Examination of Witnesses (Questions 479
- 497)
TUESDAY 17 OCTOBER 2006
MR IAN
LIVINGSTONE OBE AND
MR PAUL
JACKSON
Q479 Chairman: We now turn to a specific
sector of the creative industries being the electronic games industry,
which is of growing importance to the UK. Can I welcome Ian Livingstone
of Eidos Interactive UK, who seems to have been responsible for
many of the best-known games. I do not think you were actually
responsible for Lara Croft?
Mr Livingstone: I have been a
father perhaps; I found her!
Q480 Chairman: And also I think was
the founder of the Games Workshop where my children seem to spend
an inordinate amount of money.
Mr Livingstone: That was in 1975,
yes.
Q481 Chairman: And also Paul Jackson,
the Director General of the Entertainment & Leisure Software
Publishers Association, which I think is the umbrella group for
the industry?
Mr Jackson: That is right, the
trade body.
Chairman: Adam Price?
Q482 Adam Price: The UK games industry
has a formidable reputation, both in terms of its market share
and also the quality of its output but the Committee was in Korea
and I think Mr Livingstone you have returned from China recently—
Mr Livingstone: That is right
and I have been to Korea as well.
Q483 Adam Price: Are you looking
forward to the future? Are you confident that the UK games sector
will be able to withstand the growing competition and particularly
expansion from Korean firms and maybe Chinese into the European
market?
Mr Livingstone: My experience
having visited Korea is that government in particular took a very
early interest and viewed the industry very positively. In fact,
there are three government agencies that support the industry
and they offer support in trade shows, in education, and in helping
change the perception of games, which has always been fundamentally
negative, in this country particularly. They also work with the
telephone companies in the mobile games sector to make sure that
they understand their role, which is a pipeline rather than a
content owner. In fact, you can pay micro payments on the mobile
phone network in Korea using your social security number for very
small amounts of money. There has been a very positive reaction
from the government in Korea, much more so than there has been
in this country. They have also invested heavily in broadband
infrastructure for video on demand and everything on demand, including
games. They have a desire for it to succeed and, of course, they
are now exporting their content worldwide, primarily through on-line
distribution. Massively multiplayer on-line games have been very
successful in Korea and in the whole of Asia. The world is a small
place when it is linked by broadband. There is a threat from Korea
but we can withstand it because we are very good at creating content,
but we have never had the support I think we should have had.
Q484 Adam Price: To what extent is
there some degree of offshoring happening in the UK industry?
Are you concentrating on the core content development but seeking
to outsource some of the elements of production? Is that the phenomenon?
Mr Jackson: I think we are starting
to see an amount of outsourcing and we have seen some of the major
publishers trans-locate to other locations, primarily to Switzerland,
but fundamentally I think your question is about competitiveness,
can we remain competitive in this global environment, and I think
there are two key things that could damage our ability to remain
competitive going forward. The first is education. We need constant
more and better graduates; we need better courses in our universities
to ensure that we can continue to create the wonderful content
we are creating. The second thing is we need better protection
of the products that we are making, better protection of the IP
so that it is not constantly stolen from us, which causes problems
for us and does not allow us to reinvest. So I think those two
things might damage our ability to be fully competitive going
forward.
Q485 Mr Hall: I am pleased to meet
you, Mr Livingstone. My son is an avid Games Workshop enthusiast
and has recently competed in an international in Nottingham and
he is 26! It is a fantastic thing. There is some genuine concern
within the industry that video games are affecting teenage development
and personality development and there is a genuine concern about
some of the nastier aspects of some of the more violent games.
What is the potential for moving this market more educationally
based and bringing it into schools? We could clearly use clearly
the techniques that are there in games manufacture for educational
use.
Mr Livingstone: I think games
have long been misunderstood. People do view the negatives with
sensationalist headlines. They do not look at the positives because
we are in the entertainment industry. The fact that games are
creative, these people learn about community, they learn about
puzzle solving, they learn about problem solving, choice and consequence,
they learn by trial and error how to solve problems, and these
things often ignored. Just playing a game, even a football game,
you do learn about manual dexterity if nothing else. Not all games
are violent games. In fact, a minority of games are violent. If
you look at a game like Grand Theft Auto, which has received
a lot of negative press, it is rather like judging the whole of
the games industry on that game whereas you would not judge the
whole of the film industry on the back of the Texas Chainsaw
Massacre. It is a very broad church that would appeal to many
people. The average age of a Playstation user for example is in
his late 20s rather like your son playing Warhammer at
aged 26. Games are moving through society. Whether people like
it or not, they are important economically and culturally as much
as music, films and television. There are many devices now that
deal with music, movies and games on one device, mainly portable
devices. Games are to my mind educational and they can be used
as is. If you set out to make games purely educational then you
are going to lose a lot of the appeal, but you can use the mechanics
of what we do in education and if you play a game like The
Sims or Championship Manager or Tetris or Dr
Kawashima's Brain Training, you are in fact stimulating your
brain, you are improving your learning processes. For me games
have been a wonderfully interesting thing because it is an interactive
experience rather than a passive experience. The fact that you
are interacting, you are the central character in a game rather
than sitting like a couch potato soaking up whatever TV or film
to me is a much more compelling and entertaining media.
