At a recent networking event at Osborne Clarke London presented by the law firm’s marketing services and interactive entertainment teams, the theme was the potential for ads in computer games and it was standing room only. But what or who regulates this exciting new advertising platform? James Pond plugs and plays.
Who: Osborne Clarke
When: June 2007
Law stated as at: 28 June 2007
On 6th June 2007 Osborne Clarke hosted a networking event in London posing the question "What is the future of advertising through computer games?", featuring speakers from leading games developer Blitz Games, award-winning advertising agency Bartle Bogle Hegarty and prominent in-game advertising firm Double Fusion .
The packed audience agreed that the future for in-game advertising is rosy, and advertisers are increasingly including game advertising in their media plan to reach the core 18-34 demographic.
However as advertisers increasingly use games to deliver their marketing messages, more attention is being focused on the question of what or who regulates this "new" advertising platform. So what are the key issues?
Q. Who is currently regulating in-game advertising?
A. The simple answer, at least in the UK at the moment, is no one. However, as with much in life, if you rub the surface of this issue a little bit then it becomes apparent that there could be more to it than first meets the eye:
BBFC / PEGI age ratings
Currently game content is regulated in the UK by the BBFC (British Board of Film Classification) under the Video Recordings Act 1984, and the voluntary regulatory age rating system run by PEGI (Pan European Game Information). Thus advertising content included in-game could potentially affect the age rating granted to a game by the BBFC and/or PEGI, particularly advertising content which is "hard coded" into a game.
Even dynamic advertising content which is supplied online in real time could potentially affect the age rating given to a games product – for example the USA Federal Trade Commission last year challenged the (US) age rating originally given to the game "Grand Theft Auto: San Andreas" on the basis that a third party released a software patch which allowed access to adult content previously hidden in the game (the so-called "Hot Coffee" scandal).
Although dynamic advertising is delivered separately to the games themselves, its integration within the game itself and the fact that the game is designed to allow such dynamic advertising could allow regulators to extend the reasoning used in the Hot Coffee case and revise age ratings granted to particular games in light of the type of advertising content delivered within such games.
Other statutory restrictions
There are various other statutory restrictions which could arguably apply to the content of in-game advertising, including the usual clearance risks relating to the content of advertising copy.
For example the Control of Misleading Advertisements Regulations 1988 (as amended) – which give backstop powers to the OFT and Ofcom in respect of any misleading advertisements in the UK – apply to a broad definition of advertising ("any form of representation which is made in connection with a trade, business, craft or profession in order to promote the supply or transfer of goods or services, immovable property, rights or obligations"), which seems likely to include all forms of in-game advertising.
Q. Who may regulate in-game advertising in the future?
There are other possible regulatory avenues which may be explored in the future in the UK, including the possible regulation of in-game advertising by the following:
CAP Code / ASA
The ASA enforces the CAP Code – the self-regulatory rules relating to non-broadcast advertising and marketing – in the UK. The CAP Code itself makes clear that it does apply to advertisements in non-broadcast electronic media, including online advertisements in paid-for space. However to date we are not aware of any ASA investigation into any in-game advertising material.
So why is the ASA not taking a more active role in enforcing the CAP Code in respect of advertising content in-game? It appears to boil down to what is considered "advertising" for these purposes.
The ASA currently takes a narrow view on this issue, and regards most in-game advertising as product placement (and therefore outside its remit). The only exceptions appear to be advertising which is shown before the beginning or after the end of the game (i.e. which is not embedded in the game content), or any "pop-up" advertising which a user clicks on in order to appear in a separate window/section of the screen to the game (i.e. very much like internet "pop-up" advertisements, which the ASA do regulate).
This does lead to some slightly strange scenarios, where for example a billboard advertisement in real life would have to comply with the provisions of the CAP Code whereas exactly the same advertisement embedded in-game as a virtual billboard would not.
