The video games industry – PC games, mobile games, console games and browser/social network games – is one of the fastest growing industries.
On the global video games market, the value of which is estimated at €159.3 billion with 270 million players, Chinese market has the biggest share, and it’s followed by the markets of USA, Japan, Germany and Great Britain.
Mobile games posted the strongest growth, since many internet cafés were closed during the pandemic, and availability of mobile devices is on the rise. According to some analysts, mobile gaming will bring in $77.2 billion in revenue in 2020, up 13.3 percent from 2019.
With this, the new gaming industry will surpass the global film industry.
Regardless if you are a video game publisher, developer, freelancer or licensor, or otherwise involved in the video game industry, each of these key players must necessarily understand the legal environment needed to develop games, the contracts that need to be concluded, and which regulate interpersonal relationships in the gaming industry, and all other legal aspects of the gaming industry.
Legal aspects
Legal understanding and knowledge is required from the early stages of the concept and pre-production through production and implementation stage, including the documenting of investors’ investments and regulation of licences, intellectual property and all other rights and obligations of each one of the participants that has to be contracted.
Thus, a number of contracts and contractual provisions have to be prepared:
- Development Contract
- Investment Contract
- Employment Contract
- Nondisclosure Agreement – NDA
- Distribution Agreement
- Licence Agreement
- End user Licence Agreement – EULAs
- Terms of Service – TOS
The structure of participants in the video game industry
- Developers – persons specializing in software development, i.e. in the video game industry, persons who create a video game and all the segments it consists of – image, sound, design and other components that a particular game will require. Although there are still small developers, today better known as “indie” developers who can create a video game and place it on the market, the market is ruled by companies that employ a large number of developers, workers and teams involved in the video game production process. So we have modelers who will make models for the game, or the skeleton of the game itself, artists who will contribute to the visual appearance of the game itself, designers who take care of the experience of the game itself. In addition, teams of engineers create the foundation of the video game, i.e. they take care of certain parts that characterize the game.
- Publishers – participants who make sure that the game is placed on the market. Publishers are most often companies that work with a large number of developers, and research the market and consumer needs in order to create a gaming portfolio with as high a chance of success as possible. In addition to the above, publishers fund the entire project and strive to create a marketing campaign
- Distributors – they allow the game to be downloaded in the classic way or in digital form via digital distribution platforms without buying it in a classic store. Until twenty years ago, video games were distributed or sold exclusively in physical form. With the advent of the internet, video games began to be sold online, and today this sales channel is the largest part of sales
- Traders
- Buyer
- End users of products, also known as “players”, i.e. persons participating in the creation of relationship with characters in the game, the story that goes together with the video game, the music and the mechanics itself.
Interaction and connection between developers, distributors and publishers is very common and requires complex legal monitoring of these relationships.
Legal provisions on video games in the Republic of Croatia
Law on Audiovisual Activities published in the Official Gazette no. 61/18 and entered into force on 19 July 2018, introduced the category of video games for the first time. Thus, the production of video games is clearly defined as an audiovisual activity, and is classified in the same audiovisual activity as the production of other multimedia content, TV series and films and the provision of on-demand audiovisual services such as the Internet and other media.
This Law regulates the definition of audiovisual activities and audiovisual work so that they include video games, which created a legal framework for further development of one of the most propulsive segments of the audiovisual industry.
Thus, the law states that audiovisual works are feature and documentary films, animated films, experimental films, multimedia and transmedia projects, television series and films, video games and all other audiovisual works that are artistic and/or authorial expression regardless of the technology used to create them, the base on which they are fixed and the manner in which they are displayed.
Along with some benefits, the legislator has prescribed obligations for game developers as well. There is an obligation to emphasize the categorization of each work before its publication with regard to the age of the users for whom it is intended. The law prohibits the distribution, sale and rental of video games to minors if the category of games is not appropriate for their age. Also, public display and advertising of games that are not suitable for minors is prohibited.
Is advice of legal experts necessary?
The video games industry is developing very quickly and dynamically. Major players in the gaming industry use legal advice of legal experts, most often specialized lawyers who are familiar with the industry and are up to date with the latest achievements and trends.
All other participants in the gaming industry, including start-ups that are entering the market or are already on it, must get advice from legal experts in order to create a balance with large investors and thus achieve desired financial results.