Q486 Mr Hall: So you do not particularly
take the view that you can design games that would aid the National
Curriculum?
Mr Livingstone: I think that would
be fantastic. I am all for that. The trouble is as publishers
of mainline content it is not particularly economic but for smaller
concerns I am sure there should be a way. If there is an initiative
by government to create an environment in which to say yes, we
love games and we will have them as part of the curriculum that
would be fantastic. My own children adore playing games and they
get a lot of benefit positively out of it.
Mr Jackson: Could I just say that
while I was at Electronic Arts we put a project into schools in
the Medway towns that worked incredibly well based around city
planning, like Sim City, and that was applauded by teachers.
We then found that we had no way of taking that to the rest of
the educational market. We really did not know what to do with
it next so the project foundered and when I look back it is one
of the things I regret the most because I think it could have
been something useful. It was the route to market that stopped
us being able to take that any further.
Q487 Mr Hall: I am sorry, the what?
Mr Jackson: The route to market,
being able to get it to the schools effectively and to get the
schools to purchase it. That was a failure I think on our part.
Q488 Chairman: The market in this
country for console games, particularly one player and two player,
is pretty well established and indeed it is very sizeable. The
Committee was in Korea and we visited Nexon where we saw demonstrations
of massively multiplayer on-line gaming, which is enormous in
Korea. We were told of one game which had an average of 200,000
people playing it at any one time. They are about to launch in
this country. Do you believe that there is an equal market here
or is there a mindset that may not translate to the UK?
Mr Jackson: I think we do not
yet know the answer to that question. There has been more than
one but a highly successful massively multiplayer on-line game
was launched about 18 months ago called World of Warcraft.
I do not know the numbers but a significant proportion of people
are playing that game in the games community. However, we have
not seen, I do not think, the traditional, if you might call it
that, games playing fall off particularly because of that. So
we do not really know. The type of Western-style game playing
that currently persists here does seem to be quite resilient at
the moment to those types of games coming in even though there
is quite a large market.
Mr Livingstone: I think they will
take off in future. Korea has had a history of on-line games brought
on partly by piracy and the fact that there is no retail market.
Secondly, the culture, they have about 25,000 of these PC baangs
which are Internet cafes in Korea so they are used to playing
games on-line. There are massively multiplayer on-line games which
consist of thousands of people playing as a character. I think
the game you are talking about is Kart Rider, which is
simply a game of racing cars around where they give that product
away and they monetise it by customisation and personalisation
of the driver and the car to give incremental benefits when you
are playing to win. That is where they get all their revenues
from and it has been a very successful business model. In fact
it has moved in Korea from a subscription-based model to a free
download of content, and as we become more Internet-savvy in this
country and in Europe I think there will be a great increase in
that way of playing games definitely.
Chairman: That brings me neatly on to
Alan Keen.
Q489 Alan Keen: Yes, that was the
question I was going to ask. Can I ask you about the next stage.
I have no knowledge about this and when we went to Korea I could
not believe that people did this sort of thing. What is the next
stage, will it be where people will wear something and be affected
physically by what they play? How far away is that?
Mr Livingstone: I do not think
they will actually get to wearing stuff. They might take a digital
image of themselves and have their avatars, their "mini-me"
in the game world and connect with their friends via the Internet
and play collectively in a virtual world and because the technology
expands at such an amazing rate and the horsepower machines and
broadband available to content providers allows you to display
yourself realistically in 3D. Remember, this is still a relatively
new industry. 25 years ago it was single pixel moving across a
black and white screen in Pong and now we have come to
near TV quality imagery. There is a great chance of virtual worlds
because people need to escape. When I was a child I could run
out of the door, leave the door open, into the street and play
football or go on to the playing fields and play cops and robbers.
The fact that that is less available to children today, they need
those adventures and they can get them interactively through playing
games and they can create these virtual worlds. They should not
be a threat; they should be embraced. People are scared of games,
rather like my parents were scared of my Superman comics and Rolling
Stones records, but if you have grown up with games you are not
threatened by them. The powers that be running this country in
20 years' time will be so games-savvy there will be a new evil
on the horizon rather than games.
