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Intellectual Property Law

: IPKat

Creative Stars and Video Games: John Grisham or John Doe?

By Johanna Gibson, David Pearce, Jeremy Phillips and Ilanah Simon.

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Is there a star aspect to the video games industry? If so, who, or what, exactly is the star and what it its role? These questions came to me in reading a recent account of a legal battle that has arisen at the highest levels of that industry ("Did Activision Just Frag Itself?", April 26-May 3 issue of Bloomberg Business Week). This, in light of various reports that the industry is in a bit of a funk as it looks to reinvigorate itself in a current world of few megahits.

The article describes the battle between Bobby Kotick, the CEO of Activision, the giant of the video games business (and a member of the Vivendi stable of companies), and two of the company's erstwhile leading game developers, Vince Zampella and Jason West. Zampella and West had sold their game development studio to Activision in 2003. They stayed on at Activision and inter alia created the Call of Duty series of games, which resulted in over $3 billion dollars in sales and a ranking as the seventh best-selling video game franchise ever. Indeed, the most recent edition "Call of Duty: Modern Warfare 2"), launched in November 2009, enjoyed sales over $500 million in only the first five post-release days.

But not all was well behind the scenes. On March 1 Kotick fired the two developers, alleging that an internal investigation revealed that the pair had engaged secret unauthorized contacts with a rival. The developers then sued, claiming that the internal investigation and firing were an excuse for the company to avoid paying them royalties in respect of the most recent game. They also groused that the company had changed the product climate whereby "quantity" was preferred over "quality." Kotick filed a countersuit, alleging insubordination, witholding the payment of bonuses to turn employees against the company, and a meeting with an unnamed competitor. During this flurry of legal measures, the two developers joined Electronic Arts, the second largest video game publisher and a major competitor of Activision.

While the legal struggle itself might be the stuff for creating a new video game for the over-40 crowd, the more interesting point is what the dispute suggests about the role of the star in the video games business. The article puts it this way: " The Call of Duty clash is a sign of the 'rise and power of the elite devoloper', says Evan Wilson, an analyst .... The shift in clout makes the game industry more like films and books, where creators maintain more control over their intellectual property. The creative types are getting more leverage because of the rising cost of games ..."

Find the Video Game Star

I wonder, however, how accurate is this observation about the ascendency of the video game developer. If we think about the movie business, the "actor as star" has always had a central role in that business (whether they were contractually tied to studios in previous times or free to go wherever they want today). In addition, the movie business also has to contend with the financial types who drive most deals, the content creators, both the studio and individual creators themselves, the producer, the director, and the marketing and distribution network for promoting and screening the film (we mercifully pass over the online aspects of the industry). In such an ecosystem, I find it to difficult to locate the parallel between these various loci of power in the movie business and the alleged power of developers in the video game business.

As for the book business, the parallel between it and the video game industry is also uncertain. In book publishing, the central creative actor is the authoress, supported by her publisher, which takes on the job of promoting and distributing the book. Quite simply, unless I am mistaken, most purchasers of video games do not rely on the identify of the game developer in making the decision to purchase. Compare that with an established author like Dan Brown or John Grisham, whose moniker alone on a book will attract sales.

It seems, therefore, that neither the film nor the publishing business provides a compellingly helpful analogy to the video games industry. That said, there may be a potential connection between star developers and their commercial impact on the video game business.

Consider the quote in the article from analyst Colin Sebastian: "Most gamers don't care that much" about the identify of the designers. Rather, "[w]hat they do care about is the quality of the game. And that is why there is a lot of pressure on Activision." Kotick retorts as follows: "It's not about a single individual or one or two guys. Our commitment to quality hasn't changed. If you want to make great games and be handsomely compensated, then the best game to work on is "Call to Duty."

What "quality"means for for Sebastian or Kotick, and how quality is connected with star developers, is not, however, further explained. I would suggest the following. Sebastian seems to be taking the position that the quality of the video game, and the video game experience, is primarily driven from a small number of star developers who have the capability to translate creative contents into sucessful products. Contents and those who propel those contents, copyright if you wish, are central. This explains how, with the right star develops, one can continue to produce a stable of winning video game products.

For Kotick, at least as expressed in the quote, the role of the creator is subordinate. His emphais is on "the single best game", i.e., a winning brand that the article itself describes as a "franchise." The goal here is to maintain the supremacy of this brand. Just as with any successful brand, quality means that the product needs to continue to meet the expectations of the customer. This need not require that product quality surpasses all that of all competitors, but only that it does not materially deviate from what has come to be expected from it in the marketplace. It is for that reason that the developers, while important, are not the primary driver. This position, while it expresses a credible strategy for maintaining one's s current brand position, does not however explain adequately how one gets to the next great video game brand.

The upshot is this. The current struggle between Kotick and his ex-developers highlights, but does not ultimately provide guidance, how a company in the video game business should harness both star creavity and ongoing brand development to ensure both its present and future.

Full post as published by IPKat on June 25, 2010 (boomark / email).