Midway Says Adios to ESA?

February 17, 2009 -

Bankrupt game publisher Midway has apparently left the membership ranks of the Entertainment Software Association. The Washington, D.C.-based ESA represents the interests of U.S. game publishers.

GamePolitics notes that Midway, which filed for bankruptcy last week, has been removed from the list of member companies on the ESA's website. Such removal has preceded the ESA's official acknowledegment of memco departures in several recent cases.

The move probably speaks more to Midway's desperate financial straits than anything else. With Midway's exit, the ranks of the ESA have dropped to 20. At the beginning of 2008, 28 companies belonged to the organization.

We have asked the ESA for confirmation.

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Are Booth Babes Returning to E3?

February 7, 2009 -

The Entertainment Software Association banned booth babes from E3 in 2006, but they may be returning to the game industry's big dance in 2009 as the ESA seeks to restore the expo's former glory.

In an interview with Danny Pena of GamerTag Radio, ESA exec Rich Taylor alludes to - but doesn't quite confirm - that booth babes will make a comeback.

Play the one-minute clip to hear Taylor's comments.

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Guv Declares "Entertainment Software Day" in Texas

February 3, 2009 -

Gov. Rick Perry (R, at left) has proclaimed today "Entertainment Software Day" in Texas.

The declaration is apparently the first of its kind in the United States.

In addition, both chambers of the Texas legislature have passed resolutions recognizing the video game industry's contributions to the Lone Star State. Those resolutions were sponsored by State Sen. Bob Duell (R) and Rep. Dawnna Dukes (D), both of whom have worked on financial incentives for Texas game developers in the past.

The news comes by way of a press release from the Entertainment Software Association. The trade group which represents U.S. video game publishers enjoys a strong connection to Gov. Perry. GamePolitics readers will recall that the Guv delivered the keynote speech at E3 2008.

ESA CEO Mike Gallagher commented on the Texas-sized salute to the game biz:

The support of Governor Perry, Senator Duell and Representative Dukes for the entertainment software industry in Texas is an endorsement of the artistic and economic contributions our industry has made to the state.

These lawmakers are helping grow our industry as we work to create new jobs for Texans; boost the state’s economy; and help discover new ways computer and video games can improve the ways Americans live, work and play.

According to the ESA, Texas's game industry adds $395 million to the state's economy.

Activision Returns to E3

February 2, 2009 -

Activision's back!

The Entertainment Software Association has issued a press release which offers new details on E3 2009. But the biggest news is that Activision, which was not an official exhibitor at E3 2008, will be on the show floor when E3 opens in June.

While Activision will be exhibiting at E3, it has not, apparently rejoined the ESA's membership ranks.

As for ESA, the game publishers' trade group seems to be improving its P.R. efforts.  E3 2009, for instance, has a great-looking new website and the ESA has also established an official E3 presence on both Facebook and Twitter,
 

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Game Biz Sales Topped $22 Billion in 2008

January 28, 2009 -

While recent studio closures and layoffs have shown that the video game industry is far from recession-proof, game publishers still managed to post record-breaking sales numbers for 2008.

According to a press release issued by the Entertainment Software Association this morning, video game hardware and software sales exceeded $22 billion last year. That figure represents a 23% increase over 2007.

Nearly $12 billion of total industry revenues came from game software sales. The industry finished the year strong, with December sales topping the $5 billion mark.

ESA boss Mike Gallagher commented on the impressive revenue figures:

Even in difficult economic times, the video game industry continues to support our country’s local, state and national economies with record-breaking sales figures and rapid technological innovation.

 

Our industry’s exceptional creators, artists, and storytellers, coupled with a commitment to providing unparalleled entertainment, have fueled high-octane growth, turning video games into the most sought-after medium on the market today.

The ESA also broke down sales by ESRB rating:

  • E rating - 45.3%
  • E10+ rating - 12.1%
  • T rating - 26.7%
  • M rating - 15.9%

The sales data included in the ESA press release was compiled by the NPD Group.

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ESA Lobbying Adds Up to $4 Million in 2008

January 27, 2009 -

The Entertainment Software Association spent a record amount on lobbying in 2008, according to a report by Gamasutra.

The trade organization, which represents the interests of U.S. video game publishers, spent $4,244,364 for the year, including $1,135,500 in the fourth quarter. That's roughly a 25% increase over 2007. So what issues was the ESA focused on? Gamasutra reports:

The ESA's filing cites activity in both chambers of Congress on broadband deployment, online gaming governance and immigration issues, and throughout Washington at the U.S. Trade Representative, Department of State, National Security Council Patent & Trademark Office and other agencies on trade regulation, anti-piracy and patent modernization.

Filings for the three firms retained by the ESA—Smith-Free Group, Jenner & Block, and Telemedia Policy Group—reveal that their efforts were focused almost exclusively on Congress towards matters concerning the regulation of games themselves and perception towards ESRB ratings.

Another filing reveals that the ESA added the services of the Monumental Policy Group -- whose existing clientele includes Microsoft, IBM and Sybase. Monumental's quarterly disclosure filing shows the firm lobbied Congress and U.S. Customs and Border Protection on trade and copyright matters.

The immigration issues mentioned by Gamasutra refer to the topic of H-1B visas for highly skilled foreign workers. A document obtained by GamePolitics doesn't specify which side of the issue the ESA was lobbying, but it's safe to assume they are in favor of H-1Bs.

Media Coalition Gets First Amendment Scholar as New Chair

January 8, 2009 -

The Media Coalition, a free speech defense trade group which numbers the Entertainment Software Association (game publishers) and Entertainment Merchants Association (game retailers) among its members, has a new chair.

As reported by Video Business, First Amendment scholar and author Chris Finan (left) will succeed the EMA's Sean Bersell at the reigns. Of the transition, Bersell commented:

I am extremely pleased that Chris Finan, who is incredibly knowledgeable about free speech issues and well respected, is assuming the chair of Media Coalition. The leadership and credibility he brings to our efforts will enhance our ability to counter government censorship of publications and entertainment.

Speaking about his new assignment, Finan said:

Media Coalition plays a critical role in protecting what the American people can see, read and hear.

