Current and Emerging Issues for the Classification of Video Games In

interactive games & entertainment association

CURRENT & EMERGING ISSUES for the Classification of Video Games in New Zealand IGEA Suite 145, National Innovation Centre Australian Technology Park 4 Cornwallis St, Eveleigh NSW 2015 www.igea.net [email protected] @igea_oz /igea.net

IGEA (Interactive Games & Entertainment Association) is an independent industry association representing the business and public policy interests of New Zealand and Australian companies in the computer and video game industry. Its members publish, market, develop and/or distribute interactive games, entertainment content and related hardware. CONTENTS

Executive Summary 2 Introduction 5 The current gaming environment 6 Devices and Platforms 6 Game Consoles 6 Acquisition of games and game content 7 Boxed games 7 Digital download 7 Point of sale digital downloads 8 Subscription 8 Episodic games 9 Free-to-play, Freemium and In Game Purchases 9 How games are played 11 Traditional gaming 11 Motion sensing 11 Multi-screen gaming 11 Cross-device play 11 Companion applications 11 Online multiplayer 11 Augmented reality 12 Virtual reality 12 Overview of Game Classification in New Zealand 13 Classification and labelling of video games 13 Distribution of objectionable video games 13 The Classification Process for Video Games 14 Administration, operation and enforcement of the Act 14 Emerging Issues 15 The high frequency and volume of digitally distributed games 15 Uncertainty for Digitally Delivered Video Games 16 Unfair application on New Zealand distributors 18 The Act is not evolving with international classification practices 19 Classification Fees are Unreasonable 20 Free-to-play games 21 Episodic Games 21 The Film and Video Labelling Body and Online Content 22 Reform of Australia’s Classification Scheme 24 Recommendations 25 Conclusion 25

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 1 interactive games & entertainment association

EXECUTIVE SUMMARY

Ninety four percent (94%) of New Zealand With the average age of the New Zealand households currently have at least one gamer being 34 and 48% of New Zealand device being used for playing video gamers being female,4 the games industry games1, with many of these houses is constantly being driven to develop new (69%) having two or more game playing technologies and experiences to support devices.2 Video games are being played a broadening demographic. The most on more platforms and devices than ever popular titles still rely on the traditional before, with game experiences often game controller or keyboard and mouse, converging across multiple types of however motion sensing technologies,

EXECUTIVE SUMMARY devices and being enjoyed by multiple augmented reality, virtual reality, multi- generations of New Zealanders, often screens, cross-device and online simultaneously. PC and game consoles multiplayer are quickly gaining popularity. continue to be the dominant type of game device used in New Zealand homes and The current classification system in this trend is expected to continue with New Zealand is primarily based on the the market’s renewed demand for PC structure and approach prescribed by games and the recent release of the next the now repealed Video Recordings Act generation of game consoles. 1987 which came into force at the end of October 1987 - when games were only The Internet has changed how consumers sold in boxes and commercial digital acquire video games and game content. distribution was not envisaged. It is not While boxed products remain the primary surprising therefore that the application of distribution method for AAA games, New Zealand’s classification system on the other distribution methods are quickly rapidly growing video game market and gaining momentum. Digital distribution digitally distributed games has caused models (for computers, game consoles a wealth of issues for the interactive and smart phones), subscription models, entertainment industry, including: episodic games, free-to-play and in- game purchases are several examples 1. Inability to manage the high of the new distribution models that frequency and volume of digitally have emerged and that are expected to distributed games - While the Office dominate the gaming landscape. In 2014, of Film and Literature Classification 77% of video game content sold in New currently classifies less than 80 video Zealand was digitally delivered3. games per year, in 2014 almost 140,000 games were released in Apple’s App Store and thousands more on other digital platforms such as Android and

1 The terms ‘video games’, ‘games’, ‘interactive games’, Steam. The current classification system ‘interactive entertainment’ and ‘computer games’ are all is simply unable to keep up with the references to ‘video games’ as that term is deﬁned in the Films, Videos, and Publications Classiﬁcation Act 1993 high frequency and volume of digitally

