Holders of rights to the popular video games opening offices in “friendly” jurisdictions.
September 27, 2016
The video game industry has been growing rapidly since the early 1980-s, when the first video game consoles appeared. Today, analysts believe that in the near future video game market revenue can be compared with the income of sports and film industry, as well as the television advertising market.Thus, according to the European research company “Newzoo” volume of global gaming market will reach $ 102.9 billion in 2017 with a compound annual growth rate of 8.1%. According to “World Review of the entertainment industry and the media” prepared by PricewaterhouseCoopers revenue from sales of video games for the last 5 years increased by 40% and reached $ 949 million in 2015. By 2020, the increase in revenues to $ 1.26 billion with an average annual growth rate of 5.8% is expected.
Unlike other segments of the entertainment industry, the industry of video games involves both creativity and computer technology. Artists, writers, historians, musicians, actors and other professionals can be involved into the process of creation of video game, while developers are engaged in software.
Thus, the game becomes a complex subject of intellectual property rights, as needs various tools to develop it and its content. For example, such results of creative activity and artistic expression as a software code, graphics, music, plot, characters, box design and gaming site are protected by copyright.The name and logo of the company, as well as video games title may qualify for a trademark.Patents apply to hardware solutions, elements of the process or the game design as well as technical innovations such as software design, networking and database.As a result, all the developers possess becomes the object of protection of intellectual property rights.
Since the video games are becoming an actively developing segment on the world’s market, the rights holders are starting to look for the most appropriate ways to protect the assets and intellectual property rights. As a result, offices of large companies for producing video games move to jurisdictions with more flexible legislation, higher level of protection of copyright and lack of bureaucratic “issues”, acceptable tax rates and simple tax system.
For example, office of Wargaming (created the game World of Tanks) is located in Nicosia (Cyprus) and its offices are located in the United States, Japan, Australia, the UK and other countries around the world.The CIS countries bring up to 50% of profit, while the rest of the revenue comes from Europe, USA and Asia. According to estimates of SuperData agency, the company earns more than $ 500 million a year.
Office of Rockstar is based in Great Britain. This company is the main developer of the series Grand Theft Auto – one of the best-selling games in the world (game set a 7records in the Guinness Book of Recordsin 2013) and the company is considered one of the best developers of computer and video games.Moreover, the offices for more than 60 major companies-developers of computer games are located in the UK. What can the UK jurisdiction offer for this segment of business?
The UK belongs to the Common Law system, where the main source of law is judicial precedent. When defending and protecting intellectual property this plays a huge role, because decisions of the court detail the provisions of the Statutes, carry out the interpretation of legislation, and establish a stable practice of the law application. Today there are a number of court cases in the field of intellectual property rights in the UK. Among them are the sensational cases such as the Sabaf vs MFI, Regina vs Johnstone, Campbell vs MGN Limited and others.
In matters of intellectual property rights, international legal acts have an essential influence in the UK, as the country is a member of Berne Convention, Universal Copyright Convention, and others.
In addition, the country has developed national legislation in this area. In particular, in 2010 the United Kingdom adopted Digital Economy Act. Besides that video games have become one of the subjects of its legal regulation, the law established a procedure for influence on violators of copyright in the Internet, the authority of copyright holders, duties and responsibilities of providers and users of the website operators.The law provides for the consequences of Internet users in case of copyright infringement up to disconnect from the network.
According to the British copyright laws, any copying of the work, except for the backup, is perceived as a violation of the license. Penalty for the use, sale or manufacturing of facilities that are protected by copyright, ranes from fines to imprisonment.
Among other advantages, the bureaucracy is reduced to zero in the UK. For instance, trademark registration or obtaining a patent requires three times less time than in other countries.
After voting in favor of the UK exit from the EU, the concerns about the gaming business and transfer of the largest offices from the jurisdiction posed a threat of a possible deficiency of the staff from the EU. But while these fears are not confirmed and most likely will not be confirmed.
According to Jo Twist, CEO of “UK Interactive Entertainment Association” (UKIE) although Brexit and political uncertainty may impact the video game industry, it must be remembered that the latter is a successful sector of the world’s economy and a leading exporter in the digital segment. The Association will continue to cooperate actively with colleagues in the government in order to guarantee the best conditions for business development in the UK.
It should also be noted, that the heads of such companies as Sony, Microsoft, Nintendo, Warner Bros. and Take-Two have not voiced plans to move their offices from the United Kingdom. This once again confirms the prospects for further development of this type of business in the UK.