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ECA's Hal Halpin Expects ESA to Lose More Members in 2009

December 30, 2008 -

In a recent feature, Crispy Gamer named its Top 21 News Stories of 2008. Coming in at #16 was the  series of member defections which plagued game publishers' trade group the ESA.

Hal Halpin, president of the Entertainment Consumers Association, commented:

I’m not sure that there’s a lot more I can add to what has already been said about the defecting companies or their impact on the [ESA] apart from that I do believe it will continue. Things have fundamentally changed in the past few years and the recession’s impact on the industry is far from over…

 

That fact alone could drive one or two more publishers to leave, given the rising dues costs. Having a strong association representing the industry is important for us all, so I hope that things will change for them in ’09… perhaps with the newly restructured E3.

The ESA began 2008 with 28 member companies, but will end the year with just 21. Exiting were: Activision, Vivendi, LucasArts, id, Codemasters, Crave, and NCsoft.

FULL DISCLOSURE DEPT: The Entertainment Consumers Association is the parent company of GamePolitics.

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Video Game Biz Involved in Effort to Lobby Obama Transition Team

December 15, 2008 -

Barack Obama does not take office until January 20th, but the video game industry is already lobbying the President-elect, via an intermediary.

The game industry's issue, at this point, is copyright protection. Along with the likes of the RIAA (music biz) and MMPA (movie biz), video game publishers trade group the Entertainment Software Association belongs to an organization known as the International Intellectual Property Alliance. It is the IIPA which is doing the actual lobbying.

Toward that end, the IIPA has provided the Obama team with its list of Copyright Industry Global Challenges for 2008, and is believed to have met with them as well. For its part, the Obama team, in an effort at greater government transparency, has listed all outside lobbying efforts - including the IIPA's - at its remarkable Change.gov website.

Among the game-related concerns cited in the document are:

  • Internet-based piracy
  • Optical disc piracy
  • End-user piracy
  • Cartridge-based video game piracy
  • Open access to foreign markets

GP: There's nothing new or especially egregious in the IIPA document - unlike the MPAA's separate effort to convince Obama to adopt IP enforcement measures which would essentially throw consumers' due process rights under a bus.

On C-SPAN, ESA's Gallagher Predicts New ESA Members

December 8, 2008 -

On the very same day GamePolitics broke the news that NCsoft had dropped its membership in the Entertainment Software Association, Mike Gallagher, CEO of the game publishers trade association, predicted that new, "exciting" member companies would join the ranks of the ESA.

Gallagher's comments came during an appearance on C-SPAN's The Communicators on Saturday.

Gallagher was interviewed by C-SPAN's Pedro Echevarria along with Mike Musgrove, who often writes about games for the Washington Post.

The half-hour program, which touched on a number of issues, is worth a look. Here are samples of Gallagher's comments:

How the ESA looks at the incoming Obama Administration:

If you look at President-elect Obama's technology platform, he specifically calls out protection of intellectual property overseas, but also protection of intellectual property at home. So, we're encouraged by what we see there. We also just had the PRO-IP act passed which places an intellectual property coordinator in the White House. So, we're very encouraged by that...

Whether the ESA will pursue RIAA-style IP enforcement tactics against consumers:

[Game cosnumers] see great value in paying the price points for the software that we make... We're in a far different position than music... Our companies have seen that threat coming and we've built some protections in. We also have a better value equation with our consumer and with our customer so we look to foster and grow that as our primary means of defeating piracy, making sure it's always worth it to buy the game, as opposed to burning it.

Whether industry self-regulation of its content rating system is working:

It's not me saying it, it's the Federal Trade Commission says it. In May they issued their report which was very strongly in favor of the industry. And then just recently, the National Institute on Media and the Family issued their annual assessment of the industry and gave the ESRB and retailers very high marks...

The future direction of ESA:

You'll continue to see  a strong focus on federal and state policy... In the states, we're seeing tremendous opportunity. Gov. Rick Perry from Texas came to E3, our trade show... he came with the idea of attracting more of our [business]. Georgia, Louisiana, Michigan passed tax incentives to attract our industry...

Gallagher's comments on ESA member companies dropping out:

That was Activision's decision to leave... We have a mission on behalf of this industry that we're going to execute on... We continue to have good communication with [Activision], but we're moving forward. We're going to see some interesting changes this year when it comes to membership. I think we'll be adding some members that will be exciting for ESA as well as the industry... Whether certain companies are in or out or not doesn't really change our focus.

Near the end of the program, Gallagher gets busted doing a bit of subtle anti-Activision lobbying: 

Musgrove: Please give me something I can walk away with here. I know these are both represented companies of yours, but - Rock Band 2 or Guitar Hero World Tour? They look kind of the same to me...

 

Gallagher: I've got to come down pretty heavily in favor of Rock Band 2. 84 tracks, it's a great product... Rock Band is really terrific...

 

Musgrove: Oh, wait a minute, Guitar Hero is from Activision and they're not in the ESA right now... (laughs)

 

NCsoft: ESA Departure Not Based on Finances

December 8, 2008 -

On Saturday, GamePolitics broke the news that MMO publisher NCsoft was the latest company to leave the ranks of game industry trade association the ESA.

At the time GP speculated that the move might have been financially motivated. NCsoft has, after all, experienced some setbacks in recent months.

However, NCsoft's Director of Public Relations, David Swofford, assures us that the decision to leave the ESA is not related to those issues. NCsoft released this statement concerning its ESA membership:

While we appreciate what the ESA does for our industry, we can confirm that NCsoft has elected not to keep membership with the ESA for 2009.

This decision was not financially motivated, as indicated in your story. There have been many changes in the gaming industry over the past couple of years and, like other developers and publishers, we have decided to wait to see how related industry events and organizations further develop before rejoining. We will be reviewing our membership status on an annual basis.

In a phone interview Swofford elaborated on NCsoft's position and pointed out that, prior to leaving, the company did not have a long history as an ESA member:

We joined [ESA] for one year and then we decided we wouldn't [renew].  We think everything the ESA does is great. Right now the timing is just not right for us to be a member of the ESA.

Swofford also told GP that trade show issues are very important for NCsoft, which exhibited at PAX this year, but not E3:

Everyone is looking to see how E3 plays out now.