2 Brand, J. E. & Todhunter, S. (2015). Digital New Zealand distributed games. 2016. Eveleigh, NSW: IGEA. http://www.igea.net/2015/09/digital-new-zealand-2016- dnz16/ 4 Brand, J. E. & Todhunter, S. (2015). Digital New Zealand 2016. Eveleigh, NSW: IGEA. 3 http://www.igea.net/2015/03/infographic-total-value-of- http://www.igea.net/2015/09/digital-new-zealand-2016- the-nz-industry-in-2014/ dnz16/

2 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 2. Uncertainty with the classification 5. Classification fees are unreasonable EXECUTIVE SUMMARY system’s application for digitally for independent game developers - distributed games - With the Other major territories, including USA, commercial availability of thousands Canada, Europe, Germany, Brazil of unclassified digitally distributed and Australia, have recognised that, games, the unrealistic enforcement in the rapidly growing digital market, of the classification system and the classification and rating fees deter jurisdictional limitations, there is a publishers and developers from actively growing level of uncertainty about the participating with local classification classification system’s application to systems. These other major territories digitally distributed video games. This have either removed, or are working uncertainty is particularly problematic to remove, the classification fees for for New Zealand businesses that are digitally distributed games. within the enforcement reach of the scheme. Meanwhile, New Zealand’s classification system demands developers and 3. Unfair application of the scheme on publishers to pay between $1,430 and local distributors - The classification $2,150 to classify a game for release system places significant and unfair in New Zealand. Compared to other costs on local New Zealand businesses. major markets where the classification Overseas competing businesses of digitally distributed games is free, are able to unfairly capitalise and the current classification fees charged receive the benefit of the classification in New Zealand are excessive, costs incurred by local New Zealand unreasonable, disproportional and acts businesses. as a disincentive to publishers and developers from actively using local 4. The classification system is New Zealand classifications. not evolving with international classification practices - Major 6. The classification system’s failure classification authorities around the with free-to-play games - The world have reviewed and adapted their classification system does not approach to classifying video games appropriately capture video games that in the digital economy. New Zealand’s are provided to users for free, including current approach to classification is games that receive revenue from in- lagging behind such international game advertising. This inconsistency developments. demonstrates the legislation’s failure to adapt to emerging business models in the digital economy.

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 3 interactive games & entertainment association

7. The classification system’s failure In March 2011 the Australian Government with episodic games – Similar to referred Australia’s classification television shows, video games are now scheme to the Australian Law Reform being released as episodes of a larger Commission for a comprehensive series or season, with each episode review. In March 2012, after significant being sold for a fraction of the price of consultation with the public, industry and a full game. The classification system Government agencies, the Australian would require each of these episodes to Law Reform Commission tabled a final be classified separately, a requirement report recommending an overhaul that has prevented the commercial of Australia’s classification scheme. feasibility of releasing such episodic The Australian Government has since games in New Zealand. began implementing the Australian Law

EXECUTIVE SUMMARY Reform Commission’s recommendations, 8. The Film and Video Labelling Body including the approved use of automated has not adapted to the emerging classification tools for the classification of games market and the online digitally distributed video games. environment – The Film and Video Labelling Body’s operation struggles to With digital distribution quickly becoming prioritise the primary objectives of the the primary method of video game classification system – to appropriately acquisition in New Zealand, there is an inform New Zealander’s about the urgent need for review and reform of New appropriateness of content. Instead of Zealand’s classification system. IGEA streamlining the classification process recommends that a comprehensive review to reduce the costs of compliance, of New Zealand’s classification system be the body has attempted to charge conducted and that the review broadly unreasonable and unnecessary licence considers New Zealand’s classification fees for the display of classification system, including film, television, information on online digital distribution streaming, video games, broadcasting and platforms. With a statutory monopoly literature in the digital market place. on the handling of video game classifications and the issuing of classification labels, there appears to be little incentive or willingness to accommodate emerging markets.

4 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 1. INTRODUCTION

The aim of this paper is to provide the This paper will address the following: New Zealand Government and the public with a comprehensive understanding of • The current gaming environment – an how the Films, Videos, and Publications exploration of the many platforms and

Classification Act 1993 (the Act) is devices that are used for playing video INTRODUCTION frustrating the provision of classification games. and rating information to New Zealand consumers and generally impacting the • How games are currently being acquired interactive entertainment industry in New – identification of the various ways that Zealand. As expected in an industry that New Zealand consumers are purchasing is constantly innovating, there have been or acquiring video games and other a number of significant changes since game content. the Act was first introduced. Classification schemes around the world are now • How games are being played – an considering how to adapt and evolve to overview of how New Zealanders are address changing distribution models and enjoying video games, including through the high volume of digitally distributed the use of new technologies. games. If New Zealand’s classification • New Zealand’s classification system – an scheme is expected to survive and overview of New Zealand’s classification remain relevant throughout the rapidly system and how video games are approaching digital revolution, reform of classified in New Zealand. the Act and New Zealand’s classification system is inevitable. Accordingly, it is • Emerging issues – a comprehensive important to acknowledge and understand analysis of the classification system’s the new developments that are occurring failure to protect and inform New in the interactive entertainment industry Zealand consumers and the growing and how any reform to the Act and New challenges encountered by interactive Zealand’s classification system may entertainment industry in New Zealand. impact such developments. • Australian Reform – a summary of the recent review and reform of Australia’s classification scheme.

• Recommendation – IGEA’s recommendation for a review of New Zealand’s classification system.

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 5 interactive games & entertainment association

2. THE CURRENT GAMING ENVIRONMENT

2.1. Devices and Platforms

Consumers are engaging with video games on an ever-increasing variety of devices and platforms. The following table sets out a non-exhaustive list of the various categories of computer game devices and platforms along with relevant examples.

CATEGORY EXAMPLES Personal computers Windows based computers and Apple’s OSX computers Portable computers Laptops, netbooks Game consoles Sony PlayStation 3 & 4, Microsoft Xbox 360 & Xbox One, Nintendo Wii & Nintendo Wii U Handheld game devices Sony PlayStation Vita, Nintendo 3DS & 2DS, iPod Smart phones iPhone, Windows Phone, Android phones Tablets iPad and iPad Mini, Samsung tablets, Microsoft Surface Smart TVs and set top boxes Samsung and LG smart TVs, Sky set top boxes

94% of New Zealand

THE CURRENT GAMING ENVIRONMENT households have a device for playing games

2.2. Game Consoles Microsoft and Sony’s new generation of home entertainment consoles, Microsoft’s The major game consoles currently Xbox One and Sony’s PlayStation 4, were available for sale in New Zealand include released in New Zealand at the end of Sony PlayStation 4, Sony PlayStation 3, 2013. Both of these consoles are capable Microsoft Xbox One, Microsoft Xbox 360, of playing games delivered both digitally Nintendo Wii and the Nintendo Wii U. 94% and on physical media. of New Zealand households have a device for playing games, with 69% of these All of the currently available game households having one or more game consoles have parental controls and consoles.1 provide accessible instructions on the operation of such parental controls. 56% Games for the currently available game of New Zealand parents are familiar with consoles are delivered on both physical the parental controls that are available in media (including DVD or Blu-Ray discs) game systems2, an amount that is likely or by digital download over the Internet. to increase as gamers become parents and parental controls become more 1 Brand, J. E. & Todhunter, S. (2015). Digital New Zealand sophisticated and accessible. 2016. Eveleigh, NSW: IGEA. http://www.igea.net/2015/09/digital-new-zealand-2016- dnz16/ 2 Ibid

6 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand There have been several new entrants to the game console market, which include game consoles that have been crowd funded on fundraising websites such as Kickstarter. For example, the Ouya console was successfully crowd funded on Kickstarter with over $8.5 million pledged by over 60,000 people towards the development of this new game console3. The Ouya console has now been commercially released and provides a range of new digitally delivered games4. The Ouya is one of the many examples of new entrants in the game console market, with new consoles expected to emerge with the growing demand for digitally delivered content.

3 http://www.kickstarter.com/projects/ouya/ouya-a-new-kind-of-video-game-console?ref=live

4 http://www.ouya.tv

3. ACQUISITION OF GAMES AND GAME CONTENT

The definition of ‘video game’1 in the Act Games and JB Hi-Fi and mass merchant captures a range of interactive games and retailers such as The Warehouse. game content. From a digital iteration of a CONTENT IS ACQUIRED HOW GAMES AND GAME game as simple as chess, to sophisticated In 2014, there were approximately 720 and immersive games that explore boxed game titles released in New personal stories in virtual worlds, the Zealand. concept of ‘video game’ is very broad. 3. 2. Digital Download The introduction of new technologies and ultra fast broadband has changed the Consumers are now able to access a way consumers acquire video games and huge range of games and game content game content. The following sections set over the Internet. All game platforms, out how New Zealanders are currently including computers, game consoles, acquiring video games and game content. handheld devices and smart phones allow users to purchase, download, install 3.1. Boxed Games and play games and game content. A growing category of platforms, including The ‘boxed games’ category refers to smart phones, tablets, smart TVs and games and game content that is delivered even newer laptops do not have hardware on physical media and sold generally components such as CD or DVD drives in retail stores. Games for PCs, game and are therefore unable to read, install consoles and handheld devices continue and process video games on physical to be sold as boxed games through media and can only receive and play traditional ‘bricks and mortar’ distribution digitally distributed video games. methods. These games are being sold by a number of retailers across New Zealand, Digital downloads are being sold by a including specialist retailers such as EB growing range of digital retailers. While new digital storefronts are continuously emerging, the most popular digital game 1 or the deﬁnition of ﬁlm or publication as those terms apply to video games in the Act.

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 7 interactive games & entertainment association

retailers include Apple’s App Store, While the sale of physical media in New Google’s Google Play, Electronic Arts’ Zealand retailers is likely to continue Origin, Ubisoft’s UPLAY, Valve’s Steam, throughout the next generation of games Microsoft’s Xbox Marketplace, Sony’s consoles, the use of POSA cards will no PlayStation Network and Nintendo’s doubt increase as consumers demand for eShop. their games to be delivered digitally.

3. 4. Subscription The number of digitally exclusive games would Subscription is not necessarily a new exceed 150,000 per year approach for the games industry, however high speed Internet and digital distribution While digitally distributed video games has allowed more subscription models to may include the downloadable versions of develop. The traditional subscription model games that are released as boxed games, for games would involve the user paying a there is an exponentially growing range periodic fee to access a certain game. For of games that are exclusively digitally example, users currently pay approximately distributed. US$15 per month (or US$78 per year) for gameplay time for the massive multiplayer The amount of digital releases is difficult to online game World of Warcaft. measure, though Apple’s App Store alone has more than 427,00 games currently New subscription models have also available for download, with almost emerged, with some providing consumers 150,000 released in the twelve months with a regular selection of games for a ended June 30, 2015.2 periodic subscription fee.For example, the PlayStation Plus subscription costs 3. 3. Point Of Sale Digital Downloads $11.95 per month (or $89.95 per year) and provides subscribers with a number Digital downloads can also be purchased at of benefits including discounted and free ‘bricks and mortar’ retailers through the use digitally downloadable PlayStation 4, of activation cards. For example, retailers PlayStation 3 and PlayStation Vita games. may display a range of cards, similar to EA Access, Electronic Arts’ subscription iTunes gift cards, which contain activation service for a growing selection of Electronic

HOW GAMES AND GAME HOW CONTENT IS ACQUIRED codes that can be redeemed online to Arts’ games, is available for $6.99 per enable the user to download and play a month or $39.99 per year. particular game. These cards, also referred to as ‘point of sale activation cards’ or ‘POSA’ Subscription models see games moving cards, are commonly used for exclusively from a consumer/commodity item to digitally delivered titles that would benefit being the delivery of a service, similar to from a physical retailer presence. POSA subscription television. cards are also an innovative way to ensure New Zealand retailers continue to benefit from the growing trend towards digital 77% of all games distribution. content in NZ is accessed digitally

2 http://www.pocketgamer.biz/metrics/app-store/

8 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 3. 5. Episodic Games In-game purchases (also referred to as in- app purchases) are used for both free and The low cost of digital distribution has paid games. For example, a customer may paved the way for the development of download a game for free or for a nominal episodic gameplay. Rather than selling price and then through subsequent in- one game for $100, an episodic game game purchases they can unlock further could be distributed in five separate parts levels or features of the game. Popular costing $20 each. Episodic games provide free-to-play or freemium games include a number of advantages for businesses Candy Crush Saga, Words with friends, and consumers, including: Clash of Clans and Sim City Buildit.

• allowing games to be released earlier, Several key benefits have emerged with the initial episodes being released through the use of free-to-play and while the remaining episodes are still in freemium games, including: development; • consumers are able to enjoy games for • decreasing the entry cost for consumers, free or by spending amounts relative to allowing them to initially spend less on a their own financial circumstances and game to determine whether they want to interest in a particular game; spend more for subsequent episodes; and • users, or potential users, are now able

• increasing the publicity period for games to effectively ‘sample’ a game with little CONTENT IS ACQUIRED HOW GAMES AND GAME businesses, with semi-regular releases or no financial risk to determine whether prolonging the marketing opportunities they would like to spend any money on for game developers and publishers. the game;

The most recent successful example • developers are able to continually of an episodic game is Telltale Games’ enhance games after their initial launch critically acclaimed title The Walking Dead. by building and delivering more game This game was split into five separate content through in-game purchases; episodes that were released over a period of approximately eight months. The game • developers are able to serve a broader was subsequently released as a boxed market of users, from those users that game containing all the episodes from the would prefer not to spend any amount on collection. games and are happy with a basic game experience, to those users that want 3. 6. Free-to-play, Freemium an in-depth game experience and are and In Game Purchases willing to pay for it; and

‘Free-to-play’ or ‘freemium’ games • free-to-play and freemium games have are prime examples of the new and also been used to prevent or reduce innovative business models that have copyright infringement. As these games been developed in the mobile game are initially provided for free or at a low market. These games are provided to cost the appeal of downloading such the consumer for free, with the developer games from unauthorised sources is or publisher’s revenue derived from reduced. alternative sources such as in-game advertising or in-app purchases. Free-to- play and freemium models are now being used in a variety of devices and platforms, including for smart phone, console and computer games.

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 9 interactive games & entertainment association

Free-to-play and freemium games • ‘Bloons TD Battles’ by New Zealand’s are the cornerstone of New Zealand’s NinjaKiwi’s has had over 10 millions thriving game development industry. This users. innovative and consumer friendly revenue model is used for the majority of New • ‘Smallworlds’ by New Zealand’s Zealand’s $100 million annual export of Outsmart Games grew by 6 million digital games. The following examples registered users in 2013. highlight the success of New Zealand game developers in the global video • ‘Flutter: Butterfly Sanctuary’ by New games market through the use of the free- Zealand’s Runaway was the #1 top to-play and freemium revenue models:3 grossing iPhone educational game in 38 countries. • ‘Path of Exile’, developed by New Zealand’s Grinding Gear Games, has • ‘The Blockheads’ by New Zealand’s attracted over 10 million players and won Majic Jungle’s has had over 10 million PC Gamer’s 2013 Game of the Year. iPhone downloads.

• ‘Into the Dead’, developed by New This represents a small sample of the Zealand’s PikPok, has had over 30 potential of free-to-play and freemium million downloads and its Dreamworks games in New Zealand’s game licenced title, ‘Turbo FAST’, has had over development industry. 50 million downloads. Over 100 million users are registered on PikPok’s game platform.

