Introduction
The video gaming industry is booming in India, with a rapidly growing gamer base and increasing investments from both domestic and international companies. The Indian gaming market is poised to become one of the largest in the world. The proliferation of consoles, computers and affordable internet access has further accelerated the growth, making gaming a popular pastime among a diverse demographic. However, this growth brings an inevitable debate over game ownership, particularly as the industry shifts towards the ‘Games as a Service’ (hereafter “GaaS”) model. This model, which focuses on providing continuous online services rather than standalone products, has sparked significant controversy among consumers of interactive media, raising critical questions about ownership, control, and consumer rights.
The Global Debate and its implications for India
In the Western world, the GaaS model has become a dominant force, fundamentally altering the landscape of game distribution and consumption. This shift has led to intense debates among gamers, developers, and legal experts over the implications of this model. Issues such as the permanence of digital purchases, control over in-game content, and the rights of consumers have come to the forefront. As India’s gaming industry continues to grow, it is inevitable that these debates will travel to India, giving rise to similar situations and concerns.
In the West, particularly in the United States and Europe, the transition to GaaS has highlighted several contentious points regarding game ownership and licensing. These points are critical to understanding the broader implications of this model and preparing for its impact on the Indian gaming market.
A recent example of the complex issue of ownership in digital content is Ubisofts decision to remove ‘The Crew’ from the game libraries of players who had paid for it. This action effectively denied consumers access to a product they believed they owned. Ubisofts response to the backlash clarified that, according to the End User Licence Agreement (EULA) and terms of service, players do not actually own the game but merely a license to play it. Because of this, Ubisoft argued, they had every right to remove the game from players libraries. However, this is not something a typical consumer might be aware of; the purchase screen and game description do not explicitly state that paying for the game does not equate to owning it.
Contentious Points regarding Game Ownership and Licencing
We will be focussing on interrelated aspects that have sparked discourse within legal circles regarding the gaming industry.
Licencing vs. Ownership:
Under traditional models, purchasing a game meant owning a physical or digital copy. In contrast, GaaS often involves purchasing a licence to access the game, not the game itself. This distinction affects consumer rights and control over the game, as players do not technically own the game they pay for.
End User Licence Agreements (EULAs) typically stipulate that the game is licensed rather than sold, limiting players rights. These agreements can include restrictions on resale, modification, and usage, raising concerns over the extent of control that consumers actually have.
We can better understand this with the help of a real-world example:
When consumers purchase “The Legend of Zelda: Breath of the Wild” for the Nintendo Switch, they typically buy a physical or digital copy, granting them ownership of the game. This ownership provides control over the game, allowing them to play it anytime without an internet connection, resell or lend the physical cartridge, and keep it indefinitely. The games functionality is largely independent of the developer’s servers, meaning it remains playable
even if Nintendo ceases online support.
In contrast, “Destiny” operates under a licensing model where players purchase a licence to access the game’s online services. Governed by an End User Licence Agreement (EULA), players do not own the game and cannot resell or transfer it. The EULA restricts modifications and reserves the right to revoke access for violations, such as cheating. Players of “Destiny” are subject to ongoing compliance with Bungies terms and may experience changes in the game’s content, as Bungie can update or remove content, which might frustrate players who lose access to parts of the game they paid for.
The distinction between ownership and licensing has broader implications for consumer control, content permanence, and legal rights. While ownership of games like “The Legend of Zelda” offers more control and straightforward legal rights, licensing models like “Destiny” challenge traditional notions of ownership, especially since access to the game relies on active servers, and players must adhere to the developer’s ongoing terms. Additionally, licensing agreements often complicate the legal ownership of user-generated content, potentially discouraging creativity and leading to disputes over the use of mods.
The question whether games should be considered as Goods or Services lies at the heart of the problem of ownership. We shall now discuss how various countries around the world have dealt with this issue and what challenges lie ahead.
Whether games should be considered as goods or services? A question of ownership:
With the exception of about a dozen IPs, very few games can truly be considered as services. This is because most video games that are not sold under the subscription model are sold under a ‘Perpetual Licence’. This is important to note since multiple countries and government organisations have confirmed that computer software sold under perpetual licence are to be considered as goods and not services. What it basically comes down to is the fact that most video games are not sold under the assumption that the licence to play them will end anytime in the future which makes it perpetual.