Q490 Alan Keen: What about the business
models? We saw in Korea where people paid extra money, you called
it incremental benefits, to get certain customisation on the car
that they were driving in races. How is it moving in this country?
What is going to happen next with business models? What will the
industry be aiming at?
Mr Livingstone: It is rather like
model railways of yesteryear where you liked to buy bits and pieces
for your hobby. You are not obliged to do it but if you want to
do so, the avatars that you create, you want to make them look
better, you want some sort of bragging rights. You are creating
your own virtual world and you want to customise it and make it
better than somebody else's virtual world, so there was a lot
of monetisation of things like that. Plus people like finding
things that other people have not got. In places in China there
are people who play games for a full-time living to find virtual
items which they will then sell for real money to other players
for their virtual world. So there are many ways of monetising
virtual objects. Perhaps that is an area where you need to look
at the impact on the law of selling virtual objects around the
world.
Q491 Paul Farrelly: At the risk of
turning this from an evidence session to a series of personal
anecdotes, I have just succumbed to pester power and bought my
seven year old son a subscription to an on-line game called Club
Penguin. Fortunately, he is not going round crashing cars
or shooting policemen. In this game you waddle around the world
and make new friends and you buy yourself a better igloo or more
little pets called puffles. In that sense it is really harmless
which is why I have paid for it but, boy, is it addictive. Morning,
noon and night, it causes more rows in the house with "Can
I use your computer?" Is there a level of use that the industry
does consider excessive or addictive and what can you do about
it?
Mr Livingstone: Games are addictive
in the sense that anything you enjoy doing you want to repeat
endlessly. It is a question of balance and parental control. People
probably complain now that their children do not watch enough
television whereas 10 years ago they were watching far too much
television. There are always things that people enjoy doing and
it is a matter of getting a balance. Parents have to take the
responsibility. I would probably play golf all day given the chance
but you have got to have a balance in life, and most people do.
If you look at the distribution curve of any activity there are
people who do things for a normal amount of time and there are
some people who do them extreme or not enough, and games are no
different to the huge entertainment industry. So if children feel
they are enjoying themselves you have to say, "That is enough,
you have to do something else."
Mr Jackson: I think the industry
takes it very seriously. We have set up a programme Ask About
Games. There is a website, there are leaflets that go out with
the games, we have advertised it, and you can go on to that website
and they give you advice about age ranges, what that means, the
sensible use of games and the sensible use of computers. So I
think we do take that seriously as an issue.
Q492 Paul Farrelly: I appreciate
the practical point. It is really in the lap of the parents. A
related matter: I can enforce age restrictions by what I pay for,
such as waddling around the world rather than crashing cars, so
I can enforce that age restriction in what I choose my son or
daughter to be involved in, but how in your experience does the
industry approach enforcing age restrictions and how easy or difficult
is it?
Mr Jackson: It depends what you
mean by enforcing age restrictions. It is very easy for us to
ensure that every game that is sold in the UK is properly age-rated
and it is something we take incredibly seriously. We have a European
system called PEGI which rates all games business in Europe. That
is backed up by both the VSC, the Video Standards Council, and
the BBFC, so that if anything is of adult content it has to go
through the BBFC as well. So we have that well covered. In terms
of enforcement at shop level, most games are now sold in very
professional environments and all retailers understand how the
age ratings should be used. If we have a problem, it is potentially
in the theft area where car boot sales can sell anything unrated
and unregulated to anyone they want, but I think in terms of the
formal, legal commercial industry we are in good shape.
Q493 Paul Farrelly: I am thinking
more on-line.
Mr Jackson: On-line we are still
in relatively early stages. PEGI are working on a European age-rating
scheme and I am more than happy to give the Committee more information
about that in the future.
Q494 Chairman: Just while we are
on that point, you will be aware of the concern that has been
expressed in the House by some Members about the effect that particular
games have had. I am thinking of Manhunter and Bully.
To what extent does the industry believe or accept that games
can have a damaging effect on the psychology of young people who
are exposed to inappropriate content?
Mr Jackson: Well, I am not the
best person to talk about the evidential basis for those sorts
of issues, but I would say that it is inappropriate for young
people to see inappropriate material and they should not, and
we do everything possible, given the entertainment nature of our
industry (like other entertainment industries) to ensure that
does not happen. What I would say is that we take incredibly seriously
those issues and we think age rating is incredibly important and
it is something we spend an enormous amount of time ensuring that
it is done properly. It is straightforward; inappropriate material
should not be seen and used by underage consumers.
