Eaton Smith has for many years had involvement in the video games industry and when the UKIE Games Expo came to Liverpool on 15 and 16 July 2014 as part of the International Festival for Business, it was a simple decision to go along and be part of it.

Whilst there was indeed a high calibre panel taking part in the “Internationalising UK Talent” discussion, made up of experienced executives in the games industry, there was also an impressive range of businesses setting up their stalls in the Expo itself. There was a whole range of games industry participants there, including developers, publishers, VFX/CGI production companies, a provider of a major development engine, a peripherals manufacturer, a hosting services provider, a production finance provider and a gaming event organiser to mention just a few.

With the sales of video games in 2013 in the UK alone being measured at approximately £2.19billion and predictions being that that figure is growing, there is no doubt that the industry is in a healthy and productive state. It is a sector that is a major source of startups, both in terms of graduates and also those striking out on their own from previous employment, all to explore and develop their own ideas and projects. There are estimated to be around 500 games development studios in the UK, employing around 9000 staff.

Gamers are expecting more and more out of not only console games but also apps. In addition to the development of apps for use across the range of tablets and smart phones, the next generation consoles are well established now and developers are working hard to deliver immersive and cinematic quality games on the latest Playstation 4 and Xbox One consoles.

This consumer demand is driving innovation through the need for all sorts of additional services, from the ongoing provision of new and continually enhanced games development engines to, for example, green screen shoots for delivering the combination of believable human movements with the cinematic quality that gamers expect now. And incredibly sophisticated and reliable hosting services are needed for delivering the massively multiplayer online games that join together worldwide gamers in co-op play in virtual worlds, but in real time. And there are online e-commerce platforms available for purchasing downloadable content pretty much anywhere in the world. The games industry is making the most of the tools available to it and, indeed, is pushing the boundaries of those tools, leading to more and more advances to infrastructure, hardware and software to accommodate the new technologies being created and the demand from consumers for the resulting entertainment services. In the shape of, for example, Project Morpheus and Oculus Rift, virtual reality gaming is not far away, thanks to advances in technology and the infrastructure needed for transmitting the gamer’s movements within the games setting itself. It is coming to the point where if it can be imagined, it can be experienced.

The UK’s creative sector as a whole (designers, musicians, film, TV and games makers) generated £71billion in revenue in 2012. The film industry in the UK has had its film tax relief since 2007 and, following lobbying of the Government by the UK games industry’s association bodies, Games Tax Relief has been introduced with effect from 1 April 2014. Whilst there are both strict tests in place for working out whether a game qualifies for the relief and procedures to follow, Games Tax Relief will act as a strong incentive to developers to develop games in the UK. Qualification is somewhat complicated and you should look into the criteria in more depth to see if it is available to you - it could be well worth it!

So, where in all this does the law come in? Legal principles and issues are inextricably intertwined with the output of the games industry. These principles include intellectual property issues concerning, amongst many other things, the initial concept artwork, storyboards and flowcharts, the software, sound effects, music, the name of the game and any packaging/marketing materials and rights to exploit the materials further, for example, by making a film. Rights can be segmented in order to allow for different supplemental exploitations or it may be that you can include in the royalty calculations amounts based on exploitations of different content from within the game as a whole. Different countries have different IP registration requirements so local advice from countries in question may be needed.

Contracts will be needed as between any publisher and the developer and these will cover the intellectual property rights position and also, amongst many other issues and depending on the relationship, development fees and royalties payable, obligations concerning modifications and new editions. There will also be contracts concerning where you may need the services of a third party for any aspect of the game and its development. And if as a developer you have employees, you should have employment contracts setting out clearly and for the avoidance of doubt that you as the employer will own copyright in anything your employees create. The employment contract should also spell out obligations of confidentiality. There may also be, amongst other things, licences of third party content needed, appearance agreements (if appropriate) and, for example, agreements for voiceovers.

There is also a need for confidentiality agreements (also known as non-disclosure agreements or NDA’s) when you get into discussions with any third party so that your ideas, artwork and so on are clearly agreed to be yours and not accidentally made available for exploitation by third parties to your disadvantage. There will also be paperwork and procedures involved in any form of funding arrangement that a developer may receive from a third party.

And when your game is ready for release, you may want to boost anticipation by running some competitions but you’ll need to be sure that you aren’t falling foul of marketing promotions rules. You may need to consider trade mark issues regarding the name of the game. If you have physical units, you’ll want T&Cs with your retailers. As a developer, you’ll need to understand the terms of your publisher, however you take your title to your audience. Even if you are not in a position to negotiate or alter the terms as offered to you, you may appreciate advice on what the terms involve and what any obligations entail. And even after your game is out there and being played, if you gather any personal data about those playing your game or you run any form of community, you’ll need to concern yourself with data protection laws.

So, as you can see, legal issues start from the first pencil doodle of conceptual art, through the whole development process, through the marketing of your game and all the way through to capturing data about your game after it is in use. And there remain plenty of legal issues not mentioned above…

Returning to my opening sentiment, the UK gaming industry is in a healthy position and the future looks good. But to be sure that you are getting the best deal available to you, no matter what your involvement in the games sector or an individual title, legal advice is always sensible.

The issues set out above are only intended to be indications of issues to consider. If you do want advice on any issue that you may be considering or encountering, please do get in touch on 01484 821300 or at christaylor@eatonsmith.co.uk

For more information on our work in the video games sector, please click here

Posted Monday 21st of July 2014