The Cost of Violent Games? $1 Million

FTC tells video game industry it hasn't fixed violence problem. New penalty could impose a $1 million fine for failure to disclose content

Following last week's settlement between Take-Two and the Federal Trade Commission (FTC) over the "Hot Coffee" scandal, late yesterday a congressional subcommittee hearing was held to discuss violence in video games and restricting game sales. The FTC told the subcommittee that the video game industry has indeed made progress in complying with and improving its self-regulatory policies on the marketing of violent video games, but that still more needs to be done.

Lydia Parnes, Director of the FTC's Bureau of Consumer Protection, told the House Committee on Energy and Commerce Subcommittee on Commerce, Trade, and Consumer Protection that "there remain a number of concerns relating to video games and how they are marketed."

"Because the expressive content in video games has been considered protected speech under the First Amendment, there is a very narrow range of permissible government involvement with their advertising and marketing," she said. "As the industry continues to produce games with increasingly explicit content, it becomes even more incumbent upon industry to enforce and enhance its self-regulatory guidelines governing marketing, and upon retailers to implement and enforce policies restricting children's access to Mature-rated games."

Parnes added that "the Commission will continue to monitor closely developments in the area and will initiate actions, such as the case challenging the marketing of (Grand Theft Auto:) San Andreas, when appropriate."

Regarding the enforcement of the ratings, however, Entertainment Software Rating Board (ESRB) president Patricia Vance also testified before the Subcommittee and revealed a new, far stricter penalty for video game publishers that fail to comply with or deceive the ESRB.

"The ESRB enforcement system has been praised by the U.S. Federal Trade Commission and several government leaders for its efficacy and comprehensiveness, setting it apart from other entertainment media rating systems in terms of its scope and severity. Companies who do not comply with ESRB guidelines are subject to a wide range of ESRB sanctions, including fines, corrective actions, and other penalties," said Vance. "In fact, a complete review of the ESRB enforcement system was recently completed with the expert counsel and support of prominent attorneys Eric Holder, Jr., Partner with Covington & Burling and former U.S. Deputy Attorney General, and Joseph diGenova, Founding Partner with diGenova & Toensing, LLP, former U.S. Attorney for the District of Columbia and special counsel for some of the most highly visible governmental inquiries in recent history. Their review resulted in a new class of violations for an 'egregious' failure to disclose pertinent content, carrying a fine up to $1,000,000, among other enhancements."

Vance continued, "In the event that material that would have affected the assignment of a rating or content descriptor is found to have not been previously disclosed, the ESRB is empowered to impose corrective actions and a wide range of sanctions, including points, monetary fines up to $1 million for the most egregious offenses, and even suspension of rating services. Corrective actions can include pulling advertising until ratings information can be corrected, stickering packaging with correct ratings information, recalling the product, and other steps the publisher must take so the consumer has accurate information."

For more on this, you can read the full FTC statement here and Vance's full testimony is available here.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE