MPAA, NATO rally around implications for biz

The Supreme Court’s ruling that violent videogames are a protected form of free speech comes as a relief not just to the gaming industry but to the rest of Hollywood.

In a 7-2 decision, the high court on Monday struck down a California law that would have restricted the sale of violent games to minors. Separately, it also agreed to examine the broadcast networks’ efforts against the FCC’s so-called fleeting expletives restrictions (Related Story: Supreme Court to review FCC indecency rules).

The industry had been closely watching the vidgame case because it feared that if the law were upheld, it would carve out an exemption to the First Amendment that could eventually extend to violence in movies and TV shows.

“Videogames qualify for First Amendment protection,” the court said in its ruling, written by Justice Antonin Scalia. “Like protected books, plays, and movies, they communicate ideas throughthrough familiar literary devices and features distinctive to the medium. And ‘the basic principles of freedom of speech … do not vary’ with a new and different communication medium.”

The case — Brown vs. the Entertainment Merchants Assn. — revolved around 2005 legislation that made it illegal for retailers to sell violent videogames to anyone under 18. Then-Gov. Arnold Schwarzenegger had argued that violent games are equivalent to sexually explicit material, on which courts have ruled the government has authority to restrict sales. In addition to regulating the sale and rental of these games, the California law (which was adopted in 2005 but never took effect) would have imposed a strict labeling requirement on such games.

Monday’s court decision elicited positive reaction from Hollywood.

“The motion picture industry is no stranger to governments’ incursion on freedom of expression,” said Chris Dodd, chairman-CEO of the Motion Picture Assn. of America. “From the very inception of the movie industry, attempts to restrict speech have threatened the creativity of American moviemakers. We applaud the Supreme Court for recognizing the far-reaching First Amendment implications posed by the California law.”

The Supreme Court has “resoundingly affirmed the First Amendment’s protections for the creators, distributors and sellers of creative content,” added NATO prexy-CEO John Fithian. “We commend the court in noting the importance of voluntary entertainment rating systems, and we encourage parents to use the information provided by them.”

Broadcasters, meanwhile, were hopeful that the decision’s broad interpretation of the First Amendment is a good sign that they will prevail in their effort against the FCC’s indecency regime. In a separate order issued Monday, the high court agreed to review the networks’ challenge to the FCC’s crackdown on so-called fleeting expletives, raising the prospect that the agency could see its authority to restrict sexual content on broadcast TV curtailed.

Showbiz execs weren’t the only ones worried that government regulation of games could bleed over to other arenas. Justices noted that the First Amendment applies regardless of what form entertainment takes.

“Reading Dante is unquestionably more cultured and intellectually edifying than playing ‘Mortal Kombat,’?” Scalia wrote in his opinion. “But these cultural and intellectual differences are not constitutional ones. Crudely violent videogames, tawdry TV shows and cheap novels and magazines are no less forms of speech than ‘The Divine Comedy,’ and restrictions upon them must survive strict scrutiny. … Like the protected books, plays and movies that preceded them, videogames communicate ideas — and even social messages — through many familiar literary devices (such as characters, dialogue, plot and music) and through features distinctive to the medium (such as the player’s interaction with the virtual world). That suffices to confer First Amendment protection.”

The split decision was expected, but the 7-2 breakdown was somewhat surprising. Justices Clarence Thomas and Stephen Breyer dissented. But the inclusion of Chief Justice Roberts and Justice Alito in the majority opinion surprised some court watchers, since both seemed to be strongly leaning toward California’s side in oral arguments.

M-rated titles (the rating is the one that extremely violent games usually receive) made up 25% of all games sold last year by unit. They are also the industry’s biggest hits. (Last year’s “Call of Duty: Black Ops” boasted sales of $1 billion in just six weeks.)

While game publishers are celebrating the victory, attorneys who specialize in the entertainment space warn that the court’s decision doesn’t conclusively end the videogame industry’s troubles.

“I don’t think this puts an end to it, ” said Dan Offner, a partner with Loeb & Loeb who specializes in the videogame biz. “It may put a pin in it for a short period of time, but I see the regulation of mature content with respect to minors as a hot-button issue for the Federal Trade Commission and the various state governments.”

The reason for that is increased use of digital distribution methods — including social networking games and mobile titles.

Disney-owned Playdom recently paid $3 million to settle charges that it had violated the Children’s Online Privacy Protection Act. The company was accused of illegally collecting and disclosing personal information from hundreds of thousands of children under age 13 without their parents’ prior consent.

“I think the next big thing on the horizon is privacy and security,” said Greg Boyd, an associate specializing in entertainment, media and publishing with the law firm Davis & Gilbert. “I think you can take a look at what’s recently happened in the game industry with the hack attacks, and we’re going to have to pay a lot more attention to that moving forward. … This is the very same thing that happened with Playdom. Children are our most sensitive area.”

That’s an issue non-gaming companies are going to have to keep a close eye on as well. As digital distribution becomes more prevalent for all forms of entertainment, Hollywood’s fears about a negative ruling in Brown vs. the EMA could resurface.

“It’s the end of round one, but round two is about to start,” Offner said. “I don’t see the industry getting a big breather.”

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