The Senate v. the Gaming Industry -- by Bruce Rolston (Sept. 15, 2000)

The Senate v. the Gaming Industry: you wouldn't know it from the media coverage, but a recent FTC report on game marketing was surprisingly positive Written by: Bruce Rolston Published:

A federal report on the marketing, rating, and selling of movies, recordings and games with violent content may be being hailed as a victory this week by those opposed to the sale of graphic computer entertainment, but the report was by no means the knockout blow some had feared.

Indeed, a second read of the Federal Trade Commission report, issued Monday, shows the interactive entertainment industry's efforts at self-regulation in a surprisingly positive light. The report's drafters found little fault at all with the ESRB rating system used for games, as opposed to the serious concerns they had about the similar voluntary rating systems in place for movies and sound recordings.

The FTC does express some concern about marketing plans that continued to consider young children a target market for titles that have been given a "Mature" rating. But the overall picture that emerges is of an industry that is willing to adapt more promptly and seriously to public demands for self-regulation than either movie or record producers. Even more importantly perhaps, the report stops far short of suggesting governmental intervention in the industry, limiting its recommendations to beefing up and publicizing the rating systems currently in place.

The report, "Marketing Violent Entertainment to Children: A Review of Self-Regulation and Industry Practices in the Motion Picture, Music Recording & Electronic Game Industries" was front and center on Capitol Hill Wednesday, as politicians lined up in front of the Senate's commerce committee to state their opposition to violent entertainment. Supporters of stronger controls on the entertainment industry hailed the report immediately as a victory for good taste. Democratic presidential candidate Al Gore said Monday that if elected, he would give entertainment producers six months to "clean up their act." Gore's running mate Sen. Joseph Lieberman, a longtime critic of Hollywood, and Lynne Cheney, wife of Republican vice-presidential candidate Dick Cheney, both testified in front of the committee, which Lieberman praised for trying to do something about a "culture of carnage."

The FTC report itself, issued Monday, concluded that the entertainment industry, including video game manufacturers, does engage in marketing practices that attract teenagers and younger children to songs, movies and games that depict violence, seemingly making a mockery of its own labeling systems. But the fact that teens sneak into movies and buy mature-rated games surely comes as no surprise to anyone.

More surprising, perhaps, was the commission's explicit rejection of any need for government involvement in preventing it: "A well-constructed self-regulatory system can be more prompt, flexible, and effective than government regulation, and can be especially appropriate when government intervention would raise significant First Amendment concerns." Congress should confine itself solely to monitoring the industry's progress, the FTC suggests.

The likelihood of devising a system of government regulation of violent content that would survive the inevitable constitutional challenge seems extremely slight, according to an appendix to the report on the legal issues involved. Even when it comes to a choice between protecting speech and protecting children, speech protections have almost always won out, it notes: "The Supreme Court has repeatedly emphasized that regardless of the government's interest in protecting children, it may not 'reduce the adult population... to... only what is fit for children.'"

The only likely loophole, the FTC concluded, was the looser First Amendment protections given to "commercial speech": not the games or the records themselves, but the advertisements that promote them. (This is the same free-speech exception that allows the government to regulate truth in advertising, for instance.) But while legislation limiting what the entertainment marketers can say or do would have a better chance of surviving a constitutional challenge in the end, FTC chairman Robert Pitofsky conceded in testimony Wednesday that the resulting court challenges could just delay any meaningful change for years. He said legislation regulating advertisements should only be a last resort, although he did add, "unless there's some progress, Congress acting for America's families would have no option."

Responding to a question by commerce committee chairman Sen. John McCain, Pitofsky said comparisons made by anti-violence groups between cigarette labeling and game labeling were not sustainable. Cigarettes cause proven harm, their sale to minors is illegal, and the freedom to smoke is not covered by the First Amendment, he pointed out. The only similarity, he said, was that companies for both kinds of products sometimes "seek out an audience inappropriate because of their age."