• ‘Ice Age Village’, developed by Gameloft’s Auckland studio, has been downloaded over 10 million times in one month.

3 This information was provided by the New Zealand Game Developers’ Association and is based on data provided in the second quarter of 2014. HOW GAMES AND GAME HOW CONTENT IS ACQUIRED

10 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 4. HOW GAMES ARE PLAYED

4.1. Traditional Gaming other devices. Cross-device games also allow a consumer to play and interact with Consumers are still enjoying their video other consumers that are playing the same games in the traditional way, with a game game on a different type of device. controller or keyboard and mouse used to navigate and control the game experience, 4. 5. Companion Applications generally on a television screen or panel. Some of the most popular titles, including The consumer interaction with a FIFA 15, Minecraft and the Sims 4 all computer game is no longer limited to involve the use of a keyboard, mouse or one device alone, with many games now game controller. releasing ‘companion apps’ to be used in connection with the main game on 4. 2. Motion Sensing separate devices. For example, while a user can enjoy a game on a game console With the introduction of motion sensing in their living room, they can also continue technology, including with the Nintendo their game experience through a separate Wii U, PlayStation Move and Xbox Kinect, smart phone or tablet application while gamers are now able to use their bodies commuting to work. The use of companion and gestures to interact with games. A applications is expected to increase number of game genres have emerged or following the release of the new generation re-emerged with the use of motion sensing of game consoles. Ubisoft Entertainment’s technology, including sports, dancing, highly anticipated release Tom Clancy’s: racing, singing and fitness games. The Division for Xbox One and PlayStation HOW GAMES ARE PLAYED 4 features a sophisticated companion 4. 3. Multi-Screen Gaming application that allows tablet users to interact with game console players in real- Games are now being enjoyed on more time by allowing them to control a drone than one screen. The Nintendo Wii U’s that oversees the console player’s game controller acts as a second screen to and provide support1. the television, providing an alternative perspective to gameplay. Computer 4. 6. Online Multiplayer tablets are also being used as a second screen in a number of games, for example Online multiplayer games enable in racing games where the computer tablet users from around the world to play is used to display a racing map. together or against each other over the Internet. Online multiplayer games can 4. 4. Cross-Device Play be as simple as Scrabble or Chess, where children are playing with their While video games are often developed for grandparents on their smart phones or a number of different devices, consumers tablets, to war simulation games like Call are now able to extend their game of Duty or Battlefield, where users work experience across multiple devices. For with teammates that are scattered across example, the popular Candy Crush Saga app can be played on computers, smart phones or tablets with a user’s progress 1 The companion application experience is described in the following videos: http://www.youtube.com/ on one device shared across the user’s watch?v=rcNB1_bGG5w and http://www.youtube.com/ watch?v=dWpAeQm5hrY

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 11 interactive games & entertainment association

