As an attorney that works closely with the video game industry, S. Gregory Boyd might just be the envy of his peers. As technology changes, the law has to keep up with it.
At the Austin Game Developers Conference this week, I got to sit down with Boyd for a chat on his area of practice. Boyd co-wrote a book, “Business & Legal Primer for Game Development,” (Thomson/Charles River Media, 2007), and speaks often on legal topics.
“The main thing I think about when I’m advising venture capital money is the same thing as any business,” he says. You look at the team, you look at their experience. “Don’t ever invest in anyone that’s never built one of these things before,” he says of online games.
One of the largest mistakes investor make in the game industry, Boyd continues, “Is betting on unproven teams. Or betting on teams that have a history in, say, web development.”
He talks about being involved in the middle, when the investments are going badly, or at the end when it’s gone bad. People used to say in Hollywood that the best way to make a million dollars was to start with two. “The best way to make a million dollars in the game industry, is start with ten,” says Boyd.
“Do not underestimate the complexity of making games, as an investor,” warns Boyd. Once the games are made, of course, customers make up the next level of complexity: End-User License Agreements, the check-box contacts that come with software installation.
As a rule, he tells me, EULAs have been traditionally oppressive. “It wasn’t so much intentional as it was a risk hedge,” explains Boyd. Software developers wanted to protect themselves as strongly as possible. And video games grew out of the software industry.
That resulted in strong terms. However, what makes sense for a word-processing program, or a spreadsheet program, may not make sense for an online community, a virtual world, or even a single-player game. “But that was the place these [agreements] came from.”
Now you’re getting game players that desire more freedom, and game developers that want to try some alternate legal structures. They can, in theory, encourage growth.
While gamers are bound by the agreements they sign, Boyd likens it to the contract for a new car or credit card – something people really only go back and read once they need them.
The brave new legal world of virtual rights is also an economic one. Boyd expects experimentation and turbulence as the market and the law is defined. Lastly, he notes that it can become a very visible financial channel.
The IRS is interested in virtual property, and exploring if the market is large enough to tax, says Boyd. There’s no statute about virtual property itself, and if you generate income from the buying and selling of virtual property, it has to be claimed like any other income.