So, might NCsoft rejoin the ESA fold at some point in the future?

Absolutely. We're going to assess that on a yearly basis.

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Gamasutra Talks to ESA, PCGA about Piracy

December 7, 2008 -

Leigh Alexander takes a look at piracy from the industry side in a two-parter for Gamasutra.

In the first installment, Leigh speaks with Ric Hirsch, the top IP enforcement guy for game publisher's trade group the Entertainment Software Association. Hirsch talks about the ESA's efforts to combat piracy, but points out that its work is undertaken only on behalf of its member (i.e., not on behalf of Activision and the six other publishers which left the organization in 2008):

Part of the problem is [that piracy is] vast... And that's exacerbated by the internet, which has the effect of anonymizing a lot of activity... We use an outside vendor through which we monitor instances of infringing activity involving our members' game product.  Based on the reports... we send takedown notices to ISPs all over the world.

We are trying to pursue some of the principal players... at the top of the piracy food chain, members of warez groups who within days of a game's release and sometimes before, manage to get pirate versions of games available out there on the internet for download.

Over the last eight to 10 years, the U.S. government has stepped up its efforts in addressing IP piracy, in which game piracy is a small but growing part... Part of our mission is to make law enforcement understand better the problems that game piracy creates for the development of local game markets and how it impacts businesses and tax revenues from the game sector...

Meanwhile, in part two, Bo Svensson, a spokesman for the fledgling PC Gaming Alliance, discusses the controversy surrounding digital rights management (DRM):

[Stardock CEO] Brad [Wardell]'s approach is very hands-off. I think that if the PCGA as an organization is going to be all-embracing, if Stardock were to become a member and EA were to become a member, I think there are very obvious differences in their strategy as pertains to DRM. As a PC gaming organization, we probably need to be able to embrace both approaches, and still be able to make recommendations.

I think it's fair to say that, along the continuum of what is the best experience for the consumer and what provides the highest level of protection for developers and publishers, there's a whole realm of grays in there. I don't think that anyone has the right answer today.

GP: Hirsch also discusses the ESA's efforts to get the anti-piracy message into elementary schools. While I don't disagree with the message, as a parent and a taxpayer, I find the idea of permitting a corporate lobbying group to waste valuable educational time to be fairly outrageous. It's surprising that watchdog group the Campaign for a Commercial-free Childhood hasn't weighed in on this one.

There's much more to Leigh Alexander's story than we can summarize here. If the topic interests you, be sure to check it out.

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Has NC Interactive Left the ESA?

December 6, 2008 -

It would appear that financially-troubled NC Interactive (the US arm of Korea's NCsoft) has left the membership ranks of game publishers trade association the Entertainment Software Association.

Last month, NCsoft announced that it plans to shut down underperforming MMO Tabula Rasa early in 2009. Facing a difficult financial picture, NC Soft has laid off a number of employees at locations in both the US and UK. The publisher also recently parted ways with famed Ultima series designer Richard Garriott. 

Departing the ESA is likely a cost-cutting measure for NC, which also chose not to exhibit at E3 this year. Game publishers pay significant fees to belong to the organization. While no announcement was made by either NC Interactive or the ESA, the trade association's membership page no longer lists NC among its ranks.

It has been a difficult 2008 for the ESA, which began the year with 28 member companies. As NC exits there are now just 21, meaning that CEO Mike Gallagher's outfit has lost a quarter of its membership in 2008.

As GamePolitics reported in October, Codemasters was the most recent company to depart. Game publishers confirmed as leaving the ESA this year include:

  • Activision
  • Vivendi
  • LucasArts
  • id
  • Crave
  • Codemasters

We have a request in to the ESA for confirmation on NC's apparent departure.

UPDATE: Confirmed by ESA Senior VP Rich Taylor:

We can confirm that NCsoft decided not to renew its ESA membership.  We respect their decision and remain committed to serving the public affairs needs of the computer and video game industry.

UPDATE 2: NCsoft's David Wofford has told GP that the decision was not a financial one. See our follow-up story.

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NIMF Fires Back at GP

December 4, 2008 -

Yesterday on GamePolitics I wrote that watchdog group the National Institute on Media and the Family has been co-opted by the video game industry.

It wasn't the first time I've taken NIMF to task for accepting a $50,000 grant from the Entertainment Software Association, the lobbying group which represents US game publishers. Not surprisingly, NIMF took umbrage at my comments. Spokesman Darin Broton told GameCyte:

We’re never going to stop putting the [video game] retailers or the [video game] industry’s feet to the fire... You can rest assured that we’ll be talking publicly in 2009 about the issue of gaming addiction.

 

[NIMF accepted the ESA grant because] we’re working on a project to create an online tool for parents to tackle the issues of online predators, cyberbullies, etcetera. It’s not a blank check. It’s for a specific spot on the website.

 

Yes, there was hesitation [about accepting the ESA grant], and if there wasn’t hesitation, I don’t think any of us would be doing our jobs. But I think the end result of giving a parent another useful thing for them to make better decisions at home with their kids is worthwhile.

 

I’ve actually laughed at GamePolitics, because before this, GamePolitics was a frequent critic of NIMF for being too harsh on the industry. It’s a case of wanting to have your cake and eat it too.

I look forward to seeing what GamePolitics has to say in early 2009, and see if they still think we’re in the back pocket of the industry.

GP: I'm glad to see that my comments struck a nerve - they were meant to.

That said, I should point out that I have a great deal of respect for Dr. David Walsh and his organization. But there are certain lines which a self-proclaimed watchdog group like NIMF just shouldn't cross. And accepting money from the very industry you claim to be watching is one of those lines - maybe the biggest, brightest one of all. It's the reason why you won't find any paid video game advertising on GamePolitics, which is owned by the ECA, a game consumer advocacy group.

And while I haven't always agreed with NIMF's conclusions or its methodology, I've always believed that the organization's heart was in the right place. Over the years, David Walsh has been unfailingly respectful in his treatment of the gamer community and gaming press. As we all know, not every game critic behaves with such decency.