Mr Livingstone: PEGI and the BBFC
are robust systems and we do take our publisher responsibilities
very sincerely. We try our best to educate people, but from my
awareness and knowledge there is absolutely no evidence whatsoever
that playing a game can affect how you behave in real life. If
I could play a football game and get better at football I would
love to do that.
Q495 Chairman: The other side of
the coin, it has been suggested to me that the manufacturers are
quite keen that some games should be certificated 18 because your
prime market is the early twenties and they will regard that as
something that makes the game more attractive rather than puts
them off.
Mr Jackson: I think that if they
were thinking that that would be pretty cynical of them. In my
career at EA I would insist that certain games were put forward
to be age-rated to ensure that they were properly rated to ensure
that there was no question mark over them. Now that normally got
me rebuffed and I got told it just is not by the rating bodies,
which was fine, but I think we were very serious in making sure
that we did not put inappropriate material into the wrong hands,
and that can sometimes lead to a bit of jitteriness.
Mr Livingstone: It seems to me
also it is always the games industry that is singled out with
this sort of problem whereas it is fine for the film industry
and for TV and for music to be sold with mature content. As long
as we have got mature people buying mature content they should
be able to act responsibly.
Q496 Chairman: Paul Jackson, you
have said the other big challenge to the industry, as well as
maintaining creativity in this country, is protection of intellectual
property, which clearly is a theme running throughout our inquiry
affecting all the creative industries. Can you tell us how the
games industry is tackling that and in particular what role you
think digital rights management has to play?
Mr Jackson: Over the last 15 years
ELSPA has had an anti-piracy unit working very closely with trading
standards organisations and the police to encourage the enforcement
of anti-theft activities, what has historically been called piracy.
Theft is a major issue for us in two ways really and that is why
this is so important. Firstly, it obviously deprives us of revenues
that we can reinvest in that creative content. Secondly because
in a more subliminal way if what we do is not valued, if what
we spend all our time and energy in creating is not protected,
it knocks back the whole energy within the industry, and if that
gets out of control it leads to the things that have happened
in the Far East where they do not even bother to produce some
of the creative things we have produced. So we have worked very
closely to try and fix this issue of theft. I have to say probably
the most important thing we can do is to come here and talk to
you about what government can do to help us deal with this. I
am reminded particularly of the issue of the Copyright, Design
and Patents Act and section 107A which has not been implemented.
I only recently joined the trade body, I was in commerce until
a couple of months ago. If I understand things correctly, this
law was implemented over a decade ago and this section, which
would be so helpful to us in that it would empower and enforce
the dealing of this issue much more vigorously, has not been implemented.
I must admit as a relative outsider I do not understand how that
can be. I am bemused by that, to be honest, and we would very
much like to see that enacted.
Mr Livingstone: And the other
thing for me is I would like government to change the perception
of theft, which is effectively what piracy is. If you go into
a store and take something and steal it in a physical format and
then try and sell it, people say that is wrong, but if you then
have something like file sharing, because it is an ethereal product
and does not have any physical properties about it, that is somehow
seen as not stealing and yet it is the same cost to us having
created that content from the intellectual property that we produce,
and the copyright is needed to unpin our industry. We are moving
more and more to digital distribution and it would be even more
important to us to have our copyright protected. Also the Government
loses huge tax revenues because we will not be getting the revenues
that we should have been getting. It is a lot of lost revenue
to the companies that produce these games and also a lot of lost
revenue in VAT and in income tax, so a change in perception for
me is one thing that would really help.
Q497 Chairman: I think we would share
that view. Can I also just ask you about the way in which the
industry will develop which also has a bearing on copyright. The
record industry has moved a long way towards distribution digitally
over the net and some people have predicted that CDs will disappear.
The film industry is now moving down that same path, a little
behind but that may eventually lead to the disappearance of DVDs.
Your industry at the moment is still, in the main, physical products
sold through retail outlets in the high street. Do you see it
also moving towards digital distribution? If that is the case,
how are you going to protect copyright then?
Mr Jackson: We are definitely
seeing a move in that direction. We would be third in line because
our products are generally larger than the music and film industries,
or they are getting larger, and because the technologies have
not settled down yet there is some disparity because the technology
is constantly changing and it could lead to dysfunction there.
I think that going forward, digital rights management will be
very important to us being able to protect our products. Because
again the technologies have not settled down, the issue of DRM
has not settled down for us yet. We have a number of different
platforms and how are they going to physically manage the digital
rights is not settled yet, but I think we are heading in that
direction. I do not think we have got anything particularly constructive
we can say yet because there is still such a lot of flux in terms
of hardware platforms.
Chairman: If my colleagues do not have
any other questions, could I thank you very much.
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