LGJ: EA Online Pass a Ticket to FTCville?

Mark Methenitis contributes Law of the Game on Joystiq ("LGJ"), a column on legal issues as they relate to video games:
EA Sports: Online Pass
By now, I'm sure everyone has seen the copious discussions on the EA Sports Online Pass. If, for some reason, you've been hiding in your closet because of an irrational fear of oil spills, or have been stuck in an airport without internet as a result of plumes of volcanic ash, the summary of these discussions is that EA will be charging people who purchase used versions of future EA Sports titles $10 for the use of certain online components of the game, which "can include basic online multiplayer, as well as group/league features, roster and playbook updates, downloads of user-created content." Not surprisingly, the announcement has been met with some frustration, some angry fist shaking and some relative acceptance from the consumer base. On the other hand, there has been a surprising amount of reports of puppies, unicorns and rainbows from analysts and even GameStop as a result of the Online Pass. While I hate to be the bringer of doom and gloom, it's just part of the lawyer's job description. What doom and gloom am I referring to? Government regulation.

But before I get too far ahead of myself, I want to first play a bit of devil's advocate with some of the statements related to the need for and logic behind the Online Pass. It's been argued that the need for these kind of charges stem from the newly emerging "long tail" of content that comes with disc-based games. And on the face of things, this does seem true. Games now have downloadable content that didn't exist years ago, and players continue to take advantage of this for some time. In fact, this is the basic model that MMO games have used for some time now, so why not see something similar added to these EA Sports games, with their roster downloads and other content?
The problem is that there are a couple glaring flaws with that line of reasoning. First, much of the content that is downloaded is paid content. To me, the point of buying content is that I'm paying for all that it takes to deliver the content to me, not that I'd also have to pay for the right to participate in that store. In fact, isn't the whole point of paying for Xbox Live Gold the ability to be able to access that content store? However, this is the more minor of the logical flaws. The more extreme one falls to the idea of forcing "used game buyers" to pay for the maintenance of the servers and network, and that it's reasonable to expect to pay a premium for things not included on the disc.

These two different arguments have, in part, the same flaw. When a game is purchased new, EA makes money. When that same game is re-sold, EA does not make money on the sale, but there has been no net change in the number of players using the infrastructure. In fact, they may make more off that disc by re-selling downloadable content already purchased by the original owner that is then subsequently purchased by the second owner.

The point remains, EA's business model has to contemplate a needed infrastructure based on the number of discs in circulation, and a used game market does not impact the disc volume in circulation. I suppose I also don't need to mention that "multiplayer" is included on the disc, and so the statement that this is to cover the long term cost of free updates is at least slightly at odds with the idea of "multiplayer" being included. This does tie back to that net player concept as well, since the system should be designed to make money based on net initial sales, not based on how many people are playing discs purchased new.

Just because the reasoning is flawed does not mean it is illegal or even immoral. EA is a business, and ultimately businesses are trying to make money, and to that end, the fact that EA has found a model it thinks will drive additional revenue is great. I think there are other possible models that would work better, for example making EA Online Pass an annual fee that covers all EA games and ties cross-system to all of your online IDs (since a player won't be playing multiple games on multiple systems simultaneously) to track multi-platform stats and defray these same ongoing costs, but that is neither here nor there. But how does this tie back to the law, since that's the point of LGJ?

Many of you may recall that I've mentioned the FTC's lingering desire to regulate more online content, as we've talked specifically about DRM and EULAs in the past. If the FTC is really looking to make a splash, all it needs are a few complaints about the Online Pass, especially related to multiplayer. Why multiplayer? The box will almost certainly list that as a game feature, and one of the things the FTC always focuses on is misleading advertisement or labeling. In fact, if anyone at EA is reading this, proper box text could be the difference between the FTC looking into the issue and choosing not to address the issue. Like so many other things, if other companies choose to start making similar systems mandatory for certain content and play types, then the probability that regulators get involved goes up significantly.

The other possibility is that this model starts to look like an unfair market control as it spreads or even collusion between game retailers and manufacturers to alter sales patterns. Given that we've addressed antitrust before, and that even Apple is under the antitrust microscope now, it's entirely possible that the game industry could face similar scrutiny. This isn't the kind of claim that would spring up overnight, but would be the result of where this model could migrate in the coming years.

It remains to be seen whether this Online Pass will start a tectonic shift on the console model, or even whether the move will ultimately be successful for EA. As with so many of these services, the first six months to a year are as much a proving ground and a test facility as they are a true launch, and it may be that the model that is in place for years in the future hardly resembles the initial launch of the Online Pass.

The ironic thing is that sometimes all it takes to start the investigation wheels turning is one person with enough power to have a personal experience with the system. With so many EA sports game players, it seems almost inevitable someone at the FTC, or one of their children, will buy a used copy of an EA Sports title and be forced to buy the Online Pass. Their reaction may make all the difference in what happens next. If I had to offer a theory, I imagine the Online Pass system will evolve for the next year rendering at least some of this theoretically moot, but that depends heavily on the results, I would imagine, as they relate to the next Madden game.


Mark Methenitis is the Editor in Chief of the Law of the Game blog, which discusses legal issues in video games. Mr. Methenitis is also a licensed attorney in the state of Texas with The Vernon Law Group, PLLC and a member of the Texas Bar Assoc., American Bar Assoc., and the International Game Developers Assoc., where he is a board member of the Dallas chapter. Opinions expressed in this column are his own.

Reach Mark at: lawofthegame [AAT] gmail [DAWT] com

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This article was originally published on Joystiq.