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April 20 Tuesday

Winners and Losers: Competition with and Without IP in the Video Game Industry, BJ Ard, University of Wisconsin Law School

  • Tuesday, April 20, 2021 at 12:00PM - 1:30PM
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Video games continue to grow in economic and cultural significance. The video game industry claimed $145.7 billion in global revenues in 2019, surpassing box office revenues at $42.5 billion and music industry revenues at $20.2 billion. Games like Fortnite and Minecraft are now fixtures of popular culture, and in the lead-up to the 2020 election Congresswoman Alexandria Ocasio-Cortez garnered over 4.5 million views by taking to the popular video game livestreaming platform Twitch to get out the vote. Despite its growing importance, the video game industry has received little attention in legal scholarship on the creative industries.

This project enters the gap to examine how IP law drives investment, creative decisions, and ultimately competition in the video game industry. In particular, it examines the apparent disconnect between the expense of developing a new video game and the relative lack of legal protection against copying. New games can cost upwards of $100 million to produce. While these games enjoy some degree of IP protection, litigation over the past several decades has demonstrated that competitors are free to release “clones”—games that are remarkably similar in their look, plot, and gameplay—due to exceptions and limitations in copyright. Ordinarily we might predict that the risk of being undercut in this way would discourage investment into high-budget projects. How can firms justify spending so much if the resulting works have this legal vulnerability?

The answer lies in a closer examination of where those development dollars are directed. My working hypothesis is that firms focus on elements that can be legally protected, like trademarked franchises and copyrighted characters, as well as elements that are not legally protected but simply expensive to copy, such as cutting-edge graphics and extensive marketing campaigns. These dynamics may help explain the observation that video games have become increasingly formulaic and reliant on sequels: firms may stick with the tried-and-true and avoid creative risks because they must generate enough sales to reliably recoup millions of dollars in development and promotion costs. These dynamics may also provide insight into the precarity of independent game studios who develop worthwhile innovations: well-financed studios can exploit innovations in gameplay or theme pioneered by independent developers because there is little IP protection for these elements, while independent developers lack the graphics and advertising budgets to compete if a major studio creates a clone.

BJ Ard is an assistant professor at the University of Wisconsin Law School and an affiliated fellow at the Yale ISP. Prior to joining the UW faculty in 2018, Professor Ard worked as a visiting assistant professor at the University of Arizona James E. Rogers College of Law, a resident fellow at the Yale ISP, and in private practice at Irell & Manella LLP in Los Angeles. Professor Ard's areas of teaching and scholarship include intellectual property, privacy, and the intersections of law and technology. Professor Ard completed his J.D. and Ph.D. at Yale Law School, where he was awarded the Stephen J. Massey Prize for his work in the Community and Economic Development Clinic and served as Managing Editor of Yale Law Journal. After law school, he served as a clerk to Judge R. Lanier Anderson III of the Eleventh Circuit.

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