It remains to be seen if the ASA decide to extend their area of responsibility to encompass in-game advertising as the industry develops further. Perhaps it is only a question of time, as it seems unlikely that the ASA will sit back and allow advertisers who, for example, might ordinarily be subject to tight restrictions relating to alcohol or HFSS foods (high in fat, sugar or salt) across all other media, to run in-game advertising which safely ignores these restrictions for too long.
Ofcom is generally responsible for regulating all TV and radio broadcast in the UK. As such it doesn't sound like a likely candidate to regulate in-game advertising.
However Ofcom is also likely, in due course, to be responsible for enforcing the upcoming Audio-Visual Media Services EU Directive (which will replace the current "Television without frontiers" EU Directive). This "AVMS" Directive is not yet finalised, but it is intended to extend the current rules and regulations applying to traditional television services to a broader category of "audio-visual media services".
Interestingly one of these current rules is effectively a ban on product placement in television programming. Could computer games fall within the definition of "audio-visual media services" and thus be subject to a similar restriction?
At present the answer seems to be no, on the basis of the latest draft of Directive, where games appear to avoid being caught by the "AVMS" definition (see here for an earlier Marketinglaw report). However with the Directive yet to be signed off, and Member States of the EU yet to implement its provisions, the possibility that games could ultimately end up being regulated under the AVMS Directive cannot be completely ruled out as yet.
Q. What about in other countries? Do they have any effective regulation of in-game advertising at present?
A. Most other countries do not at present have any specific regulations governing in-game advertising (although expert local advice would be needed on a case-by-case basis). However, as flagged above ("Other statutory restrictions"), there may well be existing local advertising laws which could apply to in-game advertising.
A good example is in Italy, where product placement has generally been deemed to be unlawful across all media (not just TV) – if no measures are taken to alert its inclusion to the viewer or user – because it is regarded as surreptitious or covert. Although the position is not settled, there is a clear risk that in-game advertising could amount to such illegal product placement in Italy unless relevant notices or warnings are included.
Q. Are there any other legal risks to be wary of?
A. As in-game advertising becomes more sophisticated and commonplace, the contractual rights and responsibilities of the main players involved in implementing advertising content into games will increasingly come under the spotlight.
For example last year it was reported that Valve, the publisher of the game "Counter-Strike", was in dispute with the in-game advertising firm IGA Worldwide because an advertising campaign for the Subway fast-food chain had allegedly been implemented by IGA Worldwide into the Counter-Strike game without Valve's permission. The dispute was amicably resolved, but not until IGA Worldwide acknowledged that placing advertising in-game requires the permission of the owner of intellectual property rights in the game.
Although this may seem fairly straightforward, there could be multiple parties involved in the production of a particular game from whom consent may be required – including the platform owner (e.g. Sony (PS3, PSP), Microsoft (Xbox 2) or Nintendo (Wii, DS)), the publisher (e.g. Activision or Electronic Arts), the developer (e.g. Blitz or Kuju), any third party rights holder (e.g. FIFA (Football World Cup) or Warner Bros Entertainment (Harry Potter games)), or an individual providing an endorsement (e.g. Tiger Woods (Tiger Woods PGA Tour) or Tony Hawks (Tony Hawk's Underground)).
The contractual relationships between these parties and the advertiser and agencies involved are likely to become more sophisticated as the in-game advertising industry develops and matures. In particular those involved on the games side may want to retain more flexibility over what advertising they are obliged to accept in their games (perhaps by agreeing a ban on certain types of product or specific companies from placing their advertising in certain games), whilst those on the advertising/agency side may want to obtain greater control over the content of the games to position their products and brands in the best possible way.
Finally disputes may also arise over the ownership of innovative types of in-game advertising content between the game publisher and the advertiser.
Why this matters:
In an increasingly fragmented and cluttered communications space, advertisers are looking for new and innovative ways to get their message across to consumers, particularly by creating their own branded content.
Whilst the games industry has always offered an obvious route into the core 18-34 demographic, its impact has previously been restricted by technology limitations. Not any more – real time online delivery of dynamic advertising content into games is now a reality – and this technological breakthrough has opened up multiple opportunities which is likely to see the in-game advertising industry grow exponentially over the coming few years.