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Governance Challenges in the Global Games Industry

Presentation at the New Directions in the Development of Creative & Media Industries conference, Chinese University of Hong Kong, 7-8 June 2013

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Governance Challenges in the Global Games Industry

  1. 1. Governance Challenges inthe Global Games IndustryNew Directions in the Development ofCreative & Media Industries – June 2013Darryl Woodford /
  2. 2. A WORD OF CAUTION• Lots of optimism: new innovations, new business models– HalfBrick & Beyond• But what is the impact on players of these businessmodels?• Where does the revenue come from?• How will governments react?
  3. 3. KOMPU GACHA• About to view a clip from “Grand Chase”, described as afree MMO.• And you can play for free. However, advanced skills arehard (or in some cases, impossible) to acquire for free.• You can get certain items for straight cash.• But the best equipment is acquired through playingGacha.
  4. 4. KOMPU GACHA• This is no longer considered a game, but is regulated asif it were gambling.• “For example, in Japan the Consumer Affairs Agencyhasrecently announced it intends to regulate a paidlottery mechanic for virtual goods known as gacha ,whilein the UK the Gambling Commission has reportedlycommented on social games as being on the perimeterof gambling regulation and thus being monitored bythem” (World Online Gambling Law report, June 2012)
  5. 5. KOMPU GACHA• “There‟s a reasonable argument that complete gachawould be regulated under gambling law under at leastsome (if not most) Western jurisdictions, while at thesame time being a very lucrative game mechanic”.(Purewal, 2012).• [Social games are] “not prohibited under the IGA as theydo not satisfy the definition of a gambling service, due tothe virtual currency not being redeemable for real moneyor anything else of value” (Australian IGA Review)
  6. 6. WHAT ELSE SHOULD BE?• What else is „gambling‟? What else should be? Are thereother types of behaviors that should/will be regulated.• UK Gambling Act:–„Gaming‟ means „playing a game of chance for a prize‟. Aperson plays such a game if• „he plays a game of chance and thereby acquires a chance ofwinning a prize; and• whether or not he risks losing anything at the game‟”
  7. 7. WHAT ELSE SHOULD BE?– An arrangement is a simple lottery if:• (a) persons are required to pay in order to participate in the arrangement,• (b) in the course of the arrangement one or more prizes are allocated toone or more members of a class, and• (c) the prizes are allocated by a process which relies wholly on chance.– An arrangement is a complex lottery if:• (a) persons are required to pay in order to participate in the arrangement,• (b) in the course of the arrangement one or more prizes are allocated toone or more members of a class,• (c) the prizes are allocated by a series of processes, and• (d) the first of those processes relies wholly on chance.
  8. 8. WHAT ELSE SHOULD BE?• “A further issue associated with many gambling simulations is howthe odds are often geared to benefit the player, which may provide afalse impression of the ease of winning. In their evidence to the JointSelect Committee, Professor Blaszczynski and Dr Gainsburyidentified a Canadian research study which compared the payoutrates of free and paid online slot machine games and found that 39per cent of the free-play sites provided higher than usual odds infavour of the player. Professor Blaszczynski noted that this thenencouraged people to play on paid gambling sites where the oddsare different and players end up losing. Such sites may also result indissociation between players‟ actions and the results if they are notlosing real money.”(Australian IGA Review, p. 132-133)
  9. 9. WHAT ELSE SHOULD BE?• “As social media sites, mobile platforms and game developersoperate in a dynamic environment, with their platforms being apotential interface between online gambling organisations andconsumers of all ages, it is essential that government maintains aclose dialogue with such providers on this issue. The CWG has beenconsidering issues around the risks of online gambling to Australianchildren. The issues surrounding children and exposure to prohibitedinternet gambling services or gambling simulation applications willcontinue to require attention.”(Australian IGA Review, p. 136)
  10. 10. DOES THAT GO FAR ENOUGH?• “…a child can buy chips to play an online slot which isalmost as good as anything you find on William HillOnline… In fact, it might even pay out more than a slotyou might find on an online gambling site, which couldalso encourage the vulnerable…But that‟s OK becausethe chips aren‟t real money. Or are they?”(Ralph Topping, CEO – William Hill).
  11. 11. DOES THAT GO FAR ENOUGH?• “That‟s [addiction] what a game like Mafia Wars [onFacebook] essentially creates. The interesting thing isthat you‟re still motivated by that simple triangle Idescribed. Push button, get thing, go do another thing,get award, go on to the next thing. You see people thatmay never have played RPGs getting into the gamemechanics. They may not understand what‟s going on,but they get some fulfillment out of leveling.”(Randy Breen, CEO – Social Gaming Network).
  12. 12. DOES THAT GO FAR ENOUGH?• “Addiction in that vein means interest, passion and trueengagement. However what Randy is (unintentionally Ithink) relating in the above quote is not the addiction ofengagement through awesomeness. Instead it is theaddiction of compulsiveness […] The reality is thatthey‟ve actually sort-of kind-of half-intentionally built avirtual slot machine industry”(Jas Purewal, Lawyer at Osborne Clarke – writing forGamasutra).
  13. 13. DOES THAT GO FAR ENOUGH?“If in the everyday economytime is spent to earn money,within the economy of the zonemoney is spent to buy time.“You‟re not playing for money,”says Julie, “you‟re playing forcredit – credit so you can sittheir longer, which is the goal.It‟s not about winning, it‟s aboutcontinuing to play”(Dow Schull, 2012, emphasis mine)
  14. 14. DOES THAT GO FAR ENOUGH?“It is possible for a sense ofmonetary value to becomesuspended in machine gamblingnot because money is absent, butbecause the activity mobilizes it insuch a way that it no longer worksas it typically does. Moneybecomes the bridge away fromeveryone and everything, leadingto a zone beyond value, with nosocial or economic significance.”(Dow Schull, 2012)
  15. 15. WHALES“Las Vegas lives for big fishand the even bigger „whales,‟who gamble millions during atypical three‐day stay. The bigcasinos have tried almosteverything to lure them, sayscasino analyst Jason Adler ofBear Stearns. „Think of it asan arms race,‟ he says”(USA Today, 2000, cited in Humphreys, 2010)
  16. 16. WHALESSource: Playnomics --
  17. 17. WHALESSource: Playnomics --
  18. 18. WHALES: 1% are $192k of $590kSource: Playnomics --
  19. 19. SOME EXAMPLES:– Second Life (2010):Source: Personal Screenshot
  20. 20. SOME EXAMPLES:– Facebook Slots (Assorted)Source: GameSysCorporate:
  22. 22. HOW LONG UNTIL A MEDIA PANIC?• Tom Waterhouse (a sportsbookmaker) undertooksubstantial cross-advertisingand product placement withAustralian broadcaster Nine‟scoverage of Rugby League.Two weeks of relentlesspressure, governmentintervention and newregulations forced him toscale back his appearances.• Industry should act beforethe media does.
  23. 23. ACKNOWLEdGEMENTS• ARC Centre for Excellence in Creative Industries andInnovation (CCI) -• Social Media Research Group, Creative IndustriesFaculty, Queensland University of Technology --