Beyond that, it's not a bad thing to have rational game industry watchdogs at work. When operating appropriately, groups like NIMF provide a useful checks-and-balances function. Yes, we may chafe at some of their conclusions, but sparking a dialogue about games and their potential effects on young people can't hurt.

In taking GamePolitics to task, Darin Broton indicates that NIMF will have some watchdog-worthy comments early in the new year.

We'll be watching.

FULL DISCLOSURE DEPT: The ECA is the parent company of GamePolitics.

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ESA Denies Pursuing RIAA-style IP Enforcement

December 1, 2008 -

A Slashdot article posted just before the Thanksgiving break speculated that game publishers lobbying group the Entertainment Software Association might be turning to the aggressive, anti-file sharing tactics which have made music industry trade group RIAA infamous.

In response to an inquiry from GamePolitics, however, an ESA spokesman said the organization had not altered its response to piracy issues.

The question arose on Slashdot - and quickly disappeared into the mist of the Thanksgiving holiday - last Tuesday when Slashdot quoted a user named "cavis":

My organization just received an e-mail from the Intellectual Property enforcement division of the [ESA]. It accuses one particular IP address with 'infringing the copyright rights of one or more ESA members by copying and distributing unauthorized copies of game products (through peer-to-peer or similar software/services).' It goes on to name the filename and the application: Limewire. Has anyone had any contact with this group? Are they following the RIAA's lead and pursuing litigation for peer-to-peer piracy? I'm just trying to evaluate what I am in for as I try to battle P2P within my network." ...The [ESA's] letter reads in part...:


The... ESA is authorized to act on behalf of ESA members whose copyright and other intellectual property rights it believes to be infringed as described herein.

Based on the information at its disposal on 24 Nov 2008... ESA has a good faith belief that the subscriber using the [IP address] infringing the copyright rights of one or more ESA members by copying and distributing unauthorized copies of game products (through peer-to-peer or similar software/services), in violation of applicable copyright laws, through internet access that [agency name] provides directly to the [IP address] or through a downstream provider that purchases this access for [IP address].

While Slashdot headlined the article, Entertainment Software Association Following RIAA?, some follow-up comments to the story questioned that interpretation. So GamePolitics put the question directly to the ESA. Ric Hirsch, the lobbying group's Senior VP for IP Enforcement, responded:

Recent press inquiries regarding ESA notices to ISPs about possible online infringements of ESA members’ IP rights have questioned whether these notices represent a new enforcement tactic on the part of ESA.  

 

The ESA has been sending notices to ISPs regarding online infringements for many years, dating back to 2000. In short, this is not a new enforcement mechanism or a new front in our efforts against piracy. Rather, this is an example of the ESA’s ongoing vigilance and proactive work in detecting and deterring illegal activity.

GP: While the ESA's recent selection of a RIAA's former attorney as its general counsel initially fueled speculation that the organization might adopt the RIAA's draconian approach to file-sharing issues, that would not appear to be the case, at least not in this instance. Most notably, there's no apparent demand for a cash settlement in lieu of a lawsuit. And while the full ESA letter is not cited by Slashdot, it appears to be more of a takedown notice than anything else.

We'll update if more info becomes available.

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Florida A.G. Once Fretted About Wiimote, Now on ESRB Bandwagon

November 28, 2008 -

When gamers last heard from Bill McCollum, the Florida Attorney General was fretting that the motion-controlled Wii version of Manhunt 2 would have a generation of kids practicing to be killers. As GamePolitics reported in June of 2007, McCollum apparently got that idea from Jack Thompson.

These days, McCollum is, like many political colleagues in other states, urging parents to follow ESRB content ratings while shopping for holiday gifts. A press release on his official website quotes the Republican A.G.:

Though the holiday season is one of the busiest times of year, it is also perhaps the most important time of the year for consumers to make sure they know what they're buying for their loved ones. The ESRB rating system provides parents and others with age and content information which can be informative tools when purchasing games for family and friends.

McCollum's press release also quotes ESRB head Patricia Vance as well as ESA CEO Michael Gallagher.

But not Jack Thompson.

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ESA Boss Answers 10 Questions... GP Has One More

November 26, 2008 -

GameDaily is running a feature in which ESA boss Michael Gallagher answers 10 questions from readers.

Although it sounds juicy, there are no real fireworks in either the questions and answers. Here's a sample:

9. What areas of the ESA do you feel need improvement in terms of serving the needs of the U.S. game industry, and what are you doing to address these?

Fixing the E3 Expo is a critical step forward. We need an industry event that captures the energy, creativity, and growth on our entertainment medium. I look forward to the lift ESA will get from the much improved show next June. In addition, it is critical for our industry to elevate its participation in the political process – through the ESA PAC as well as through the hundreds of candidates ESA supported on the state level. We need to boost those resources and improve targeting going forward.

On the grass roots level, we need to continue to grow, excite, and unleash the Video Game Voters Network in the policy arena... The video game industry is dynamic and fast-growing – and ESA must continue to foster and represent those qualities on behalf of the industry, its innovators, entrepreneurs, artists, and consumers.

Gallagher also talks about his view of what the Obama administration will mean for games. Interesting, but he has already tackled this subject in some detail.

GP: I would have liked to have asked if Gallagher really imagines that the VGVN can legitimately represent game buyers when game sellers are paying the freight? Isn't that a bit like asking General Motors to represent drivers?

Sure, the interests of gamers and publishers converge on issues like censorship. But those interests diverge wildly when it comes to a number of issues which affect consumers such as DRM, the DMCA and used game trades.

And, yes, I recognize that I've got an inherent conflict of interest on this topic due to the ECA's ownership of GamePolitics. It's really the main reason I haven't been more vocal on this issue. But given the many controversies over anti-consumer measures like SecuROM, I'm frankly surprised that other outlets in the gaming press don't weigh in.

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Feds' Mod Chip Raid Ended a $2.5 Million Piracy Operation

November 24, 2008 -

A 2007 investigation by Homeland Security agents led them to conclude that a Texas company was raking in as much as $2.5 million per year through the importing and reselling of mod chips obtained from a supplier in China, GamePolitics has learned.

When installed in video game consoles, mod chips allow for the playing of pirated copies of games, but have other more legitimate uses as well. Although they are legal in some countries (Canada, Australia, UK), mod chips are prohibited in the United States under terms of the Digital Millenium Copyright Act.

