Legal Challenges in the Games Industry in 2021

Well, it’s safe to say that 2020 didn’t go in a way any of us could have easily predicted. We made some solid guesses on what might happen in 2020 and in 2019 but most of our predictions got derailed by the pandemic.

That being said, here’s our thoughts and predictions on 2021 as the pandemic continues.

Remote work is now just work

Plenty of pundits have claimed that remote work is here to stay. We believe it’s here to stay in plenty of ways, however, as remote work becomes more common there will be more tax issues and legal implications. 

Where is an entity’s income taxable? There are different requirements in different states. 

There will also be challenges to see if this truly resonates with the games industry. For example, dev kits are often heavily restricted and may even need to be in a locked room as part of the contract for accepting a kit. How will the games industry tackle the security issues and fight against leaks in a more distributed world? 

Laws that apply to employees vary from state to state (and country to country). But with remote work, companies have to be more mindful of it – the golden rule is typically that the law of the employee’s jurisdiction applies, regardless of what you try to put into your agreement. Where-ever that person resides is what laws apply. A business may be based in California but one employee in Canada means Canadian laws apply to that employee.

Odin prediction: More companies in the games industry will go permanently remote but there are going to be legal complications on taxes and managing remote employees.

Privacy, privacy, privacy

We anticipated that 2020 would be the year of CCPA. It was not. It was more of a scramble to survive the pandemic and hold-onto-your-hats kind of year as many businesses shifted to a predominantly online mode of work to survive or went under.

As remote work becomes more prominent and more people are online than ever before, privacy will eventually come back into the mainstream conversation – especially as California ups the ante with things like CPRA that goes into effect in 2023.

Odin prediction: Privacy rights will become a bigger part of regulatory discussions in 2021 and beyond – and there may finally be movement on the federal level, not just in California.

Antitrust movement in the games industry

There’s a pretty clear storm brewing as the government figures out how to handle the monopolies that FAAMG (Facebook, Amazon, Apple, Microsoft, Alphabet’s Google) have ushered in. 

This may affect the lucrativeness of the games industry but it’ll definitely affect advertising. While some of the larger entities are shifting their policies already to not look so much like a monopoly, it’s clear that some are going to push for more substantial change.

Odin prediction: Regulations and antitrust movements are going to try to break up some platforms we’ve grown used to and some in the games industry may take a hit as a result.

User generated content

More games are going to be created as tools. There will be more players in this industry trying to ride the Minecraft and Roblox waves. As such, more publishers and developers and platforms will need to be very savvy about their terms and monitoring user generated content (UGC).

Odin prediction: With more platforms trying to succeed the way Roblox and others have, more will add UGC features but not fully monitor or support them in their terms. Someone will eventually be made an example of. Then, regulations may tighten.

A few wild predictions

We spent a lot of time discussing what may happen in 2021 and here are a few of our wild card predictions internally:

Vtubers are on the rise – virtual influencers (vtubers) are having their moment, but there are a ton of IP challenges there. We’ll see how the law keeps up with this movement (hint: it won’t).

California will become less of a hub for the games industry – if the remote work transition stays true, we’re going to see less attention centered on California as one of the main homes in the games industry in the next few years. Columbus, Ohio is already becoming a surprising esports hub, for example. Our homebase of Raleigh, North Carolina has several very big studios already like Epic Games, Insomniac Games, Funcom, Ubisoft Redstorm and many more at a smaller scale. There will be more hubs distributed throughout the US and globally over the coming years.

Video games in cars – legally, this will involve new types of licenses and agreements with companies less familiar with the space. Eventually, we’ll also see more action in the wearables space and smart speaker space as voice recognition improves. Again, these transitions of games to new platforms will come with a lot of hiccups as new businesses unfamiliar with games enter the field.

In-person events will raise healthcare privacy issues – if we see a return to in-person events in 2021 (and we don’t think this will happen), we do expect there to be privacy issues as events will request or require vaccination records. This means individuals will be sharing personal information with organizations not equipped to handle sensitive information. 

Some of our past predictions

In 2020, we predicted that we’d go back to transmedia. Then the movie industry imploded a bit during the pandemic. We still think this prediction is on-track but production is lagging as industries shift to a COVID-world and delays during resurgences of the virus.

We also predicted that loot box regulation conversations would be a hot topic in 2019 and in 2020. More developers are willingly opting out of loot box mechanics and the conversation just isn’t as important as deciding who gets a vaccine for COVID and when. This may come back but for now, it’s a prediction definitely on hold.

Esports has formalized to some extent but as the sports and entertainment and hospitality industries all collectively plummet in a leisure-less and travel-less world, our prediction has definitely stumbled here. 

Lastly, on the influencer marketing front, crackdowns on regulations will inevitably happen. But the influencer marketing space took a massive hit in 2020 as budgets for many businesses shrank. There are just way more pressing concerns in the world than the FTC scolding moms hawking essential oils on their Instagram feeds. 

Have thoughts on our predictions for 2021? Let us know! We’re happy to hear different opinions on what’s taking place after such a chaotic year.

Brandon J. Huffman

Brandon is the founder of Odin Law and Media. His law practice focuses on transactions and video games, digital media, entertainment and internet related issues. He serves as general counsel to the International Game Developers Association and is an active member of many bar associations and community organizations. He can be reached at brandon at odin law dot com.

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