Also missing in Pitofsky's final report was any suggestion that the current rating system for games was in any way inadequate. Lieberman and others have argued the rating systems themselves needs an overhaul (to be "recalibrated," according to the candidate), that movies that are now given R's should be NC-17, and likewise for games. But the FTC declined to get involved in that kind of moral debate, focussing merely on the existing regulatory systems, and whether they achieved their stated intentions.

"The Commission emphasizes that its review and publication of this Report, and its proposals to improve self-regulation, are not designed to regulate or even influence the content of movies, music lyrics or electronic games. The First Amendment generally requires that creative decisions about content be left to artists and their distributors."

Instead, the FTC only suggests three goals that the industry needs to work on: industry-wide compliance with the spirit and intent of their own ratings systems, increased compliance by retailers, and improving parents' awareness.

Perhaps surprisingly for some, it is the computer game industry that is described as the closest to achieving those FTC goals now. For instance, the report notes at one point, even if the rules aren't always followed, at least computer game marketers have rules to live by.

"Only the electronic game industry has adopted a rule prohibiting its marketers from targeting advertising for games to children below the age designations indicated by the [ESRB] rating."

The video game industry's willingness to co-operate was strongly evident at Wednesday's hearings, as well. Record industry executives who appeared were belligerent and combative, openly challenging the senators' right to tell them what to do, and Hollywood's industry leaders declined to attend at all. But the game manufacturers' representatives (Sega America president Peter Moore and Acclaim Entertainment president Gregory Fischback), while disagreeing strongly with some of the FTC's conclusions, stressed that they shared the commission's overall concerns.

"It's clearly not perfect. We have work to do. But we acknowledge our obligation to market products appropriately," said Fischback.

"I want to thank [your industry] for improving the situation, as described today by the FTC," McCain responded.

The ESRB game rating system was praised by the FTC as the "most comprehensive of the three industry systems studied by the Commission... [The ESRB system] is widely used by industry members and has been revised repeatedly to address new challenges, developments, and concerns regarding the practices of its members."

The system, which is run at arms-length but funded by the Interactive Digital Software Association, submits console and PC games to a three-person rating panel with no ties to the industry. The panel can choose to rate a game as suitable for one of five age-based categories: Early Childhood, Everyone, Teen (13 and up), Mature (17 and up), and Adults Only. According to the ESRB, about 7 per cent of games receive an Mature, or "M" rating, and one percent an Adults Only rating.

The IDSA has the authority to remove ratings, or fine violators of the ESRB codes, which also include restrictions on how games can be marketed. While the FTC concluded the IDSA is more aggressive about catching ratings violations than other industry associations, it noted it has yet to resort to the full powers available to it.

That doesn't mean the system isn't working, though, said Moore, mentioning an advertising campaign Sega recently had to pull (for a non-violent sports game) because it failed to meet some technical restrictions imposed by the ESRB's advertising panel.

"The [ESRB] works. It watches us. They have the power to be punitive," he said.

Also unlike movies and records, the industry requires the display of those ESRB rating icons and, in most cases their content descriptors ("Realistic Blood and Gore" for instance) on game packaging, in print ads, online, and on television. The FTC's own study showed that compliance by game developers and packagers and advertisers has become almost universal (although it does note the ESRB's requirement to put content icons on webpages that carry downloadable demos of games seems to have been largely forgotten).

Compare this with the state of affairs in the music industry, where deciding whether a record deserves the Recording Industry Association of America's "Parental Advisory" sticker seems largely a hit-and-miss proposition. "According to the recording companies, the decision to label is subjective, and often made on a case-by-case basis. None of the companies has adopted written policies or guidelines defining "explicit" content in music and none memorializes why a particular recording received the advisory."

The film industry's own movie rating system, which is much older and more established than that for video games, did not escape criticism either. The reasons for a rating (gratuitous sex, explicit violence?) are rarely given. Unlike game companies, filmmakers only have to tell movie fans the rating itself in most cases (PG-13, NC-17, etc.), not what kind of content it deserves the rating for. The practice by theatre chains of having graphic trailers for "R" rated movies playing before "PG-13" or "G" movies are shown was also harshly criticized.