To date, federal law enforcement officials have kept a tight lid on "Operation Tangled Web," their code name for a wide-ranging investigation into mod chip distribution in the United States which culminated in a series of raids in August, 2007. However, a detailed search of publicly-accessible court records by GamePolitics has turned up signed copies of warrants authorizing investigators from U.S. Immigration and Customs Enforcement to seize two accounts controlled by a Texas man, identified by investigators as Manuel S. Diaz-Marta of Dallas. The warrants were sworn to by ICE Agent Vaughn Johnson, an asset seizure specialist.

GamePolitics readers may recall that on August 1, 2007, ICE agents raided 32 locations in 16 states, seeking evidence of mod chip distribution. Federal agents received technical assistance in the case from video game publishers trade group the Entertainment Software Association.

According to the documents obtained by GamePolitics, the investigation into Diaz-Marta began in November, 2006 when ICE Agent William Engel of the agency's Cleveland Field Office made undercover purchases of PlayStation 2 mod chips from www.modchipstore.com. An ICE check of domain registration records showed that the URL was registered to a Dallas company, NonStop Technologies. Feds then traced a money order used to make their undercover purchase and found that it had been deposited into a Wells Fargo Bank account registered to NonStop Technologies and Diaz-Marta. ICE alleges that Diaz-Marta listed his gross annual sales as $1,800,000 on Wells Fargo account application forms. When investigators seized the Wells Fargo account on August 1, 2007 it contained $109,100.55.

ICE also alleges that, between August, 2006 and February, 2007, the Wells Fargo account was used to make forty wire transfers totalling more than $500,000 to Supreme Factory, a Chinese company which federal investigators say is known to them as a distributor of mod chips. During the same time period, more than $1.2 million was deposited into the Wells Fargo account, presumably from mod chip sales within the United States. At that rate, federal investigators calculated that modchipstore.com would have been generating roughly $2.5 million per year in sales.

During the August 1, 2007 raid, investigators searched Diaz-Marta's residence, according to one of the affidavits signed by Agent Johnson. At that time agents discovered more than 100 mod chips as well as invoices from Supreme Factory for additional devices. Agent Johnson estimated that 80% of NonStop Technologies' business derived from mod chip sales, writing in a seizure affidavit:

The business cycle for NonStop Technologies more closely resembles that of a drug dealer than that of a provider of legitimate consumer goods. The sales volume and turnover being conducted by NonStop Technologies is indicative of the sale of a highly sought after and scarce product...

As a result of the search of Diaz-Marta's residence, agents also moved to seize a Scottrade account. No funds were contained in that account, however.

GP: Today's GamePolitics exclusive coverage is the first public indication that 2007's Operation Tangled Web was a major investigative success for the feds, as well as something of a coup for the ESA's anti-piracy team. Heretofore, the only publicly available information on the case has consisted of scattered, largely unofficial reports concerning apparent small-fry who were caught up in the sweep. Now, with evidence of NonStop Technologies' impressive revenue stream and large wire transfers to China, the picture of the investigation has changed considerably.

It is important to point out, however, that no information has been released by the U.S. Attorney's Office regarding potential indictments of anyone involved in the case, including Diaz-Marta. ICE declined GP's request to comment for this story. We should also point out that 31 other places were raided on August 1, 2007. Very little is known so far about what was found at most of those locations.

Document dump:

1.) seizure warrant for Wells Fargo Bank account

2.) seizure warrant for Scottrade account

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ECA's Hal Halpin Dissects the Political Side of Gaming

November 23, 2008 -

In a no-holds-barred interview with Crispy Gamer, Entertainment Consumers Association president Hal Halpin dishes on the uneasy relationship between Washington, D.C. and the video game community.

As part of his leadership role with the ECA, Hal does quite a few interviews, but this one with CG's James Fudge is probably the most in-depth yet. Here are some of Hal's thoughts:

On game publisher group the ESA's new (in 2008) practice of making campaign donations:

The [ESA] represents the rights of game publishing companies and as such has a duty to do what it can to influence legislators by lobbying. I know that starting up a PAC (Political Action Committee) was a decision that they grappled with for over a decade... PACs can be effective tools, but yes, you do run the risk – nowadays – that the ends may not justify the means...

On game ratings and whether the industry does enough to keep mature-themed games away from minors:

I’ve been a fan of ESRB for quite some time. Of all of the ratings systems... it really is the most comprehensive and valuable... That said, there’s always room for improvement. Perhaps ESRB having more independence from the ESA would be one great step. Another might be to work more closely with us... which we’re working on...

 

I do [think the industry is well at keeping M-rated games away from minors]...

On supposed tensions between the ESA (publishers group) and the ECA (consumers group):

We should be clear that the ESA represents the rights of game publishing companies, not gamers... It’s a trade association that looks after the interests of their member corporations... That said, much of the legislative work that the ESA has done over the years, with regard to First Amendment in particular, has benefitted the sector as a whole – gamers included.

 

As Mike Gallagher (ESA president) and I have discussed several times, the vast majority of the time ESA and ECA are on the same page... but there are clearly other times where our interests are necessarily divergent. Inherently, Mike’s issues will sometimes be in opposition to the best interests of consumers solely because they’re in the best interests of publishing companies...

On frequent game violence critic Sen. Joe Lieberman (I-CT):

Joe Lieberman has been largely misunderstood and painted with a very broad brush in my opinion. While I haven’t agreed with much of what he has said in the past, he alone among legislators was responsible for effecting non-legislative change in our business and did it with a lot of class, I might add.

 

Again, back when I was running [game retailers group] IEMA, I received a call from one of his staff inviting me to his office in Hartford. We had a frank meeting in which he requested that game retailers begin carding for the sale of mature-rated games in much the same way that movie theatre owners were doing, via self-regulatory efforts, with R-rated movies. The IEMA retailers... met the challenge head-on and reacted quickly and efficiently – changing the way in which games were sold, forever.

