you’re doing talent representation which requires an entirely different skillset.” In addition, Ilardi points out that “there’s also a ton of employment and real estate law because they are starting to open physical spaces. I’ve really become a generalist in this role.”
How to land a job in video games
For those on the inside, videogame law offers a chance to get a foot in the door to the future. “You are participating in a cultural driver,” Greg Boyd points out. “A lot of other types of law just aren’t cultural drivers in the same way.” In a sector that is constantly evolving, it’s not possible to know exactly what’s round the corner, but for Ilardi, that’s just part of the fun: “It can be the Wild West, you can be presented with issues that are real head scratchers, but for me it’s a real high.”
“All that said, you can’t fake it,” Boyd cuts straight to it. “You have to really be committed to videogames, or these people aren’t going to trust you. No one is ever going to ask a tax attorney ‘what kind of tax do you do at the weekends?’ People are going to ask you these things, they want people who can identify quality.” This – Taylor Miller tells us – is even more so in videogame law than elsewhere: “I think compared to music, or sports, I do feel that there is a stronger theme of needing to have a passion in the space.”
“There’s this perception that we are looking for people who can ‘put away childish things,’ but that’s just not true! If you want to get into videogames, and you feel like you’ve never had social or intellectual permission to, here’s your hall pass!”
“People can be good at things they don't like, but they're rarely successful and happy” Reinstra adds, “whether it's videogame law or some component of it, whether it's privacy or intellectual property, you really have to have a passion for that area. It has to be something that you would do it even if you weren't paid to be doing it.” For Boyd, a passion for gaming is something that attorneys are often reluctant to include on their resume: “There’s this perception that we are looking for people who can ‘put away childish things,’ but that’s just not true! If you want to get into videogames, and you feel like you’ve never had social or intellectual permission to, here’s your hall pass! If you took all the videogames off my resume, you would ask what I’ve been doing for the last 20 years!”
So, what should you be doing now? “The first question is, are you even in the right practice area where you can get that type of work?” Miller explains. “For example, if you’re a structured finance associate, step one is to go and un-structured finance yourself. Roles in any area of entertainment are highly coveted, so switching to being a videogame attorney may be a multi-step process. Pivot to another corporate or IP practice first, then move to a firm where you can do that work with videogame clients.” For Ilardi, it’s more about the kind of work you are doing than the clients you are doing it for: “take a job initially - whether it’s as a litigator or a transaction attorney - where you are going to get applicable experience.”
For those looking to break into videogame law, “the ideal scenario is that you’re doing work for videogame clients directly,” Whistler founding partner Sean Burke tells us. “Equally, if you’re in a media space where there’s IP issues, or you are at a start-up tech firm and you represent clients that are streaming and producing content, then guess what, that’s very similar to what a videogame practice would look like.” In fact, Burke reasons that the best thing you can do is “start thinking less of videogames, and more of content-producing clients.”
“The excitement for lawyers is that you can take your skills and go just about anywhere and be able to add value” Reinstra chips in, “whether you're a first-year lawyer, a first-year law student, or a seasoned veteran in a particular area. Your domain experience will be applicable in an online world.” In fact, for the folks at Roblox, it’s not necessarily gaming industries that they are looking for on a resume: “We're looking for worldwide experts in a particular domain.”
An eye on the future
With videogames rapidly becoming the centerpiece of firms’ entertainment practices, Gruman sees changes on the horizon for BigLaw: “A couple of the BigLaw firms do it, but really the boutiques are the leaders. However, as the industry continues to grow, he reasons that “it’s going to become ubiquitous.”
“The more modern references you find in things like Ready Player One are cautionary tales.”
But changes are happening within the industry too, as our insiders are all too aware. “I feel like the metaverse and the emergence of these online environments is something that can’t be ignored” Ilardi remarks. Virtual reality is nothing new, but its development and adoption has been accelerated by the Covid-19 pandemic. Apple, for example, are rumored to be targeting the release of a virtual reality headset this year. “I’m for it, but we need to be cautious about how we do it and be wary. Any problems we see on social media will be magnified,” Boyd warns, highlighting that “the more modern references you find in things like Ready Player One are cautionary tales.”
Indeed, this is something Reinstra echoes: “As people's existence moves more and more onto an online platform, all of the issues that arise in the real world are going to replicated, whether it's privacy, addiction, or free speech to name a few.”