Thomas Steiner Dr. iur. Advertising in Online Games and Cultural Diversity An EC and International Media Law Enquiry L-G-D-J Stampfli Publishers Ltd Berne 2010 Bruylant Ltd. Brussels -2010
Acknowledgements XIII Table of Cases XV Table of Legislation XIX List ofabbreviations and Acronyms XXIII Introduction 1 Chapter 1: Enter the Matrix of Online Games and In-game Advertising 9 1. INTRODUCTION 9 2. ONLINE GAMES: A TYPOLOGY 10 2.1 Casual Games 11 2.2 Multiplayer Online Network Games 12 2.3 Massively Multiplayer Online Games (MMOGs) 13 2.4 Serious Games 15 3. ONLINE GAMES: THE STATE OF PLAY 16 3.1 Enormous and Still Growing Economic Potential 16 3.2 The Trend Towards Online Games 17 3.3 From Offline Only to Online Only: A Snapshot from 2008 and 2009 Console and PC Market Entries 18 3.3.1 Purely offline: Fallout 3 18 3.3.2 Partly online: LittleBigPlanet 19 3.3.3 Purely online: MMOGs for PCs and consoles 20 4. DRIVERS OF THE INDUSTRY 20 4.1 Technological Factors 21 4.1.1 Platform convergence 21 4.1.2 Implications of broadband 21 4.2 Demographic Factors 22 4.2.1 (Online) digital games attract all ages 22 4.2.2 Women enjoy online games 24 5. RISING COSTS 24 5.1 High Development and Production Costs 24 VII
5.2 Costs of Providing the Game as an Ongoing Online Service 26 6. IN-GAME ADVERTISING: A TYPOLOGY 27 6.1 In-game Product Placement 27 6.1.1 Static in-game product placement 27 6.1.2 Dynamic in-game product placement 27 6.2 In-game Sponsorship 30 6.2.1 Static in-game sponsorship 31 6.2.2 Dynamic in-game sponsorship 31 6.3 Pre-game, Inter-level, and Post-game Advertising 31 7. IN-GAME ADVERTISING: A NEW SOURCE OF REVENUE FOR ONLINE GAMES PROVIDERS 32 7.1 In-game Advertising and Casual Games 32 7.2 Free Online Versions of Popular Games: The "Asian Model" 32 7.3 Dynamism in Multiplayer Online Network PC and Console Games 34 7.4 More MMOGs are Open to In-game Advertising 35 7.5 Serious Games for Advertising 35 8. IN-GAME ADVERTISING: NEW OPPORTUNITIES FOR ADVERTISERS 36 8.1 The Obvious Response to Changing Patterns of Consumer Behaviour 36 8.2 Reaching Narrowly Defined Demographics 37 8.3 Localising Gamers and Advertising according to Geographic Segmentation 37 8.4 Profiling Gamers and Advertising according to Behavioural Segmentation 38 8.5 Attentive Gamers vs Couch Potatoes 38 8.6 Advergames: The Alternative Model 39 9. CONCLUSION 39 Chapter 2: Policy Perspectives: Advertising, Online Games and Cultural Diversity 41 1. STARTING PREMISES 41 2. REMARKS FROM A HISTORICAL-SOCIOLOGICAL PERSPECTIVE: WHY THE SCEPTICISM ABOUT ADVERTISING? 49 VIII
3. ADVERTISING REGULATION IN EUROPEAN BROADCASTING LAW: POLICY AND CONCEPTS 50 3.1 Different Goals 51 3.2 Similar Approaches to Advertising Standards 53 4. CULTURAL DIVERSITY MOTIVES AS UNDERLYING RATIONALES FOR ADVERTISING'S REGULATION 54 4.1 The Right to Integrity of Programmes 55 4.2 An Institutional Approach: Mechanisms Fulfilling the Same Function as Constitutional Rights 58 4.2.1 Society as a global communications system 60 4.2.2 Constitutional rights as social institutions 62 5. CULTURAL DIVERSITY AS A CONCEPT AND A PUBLIC POLICY OBJECTIVE 70 6. CONCLUSION 72 Chapter 3: EC Media Law Enquiries 77 1. INTRODUCTION 77 2. ONLINE GAMES AND THE SCOPE OF THE AVMS DIRECTIVE 80 2.1 A Service as Defined in Articles 49 and 50 EC Treaty 80 2.2.1 Types of activity caught by Articles 49 and 50 EC Treaty 82 2.1.2 Inter-State/cross-border element 83 2.1.3 Economic activity 84 2.2 Electronic Communications Networks 87 2.3 Non-linear/On-demand Services 88 2.3.1 Linear audiovisual media services: No case for online games 89 2.3.2 Non-linear audiovisual media services: A case for online games? 89 A. Casual games and serious games 90 B. Multiplayer online network games and MMOGs/ MMORPGs 91 3. THE REGULATION OF IN-GAME ADVERTISING IN THE FRAMEWORK OF THE AVMS DIRECTIVE 93 3.1 Is Advertising in Online Games a Form of Audiovisual Commercial Communication? 94 IX