On game rentals and used game trade-ins by consumers, which some publishers and developers would like to see ended:

I understand the concerns that developer friends of mine have about not getting a second bite of the apple... In the movie business, they produce a theatrical version and then DVD, Blu-ray, Video on Demand (VoD), PSP and pay-per-view versions...

 

[Game biz types] see rental and used as businesses in which they don’t get to participate. And while I understand and appreciate their perspective... I’m still not convinced that rental and used are bad for the sector. We’ve witnessed how rental has provided a low-cost venue for people to try before you buy; same for used...

On the U.S. Supreme Court and its potential impact on video games:

Well, [a change in the balance of the court] will most definitely present a problem for the industry, but not necessarily consumers. The more conservative judges are also the ones that tend to side with intellectual property owners over consumers, for instance. Tech policy is in for a major shift from the right to the left in my opinion, and that would be very good for consumers, but quite disconcerting for the IP-concerned trade associations (MPAA, RIAA and ESA).

 

We’ve also heard that the conservative judges would be more likely to be open to anti-games/gamer bills, so a shift to the more liberal side would be good for both the trade and consumers in that regard.


Hal also points interested gamers to a detailed listing of ECA's position statements.

FULL DISCLOSURE DEPT: The ECA is the parent company of GamePolitics.

In Wake of Election, ESA Boss Sees Historic Time for Game Community

November 21, 2008 -

In an op-ed published at 1up, Michael Gallagher, CEO of game publishers trade group the Entertainment Software Association, frames the recent presidential election as "a historic time for America and the computer and video game community."

Recapping many of the campaign-related game developments (Obama's XBL ads, McCain's Pork Invaders game), Gallagher writes:

The campaign produced a milestone of its own in the use of our technologies to engage and communicate with voters.

 

 For the first time, American gamers and the entertainment software industry played an active role in the political process...

With the U.S. recession deepening, Gallagher also cites the benefits that the game industry provides to the U.S. economy and lays out the ESAS's agenda going forward:

  • working closely with all levels of government
  • preserving the First Amendment rights of gamers
  • supporting parental education efforts around video game ratings
  • protecting our industry's intellectual property
  • leveraging broadband to increase the connected experience
  • working to improve our industry's contributions to the economy
  • supporting state-level tax incentive legislation
     

Gallagher concludes with:

We look forward to working with the Obama administration, the new Congress and state leaders around the country and ensuring that America's governments recognize the positive effects of the computer and video game industry.

UPDATE: For more of Gallagher's thoughts, see GameStop's interview.

Copyright Lobby Group Adopts Dick Cheney Dialogue Model

November 19, 2008 -

If comments by the head of the Copyright Alliance are any indication of things to come, it's going to be difficult, indeed, for video game consumers to have an intelligent and productive dialogue on IP issues with the video game industry. The ESA, which represents U.S. video game publishers, is a member of the copyright lobbying group.

A portion of a recent blog entry by Copyright Alliance executive director Patrick Ross seeks to marginalize those who would question or criticize the current state of IP law. Ross displays a discouraging mentality reminiscent of the Bush administration's efforts to paint Iraq War critics as soft on national defense.

With elected officials, consumer interest groups and gamers asking legitimate questions about issues like SecuROM DRM, the DMCA, ACTA, PRO-IP, and ownership of user-created content, we were disheartened to read these words from Ross:

Copyright truly is a consensus issue, with people and policymakers of all stripes recognizing its value. A few vocal blogs and a few sympathetic media outlets tend to create this notion of a war between creative industries and, well, I suppose consumers, but such a war doesn’t really exist.

The Copyright Alliance head implies that if one does not get behind IP protection as the content industry sees it, then one is either on the fringe, supportive of piracy, or both. In other words, If you're not with us, you're against us.

That's nonsense.

Honest people don't support piracy. But neither do honest people wish - or deserve - to live in an IP police state where tech-challenged elected officials accept IP industry campaign donations and proceed to pass laws that are heavily, if not completely, slanted toward big business.

Get a clue, Mr. Ross.

Ian Bogost Talks Games and Politics at Harvard

November 14, 2008 -

Gene Koo of Valuable Games live-blogs an appearance by serious games guru Ian Bogost (left) at a Harvard study group led by Nicco Mele:

Video games [serve] as a centrifying values issue, making it very cheap [for politicians] to decry video games. Ian mentions the ECA (Entertainment Consumers Association), and the idea of a union of video game players, or a common identity among gamers, “weirds” him out.

Gamer demographics — if there are political games, whom will they reach?: There’s a lot of bad data, but… see the Entertainment Software Association. The better question is to break them down by style/type. Ian’s own games — TSA game since 2006 has approached 50M plays. (< $10K to build).

An Obama game could really sell. Who wouldn’t buy an Obama game? Well...

So what about an abortion game that attempts to help each side understand the perspective of the other side of the debate? ...

Nicco mentions that the [Howard] Dean [2004] campaign’s game did inspire people to donate, get involved. Ian wonders if this idea will “peak” (novelty factor).

The problem is that the vast majority of these [political] games are meaningless tripe. See Ian’s discussion of Pork Invaders, in the Gamasutra article, and also the contrast with Tax Invaders as a rhetorical device.

FULL DISCLOSURE DEPT: The ECA is the parent company of GamePolitics.

ESA Visits Mexican Market, Returns with 91,000 Bootleg Games

November 10, 2008 -

The Entertainment Software Association, the trade group which represents U.S. video game publishers, has issued a press release detailing a raid on a notorious marketplace in Guadalajara, Mexico.

According to the release, Mexican law enforcement officials acting in concert with the ESA raided the San Juan de Dios Market where they seized:

  • 91,200 illegal copies of video games
  • 130,000 video game cover inserts
  • 3,200 empty video game boxes

In June, as GamePolitics reported, the ESA staged a similar operation in Mexico City's Tepito marketplace.

Of the latest raid, ESA boss Michael Gallagher commented: 

Piracy in markets such as San Juan de Dios hurts businesses engaging in the legitimate distribution and retailing of computer and video games. We commend Mexican law enforcement officials for their actions in this raid and are committed to fully supporting authorities around the world who conduct these kinds of enforcement actions.

GP: At left is a video glimpse (not from the raid) of the San Juan de Dios Market.