There have been various instances throughout the years where software sold under a perpetual licence has been considered as goods rather than a service. In the case of UsedSoft Gmbh v Oracle International Corp.(1) , the European Court of Justice held that softwares acquired under a perpetual licence can be resold by the purchaser. Additionally, in the case of Valve Corporation v ACCC, the Federal Court of Australia held that Valve had engaged in misleading or deceptive conduct, made false representations about consumer guarantees, and included false or misleading terms and conditions in its Steam subscriber agreements and
refund policies and ordered Valve to pay a penalty of $3 million. Furthermore, the World Intellectual Property Organisation (WIPO) already considers ‘Video game software’ as goods rather than services. Interestingly, the only major market where there isn’t much clarity on whether games should be considered as goods or services is the US. There have been some inconsistent lower court rulings but they are not in agreement and do not apply to the whole of the US. A specific matter of software ownership has never gone to the US Supreme Court and till then nothing can be said conclusively about the question of game ownership in America.
Major advocates of consumer rights and game preservation have frequently cited these judgements and provisions to argue that game publishers do not have the right to simply revoke the licence of a player after purchase. The lack of clarity and major landmark decisions by the Supreme Court in the biggest video game market in the world i.e. the US hasn’t helped either in conclusively determining whether games are goods or services.
Addressing the GaaS Challenge: Indias Path Forward
To address the challenges posed by Games as a Service (GaaS) and game ownership, India must proactively create a legal framework to protect its growing gamer base. A clear legal framework, distinguishing between game ownership and licensing is essential. This framework should ensure that consumers are fully informed about their rights when purchasing a game versus buying a licence to access it. Moreover, the Consumer Protection Act (CPA) 2019 in India empowers the Central Government to take measures in order to prevent against unfair trade practices in e-commerce, which could include certain provisions in EULAs (2) . Any term that causes significant harm or disadvantages the consumer, like overly restrictive clauses or misleading information, can be restricted with further regulations. The CPA also recognizes digital goods under its ambit, allowing issues related to unfair trade practices in games to be addressed(3).
Robust consumer protection laws should be implemented, covering digital goods, including games. These laws should guarantee the right to refunds, ensure transparency in in-game purchases, and protect consumers from exploitative practices such as loot boxes. Additionally, it is crucial to ensure that consumers retain some control over their purchased games, even when provided as a service. This could involve mandating offline modes or local backups, ensuring continued access even if servers are shut down. Developers should also be required to communicate any significant changes to game content clearly and provide adequate compensation or alternatives if these changes negatively impact the user experience.
The Hon’ble Supreme Court of India, in a landmark ruling in Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax (4) , also analysed End User Licence Agreements (EULAs), noting that software is licensed, not sold, and that EULAs do not grant copyright but impose use restrictions. This ruling reinforces the importance of carefully drafted EULAs, ensuring consumer rights and clarifying licensing terms. Intellectual property rights for user-generated content, such as mods, should also be addressed. Guidelines must be developed to ensure that creators retain some rights over their work, recognizing their contributions and providing clear terms for the use and monetization of mods. A collaborative environment between developers and modders should be fostered to encourage innovation and creativity within the gaming community.
Finally, public awareness campaigns are crucial for educating consumers about their rights and the implications of the GaaS model. These campaigns should provide information on understanding EULAs, recognizing exploitative practices, and knowing how to seek redress. Promoting digital literacy will help consumers make informed decisions about their gaming purchases and usage, empowering them to navigate the evolving landscape of digital gaming.
Conclusion
In conclusion, the shift towards the Games as a Service (GaaS) model presents significant challenges for game ownership and consumer rights, especially in India’s growing gaming market. While this model offers continuous content updates and enhanced engagement, it also raises critical issues around ownership, control, and the potential for exploitative practices. The lack of a clear legal framework in India and inconsistencies in global legal interpretations highlight the need for robust consumer protection laws and regulations that clearly define the rights of gamers. As Indias gaming industry continues to expand, establishing clear distinctions between game ownership and licensing, regulating End User Licence Agreements (EULAs), and safeguarding consumer rights will be crucial. By doing so, India can ensure that the gaming industry thrives in a manner that respects and protects its consumers, fostering a healthy and sustainable environment for gamers and developers alike.
Reference
- UsedSoft GmbH v. Oracle Int’l Corp., Case C-128/11, [2013] Bus. L.R. 911 (ECJ).
- Consumer Protection Act, 2019, § 94.
- Consumer Protection Act, 2019, § 2(16).
- Engineering Analysis Centre of Excellence Private Limited v. Commissioner of Income Tax, AIRONLINE 2021 SC 102.