3.2 In-game Product Placement and the AVMS Directive 96 3.3 In-game Sponsorship and the AVMS Directive 98 4. CULTURAL DIVERSITY AND THE REGULATION OF ADVERTISING IN THE DIGITAL ERA 99 4.1 What Happened to the Principle of Separation of Advertising and Programmes? 100 4.2 Transparency: Ever-more Important in the Digital Environment? 101 5. "ANALOGUE" CONCEPTS FOR DIGITAL GAMES? 102 5.1 Giving In-game Placements of Products and Brands No "Undue Prominence" 103 5.2 Making It Transparent 105 6. CONSIDERING "EUROPEAN WORKS" 107 7. CONCLUSION 110 Chapter 4: Online Games Under WTO Law: Unresolved Classification Issues 113 1. INTRODUCTION 113 2. THE DIFFERENT ARCHITECTURES OF GATT AND GATS AND THE IMPLICATIONS FOR ONLINE GAMES 114 3. THE VIEWS OF STATE AND NON-STATE ACTORS 116 3.1 On Methodology 116 3.2 WTO Members 117 3.2.1 GATT-like treatment for entertainment games: United States of America (US) 117 3.2.2 GATT treatment for digital contents: Japan 118 3.2.3 Digital games as GATS audiovisual services: European Community (EC) 119 3.2.4 No (clear) definition of software in GATT and GATS: Canada 120 3.3 The View of the Industry 120 3.3.1 Digital games as software: The Interactive Software Federation of Europe (ISFE) 120 3.3.2 Free trade for software products of any kind: Microsoft 121 3.4 Views Expressed in the Academic Discourse 122
3.4.1 In search of digital products' classification: Sacha Wunsch-Vincent 122 3.4.2 Rebalancing GATT and GATS: Tania Voon 125 3.4.3 Electronic intangibles, software, and the fine line between goods and services: Rohan Kariyawasam 127 4. ONLINE GAMES AS COMPLEX PRODUCTS COMBINING SOFTWARE AND CONTENT SERVICES 128 4.1 Goods vs Services - GATT vs GATS 129 4.2 GATS Classification of Online Games 131 5. CONCLUSION 135 Chapter 5: Government-assisted Governance of In-game Advertising 139 1. MAPPING THE WAY TOWARDS A SYNTHESIS 139 2. THE IMPLEMENTATION OF THE AVMS DIRECTIVE: COOPERATION OF PUBLIC AND PRIVATE ACTORS IN NETWORKS 143 2.1 Co-regulatory Arrangements 143 2.2 A New Approach 145 2.2.1 The New Approach to Technical Harmonisation and Standards 145 2.2.2 Relationships of mutual recognition 147 2.2.3 A "new approach" for the implementation of the AVMS Directive 149 3. SELF-REGULATION OF THE ONLINE GAMES INDUSTRY 151 3.1 The Current Framework 151 3.2 Governance of In-game Advertising by Article 10.2 of the PEGI Online Safety Code 152 3.3 The Flaws of Article 10.2 POSC 152 4. GOVERNMENT-ASSISTED GOVERNANCE: THE COE'S HUMAN RIGHTS GUIDELINES FOR ONLINE GAMES PROVIDERS 154 4.1 The Scope of the Human Rights Guidelines 155 4.2 The Legal Nature of the Human Rights Guidelines 156 4.3 The Guidelines' "New Approach" to Governance of In-game Advertising 156 4.4 Continual Observation, Readjustment and Cooperation 158 XI
4.5 Recommendations 159 5. CONCLUSION 163 Conclusion 167 Annex 173 ANNEX 1: PEGI ONLINE SAFETY CODE ("POSC") 173 ANNEX 2: HUMAN RIGHTS GUIDELINES FOR ONLINE GAMES PROVIDERS 183 Bibliography 189 XII