Where the 30 year-old movie ratings system remains superior to the ESRB's is in its recognition by the general public. The much newer game ratings remain a mystery to many, the FTC says, although those who understand the ESRB generally trust and respect it. Notably, the report dismisses a well-known June 1999 Gallup Poll which said three-quarters of Americans felt the game industry wasn't doing enough to inform people about game content, saying that Gallup wasn't being fair to game manufacturers when it asked the question. When only those people who actually buy computer games were asked, the report notes, up to 86 per cent approved of the ESRB as a useful warning tool for parents, comparable with the support levels for movie ratings.

Game retailers did come under sharp criticism for their generally lackadaisical attitude toward selling "M" rated games to minors. In compiling its report, the FTC used an army of undercover teenagers who attempted to buy mature-rated CDs and games and sneak into "R" movies. Some 85 per cent of the time, the 13-16 year-olds walked out of the store with game in hand. While that sounds unimpressive, it's notable that record retailers did no better, with 88 per cent of the teenagers leaving with CDs marked with a parental advisory. Even box office clerks sold unaccompanied minors a ticket to an R movie nearly half the time.

Game companies were also slammed, along with those in film and music, for marketing documents that identified ways to get teenagers to buy their "Mature" rated titles. Again, the interactive entertainment industry was singled out by the FTC as, if not ideal, certainly not the worst offender.

"While it comes up short on compliance," says the report, "the electronic game industry at least acknowledges that targeting children undermines its rating system; it has crafted a code of conduct to address this issue. In late August 2000, the music recording industry trade association recommended that recording companies not advertise explicit-labeled recordings in outlets where a majority of the audience is under 17. The motion picture industry has no similar code or guideline."

Still, there's no doubt that the gaming industry as a whole has some 'splainin to do about why 40 per cent of the players of its M-rated games are kids supposedly too young to buy them. It's not just the developers' fault: the report also points at gaming magazines and websites as sharing culpability. For instance, it makes an example of one magazine editor who in a response to a letter by a teenager wanting to get an M-rated game despite his parents' wishes, told him his parent were "confused," and suggested he borrow his friend's copy. Some of the industry's advertising and marketing people come across as equally cavalier in their internal memos.

Nevertheless, the FTC's conclusions about the prevalence of underage marketing still drew a strong negative response from industry representatives. Compared to the other industries, gaming comes out looking the best, with only 70 per cent of "mature" games exhibiting aspects of teen marketing in the FTC's opinion, compared to 80 and 100 per cent of films and records, respectively. (What is more, console titles formed the majority of alleged offenders. For PC-based games alone, the number was even lower, at only 26 per cent.)

While films were noted for such grievous errors in judgement as using underage focus groups to refine the appeal for mature-themed movies, the sins of the game were often related to where their advertisements ran. Many of the game titles were judged guilty for simply proposing to place ads in game magazines, or during TV shows young people liked like "The X-Files" or "Friends."

That's ludicrous, said Moore Wednesday. "The [FTC's] expectations and criticism are based on unrealistic assumptions. Banning M-rated titles from a magazine or TV solely because teenagers read that magazine or watch that show... such sweeping generalizations oversimplify and sensationalize the issue."

"We do not believe placing ads [for M-rated games] in game magazines is inappropriate."

As for the other problems found, such as marketing memos that refer to young people buying games and so on, "that is simply a practice we do not condone," Moore added. Still, he said, "we do strongly disagree with the FTC's conclusion" about the prevalence of underage marketing by game developers."

(At least one of the common accusations by computer game critics didn't stand up to the FTC's scrutiny: the idea that games reach out to younger audiences through the sale of licensed "action figures." The report observes that no action figure that originated as a video game character has made it into the top 50 best sellers.)