46 comments

ESA's Nite to Unite Raises $750K for Kids

November 7, 2008 -

The ESA Foundation, the charitable arm of video game publishers trade group the Entertainment Software Association, announced this week that it raised $750,000 for various children's charities at the organization's annual Nite to Unite.

The sold-out event was held on October 22nd in San Francisco. Legendary Nintendo game designer Shigeru Miyamoto (left) was honored with the 2009 ESA Champion Award.

ESA CEO Michael Gallagher commented on the spirit behind Nite to Unite:

The video game industry’s commitment to giving back is stronger than ever. For ten years now, Nite to Unite has been the premiere industry event dedicated to children’s causes and honoring its creative visionaries. I’m honored that so many distinguished individuals and organizations attended.

2 comments

Dancing Judge, Gaming Judge (with baggage) Will Hear California Video Game Law Appeal Today

October 29, 2008 -

This morning when the state of California argues before the U.S. 9th Circuit that its 2005 video game law is constitutional, at least one member of the Court's three-judge appeal panel will have some familiarity with games.

As GamePolitics has previously reported, Judge Alex Kozinski at one time penned game reviews for the Wall Street Journal. On a more serious note, Kozinski has also apparently survived a June scandal in which sexually graphic images were found on a personal website which he maintained.

Other panel members include Judge Sydney Thomas and Judge Consuelo Callahan (left). Callahan has been dubbed The Dancin' Queen of the Ninth Circuit thanks to her penchant for beaking into tap routines (GP: You can't make this stuff up.):

A hoofer with a sense of humor, Callahan likes to surprise judicial and legal gatherings by starting discussions about serious topics and ending with a quip about appellate judges who tap dance around issues. She then pulls off her black robe to reveal a sequined costume and tap shoes.

She's been known to hop on a tabletop or in one case on a judicial bench during these special events and do some pretty impressive steps. "I may be the highest ranking tap dancer in federal court," Callahan said with a grin during a recent interview in her chambers in the Sacramento federal court building. "It is fun and it has a certain shock value."

Shock value, indeed. Wouldn't it be fab if Judge Callahan broke out the tap shoes this morning?

Today's hearing will take place at 9:30 am PST at the McGeorge School of Law in Sacramento. In a press release, State Senator Leland Yee (D), architect of the contested video game law, offered his view:

California’s violent video game law properly seeks to protect children from the harmful effects of interactive, ultra violent video games. Our efforts to assist parents in the fight to keep these harmful video games out of the hands of children should survive Constitutional challenge under all levels of judicial review.
 
Based on an extensive body of peer-reviewed research from leading social scientists and medical associations, we narrowly tailored this law to serve the State’s compelling interest in protecting children. I am hopeful that the 9th Circuit will overturn the lower courts decision and help empower parents with the ultimate decision over whether or not their children play in a world of violence and murder.


Game retailers group the Entertainment Merchants Association, along with game publishers group the ESA, are plaintiffs in the case. The EMA recapped the legal fight surrounding the California law in its own press release - hit the jump for the details.

ESA Boss Lauds Texas Game Dev Incentives, Dings Content Restrictions

October 28, 2008 -

Love the incentives, hate the content restrictions.

As reported by the Austin American-Statesman, that pretty much sums up what ESA CEO Michael Gallagher told the Greater Austin Chamber of Commerce during a recent visit to Texas. While praising a grant package for film makers and game developers passed in 2007, Gallagher rightly criticized:

...a content requirement about not disparaging Texas. Those types of speech restrictions in general are not viewed in favor by the courts. They tend to lead to a lot of problems down the road.

The ESA boss reminded the Chamber crowd that Texas Gov. Rick Perry (R) gave the keynote at this year's E3 (although he probably avoided mentioning how few E3 attendees showed up for the Guv).

The newspaper also mentions a concern that some Texas politicos have about providing grants to developers:

Legislators are warming to the idea of providing state funds to video game companies, but there is still some reluctance. Some fear that a political opponent could accuse them of voting to spend state funds on games like the violent "Grand Theft Auto."

GameCo CEOs Who Trashed E3 2008 Now Singing a Different Tune

October 23, 2008 -

We couldn't help noticing that yesterday's E3 2009 press release the ESA included quotes from two of the most prominent video game industry critics of the 2008 expo.

Both John Riccitiello of Electronic Arts and Laurent Detoc of Ubisoft USA run ESA member companies, so their harsh criticisms of this year's show certainly stung the ESA. It is significant that they are on board with the new format.

Then and now, here's what Riccitiello and Detoc had to say about E3:

Riccitiello:

(July, 2008) I hate E3 like this. Either we need to go back to the old E3, or we'll have to have our own private events.


(yesterday) The E3 Expo will be the pre-eminent North American gaming show next year. The new, larger event is better for industry leaders and for serious gamers.

Detoc:

(July, 2008) E3 this year is terrible. The world used to come to E3. Now it's like a pipe-fitters show in the basement.

 

(yesterday) The video game business will be twice as big in 2009 as it was in 2006 when we had the last real E3 Expo - so get ready for some fireworks! The changes made will ensure that the 2009 E3 Expo conveys the best of what makes us proud as entertainment leaders.

11 comments

E3 2009: Bigger, Not Public

October 23, 2008 -

Reports this week which claimed that E3 2009 would be at least partially open to the public were just wrong, it would now appear.

Yesterday game publishers trade group the ESA, which owns E3, issued a press release detailing the new format. And you're probably not invited. Here's what we know:

  • Dates: June 2-4, 2009
  • Location: L.A. Convention Center
  • Invited: "all qualified computer and video game industry audiences, including international and U.S.-based

When we asked ESA P.R. guy Dan Hewitt to clarify whether the public would be eligible to attend, he told us:

There will be opportunities to view the E3 Expo and learn about what's going on at the show, but it won't be open to the general public.

The show will be capped at 40,000 attendees, well up from the ghost town feel of this year's 5,000 attendee flop, but just a bit more than half of E3's peak years of 2004-2006.

ESA boss Michael Gallagher was interviewed on the new E3 format by Destructoid. Among his comments:

We have a much, much broader audience than the targeted show that we ran the last two years, which was very focused on press-only and really U.S. press. This is meant to target international press, mass media, as well as just gamer press. It's meant to look at retailers in particular.