Hidden among the recommendations in the 104-page report (not counting appendices) is a treasure trove of information about young gamers and the industry that serves them. (For instance, while nearly every M-rated title's marketing documents planned in detail how to reach out to young males aged 24 and under, almost none even mentions finding a way to interest young girls.)

Sadly, although not commented on by the commission one way or the other, one unavoidable observation from reading through the report is the remarkable lack of knowledge (or interest) the average American parent seems to have in what their children do at the console or monitor. Half of American households reported no restrictions about what games their children can play; and a third allowed their children to buy games without a parent's knowledge. Even more alarming, 40 per cent of the parents who are aware of the game rating system do not use it in evaluating the games their children play. That's disappointing, says Fischback, who pointed out rating systems are only useful if people know what the ratings mean and apply them.

"Parents must understand they have the responsibility and ability to be involved in the entertainment decisions of their children," he said. "Most parents are able to play a watchdog role, if they choose to do so."

In his testimony Wednesday, Fischback also deftly turned around one senator's analogy about how labeling on cereal boxes was more detailed than labeling on entertainment. "If parents spent as much time scrutinizing their childrens' entertainment 'diet' as they do their nutritional diet, we wouldn't have this situation," he said.

The congressional hearings chaired by McCain often veered off the narrow issue of appropriate marketing practice to what many saw as the real issue: a perceived decline in popular culture, with representatives of both political campaigns seeking to position themselves as the more moral ticket. Lynne Cheney, there in her role as former chair of the National Endowment for the Humanities, but not-coincidentally also the wife of the Republicans' vice-presidential candidate, used her time largely to make a lengthy complaint about the lyrics of rap star Eminem. Lieberman, the democratic vice-presidential candidate, called current mass entertainment a "culture of carnage."

The FTC report itself was a byproduct of the outrage following the April 1999 shootings at Columbine High School in Littleton, Colorado. Shortly after those deaths, Lieberman, along with fellow senators Orrin Hatch of Colorado and Sam Brownback of Kansas, called for an investigation into how violent entertainment is being sold to young people.

Even before Wednesday's hearings, entertainment companies were changing practices to accommodate the FTC's concerns. On Tuesday the Disney Corporation announced limitations on movie trailers that would be shown before its movies, and restricted TV advertising for its mature content. And K-Mart and other retailers announced they would start enforcing the ESRB age restrictions on the sales of games... moves that the industry's lobby group, the Interactive Digital Software Association, says it fully endorses.

The day after the report was issued, the Federal Communications Commission said it also would be examining if self-regulation is working in the television industry.

Some political commentators have suggested that the next day of hearings, when Hollywood's executives are supposed to finally show up, could be the entertainment industry's "Big Tobacco moment," referring to the grilling tobacco company executives received at a similar congressional committee several years ago.

However, Republican sources in particular are skeptical that Gore, if elected, would ever do much to alienate his many supporters in Tinseltown. Lynne Cheney alluded to this in the hearings Wednesday, openly asking if Gore would be raising the issue of the misogyny in today's films and music at his latest Hollywood fundraiser, scheduled for the next evening. As McCain noted, Hollywood contributions to political parties totaled $18 million last year. And there's no doubt the lobbying agencies for both movies and music (the Motion Picture Association of America and the Recording Industry Association of America) are both behemoths, with massive budgets for buttering up politicians.

So there are limits, the thinking goes, to how high the Democrats or Republicans can turn up the heat on the largest entertainment companies. The worry in the gaming industry has to be now that the FTC's report may result in their industry, due to its relatively less influential position politically, playing the role of the scapegoats, while movies and music get off relatively scot-free. Already, influential cultural commentators like Slate's Judith Shulevitz and Inside.com's Kurt Andersen have penned columns saying games, not the other forms of entertainment, are "the real villains."

Never mind that, in its details the report itself clearly depicts game makers as the lesser of the offenders, the most responsible towards parents and society as a whole. The question now is, is that all that's going to matter in the end?