 

We moved it earlier in the year to make it more relevant to the retail environment. We're looking [for] developers, business partners, hardware and accessory manufacturers. It's a much broader audience, which is much more traditional, or shares more in common with the older versions of E3.


14 comments

Newseek: E3 2009 Format a Result of "Politically Difficult" Negotiations

October 21, 2008 -

Newsweek's N'Gai Croal reports that the new, publicly accessible E3 was born of "long, bruising and politically difficult negotiations."

Although Croal does not specify which entities were hashing out the E3 2009 formula, such talks would presumably include the ESA, which owns the show, the ESA board of directors, ESA member companies and, possibly, representatives from the city of Los Angeles.

The new E3 will run June 2-6 at the L.A. Convention Center. Croal's Level Up blog includes comments from his unnamed source on the deal:

It was a long journey to get there, politically. After vehemently opposing a bigger show three years ago--to now go back to the board, admit a mistake, and advocate for a bigger show. It reflects well on the [ESA] and the [ESA] board to recognize they made a mistake and, regardless of how it would look publicly, go ahead and fix it.

 

The [big] three [console manufacturers'] positions are opposed, indifferent and mildly supportive--not going to say which is which—to adding a consumer show on the back of the media and business summit.

GP: Croal's source credited EA with leading the push to a new format. Indeed, EA CEO John Riccitiello was on record as among those who hated the awful 2008 show.

If we were guessing as to the Newseek source's comments on the big three, we'd say that Sony was opposed (strapped for cash), Nintendo was indifferent (making big money either way) and Microsoft mildly supportive.

8 comments

Report: Details on E3 2009 Revealed Tonight

October 20, 2008 -

E3 2008 was a disaster. But what will the 2009 version look like - provided there is one?

According to Destructoid, all will be revealed tonight on G4's X-Play, hosted by Adam Sessler and Morgan Webb.

GP: Since there is hoopla involved, the ESA must be holding E3 next year - and it must be a very different animal (because if it was the same, everyone at ESA would be fired). Here are the possibilities as we see them:

  • open to the public
  • open to the public & combined with that other L.A.-based flop, E for All
  • back to the pre-2007 extraganza, but open to industry and media only
  • an entirely new show with an entirely new name... in an entirely new city?

UPDATE: I'm hearing unconfirmed reports that the ESA - which owns and operates E3 - is not on board with whatever E3 news G4 has planned for tonight.

UPDATE 2: G4 reports that E3 2009 will remain in L.A., but offer public admission - for a fee. Expect the ESA to drop the official announcement on Tuesday morning.

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Andrew EisenAs it happens, Chinatown Wars is the only GTA game I've played.04/19/2014 - 10:43am
Papa MidnightWith GTA5 (to date) failing to even provide indication of a PC release, I'm realising that this might be the first GTA game that I have not played (outside of Chinatown Wars) since the series inception.04/19/2014 - 8:14am
IanCSo im guessing a bunch of edutainment games, which a lot of people elsewhere are going gaga over, dot count as classics? Okay. If you don't mind me, i have a sudden urge to play Putt Putt....04/19/2014 - 6:15am
MaskedPixelantehttp://www.joystiq.com/2014/04/18/playstation-99-cent-sale-discounts-tokyo-jungle-super-stardust/ Weekend long PSN flash sale. So much stuff is 99 cents for the rest of the weekend.04/18/2014 - 5:59pm
Adam802http://www.polygon.com/2014/4/18/5627928/newtown-video-game-addiction-forum04/18/2014 - 4:14pm
Matthew Wilsonit is a video talking about why certain games/products/consoles do well, and others do not. he back it up with solid research.04/18/2014 - 3:56pm
Andrew EisenI'm not keen on blind links. What is it?04/18/2014 - 3:45pm
Matthew Wilsonthis is worth a whatch https://www.youtube.com/watch?v=MyXcr6sDRtw&list=PL35FE5C4B157509C904/18/2014 - 3:43pm
MaskedPixelanteNumber 3: Night Dive was brought to the attention of the public by a massive game recovery, and yet most of their released catalogue consists of games that other people did the hard work of getting re-released.04/17/2014 - 8:46pm
MaskedPixelanteNumber 2: If Humongous Entertainment wanted their stuff on Steam, why didn't they talk to their parent company, which does have a number of games published on Steam?04/17/2014 - 8:45pm
MaskedPixelanteNumber 1: When Night Dive spent the better part of a year teasing the return of true classics, having their big content dump be edutainment is kind of a kick in the stomach.04/17/2014 - 8:44pm
Matthew Wilsonhttp://www.giantbomb.com/articles/jeff-gerstmann-heads-to-new-york-takes-questions/1100-4900/ He talks about the future games press and the games industry. It is worth your time even though it is a bit long, and stay for the QA. There are some good QA04/17/2014 - 5:28pm
IanCErm so they shouldn't sell edutainment at all? Why?04/17/2014 - 4:42pm
MaskedPixelanteNot that linkable, go onto Steam and there's stuff like Pajama Sam on the front-page, courtesy of Night Dive.04/17/2014 - 4:13pm
Andrew EisenOkay, again, please, please, PLEASE get in a habit of linking to whatever you're talking about.04/17/2014 - 4:05pm
MaskedPixelanteAnother round of Night Dive teasing and promising turns out to be stupid edutainment games. Thanks for wasting all our time, guys. See you never.04/17/2014 - 3:44pm
Matthew WilsonAgain the consequences were not only foreseeable, but very likely. anyone who understood supply demand curvs knew that was going to happen. SF has been a econ/trade hub for the last hundred years.04/17/2014 - 2:45pm
Andrew EisenMixedPixelante - Would you like to expand on that?04/17/2014 - 2:43pm
MaskedPixelanteWell, I am officially done with Night Dive Studios. Unless they can bring something worthwhile back, I'm never buying another game from them.04/17/2014 - 2:29pm
PHX Corphttp://www.msnbc.com/ronan-farrow/watch/video-games-continue-to-break-the-mold-229561923638 Ronan Farrow Daily on Video games breaking the mold04/17/2014 - 2:13pm
 

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