the globe to achieve a common objective. “A more whimsical demonstration involved Playing online games is common practice the Microsoft-owned ‘Minecraft’ game. In a in New Zealand, with more than 73% small living room, the HoloLens projected of New Zealand gamers now playing three-dimensional structures and animated games online2. Online multiplayer creatures on an actual coffee table. I games usually contain gameplay and summoned imaginary tools and blasted a communication features that enhance the simulated hole in the room’s actual wall and users’ experience, including customisable was surprised to see cartoon bats fly out.” avatars and game items, text chat, audio chat and friends lists. It is common for 4. 8. Virtual Reality online multiplayer games to contain mechanisms for users to report any The concept of virtual reality games negative online behaviour of other users. has existed for some time now, however recent technological developments have 4. 7. Augmented Reality allowed this concept to step beyond science fiction and into reality. Most Game devices are often connected to recently, a virtual reality headset called video cameras that can be used for the ‘Oculus Rift’ has been successfully augmented reality games. These games crowd funded and a development version will generally use a video camera to record of the headset has already been released the user’s surroundings for display on the for game developers. In March 2014, user’s television or smart phone screen Facebook acquired the developer of the and then will superimpose virtual objects Oculus Rift for a reported US$2 billion. and characters on the displayed image The Oculus Rift features head and motion for the user to interact with. For example, tracking, allowing the user to simply the popular PlayStation 4 title ‘Playroom’ move their head to look around the virtual allows users to interact with virtual robots environment that is being displayed that appear to be flying around the user’s through the headset. Games for the living room. Augmented reality games Oculus Rift are currently being developed, are popular with smart phones as these including a rollercoaster game that puts devices usually come equipped with high- the user in the seat of a high speed, resolution video cameras. In January 2015 gravity-defying roller coaster and a game Microsoft announced its hologram device, that allows the user to explore the detailed the HoloLens. The HoloLens is expected environment of a mansion in Tuscany. As to have a number of uses, including for technology improves, more virtual reality education, productivity and entertainment. games and hardware are being developed The following quote provides one and the cost of such products is expected example of how augmented reality and to be well within reach of the mainstream the HoloLens has been used for video games market. For example, Sony has games.3 announced the development of their HOW GAMES ARE PLAYED HOW virtual reality headset for the PlayStation 4, Project Morpheus, and Samsung has now launched their virtual reality headset in the 2 Brand, J. E. & Todhunter, S. (2015). Digital New Zealand 2016. Eveleigh, NSW: IGEA. United States, the Gear VR, for less than http://www.igea.net/2015/09/digital-new-zealand-2016- US$250. dnz16/

3 http://www.nzherald.co.nz/business/news/article.cfm?c_ id=3&objectid=11391204

12 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 5. OVERVIEW OF GAME CLASSIFICATION IN NEW ZEALAND

The Act and related regulations set out displayed on film slicks, display cases, how video games are to be classified and casettes and spools. The Regulations go the requirements for the classification of on to specify the minimum dimensions of video games in New Zealand. classification labels. There is no specific requirement in the Regulations for the The OFLC’s policy advice suggests that display of classification labels for video ‘video games’ fall within the definition of games that are digitally distributed over ‘film’ in the Act1 and are therefore also the Internet. broadly considered as ‘publications’. The relevant offence provisions in the Act Non-compliance with the labelling concern three key activities: requirements in the Regulations attract a fine of $3,000 for individuals and $10,000 • the requirement to classify certain video for corporations.2 games; 5.2. Distribution of objectionable • the requirement to display classification video games labels for certain video games; and Section 123 of the Act generally prohibits • the general prohibition against the the distribution of ‘objectionable supply of objectionable publications, publications’, including any objectionable including objectionable video games. video games. Any offence of this prohibition attracts a fine of up to 5.1. Classification and labelling of $10,000 for individuals and $30,000 for video games corporations. In circumstances where the individual or corporation had knowledge Part 2 of the Act generally requires films to that the video game was objectionable, be issued with a label and that the label be the penalties severely increase to up to 10 displayed in accordance with regulations. years imprisonment for an individual and Section 8 of the Act goes on to state that, $200,000 for corporations. Similar offence unless the video game is a ‘restricted provisions and penalties exist for the publication’, video games do not have possession of objectionable publications.

to comply with labelling requirements. CLASSIFICATION IN NEW ZEALAND OVERVIEW OF GAME Accordingly, video games that are to be Video games that are not classified classified as ‘restricted’ (for example, and would likely attract a ‘restricted’ Restricted 13, Restricted 15, Restricted 16, classification would potentially be Restricted 18 etc.) require classification considered ‘objectionable publications’ while unrestricted video games (including until they are appropriately classified G, PG and M) do not require classification by the Office of Film and Literature or labelling. Classification (OFLC).. Accordingly, the general prohibition against the supply or The regulations set out how video games distribution of ‘objectionable publications’ should display classification labels. In operates as an incentive for video game particular, regulation 19 of the Films, distributors and retailers to classify Videos, and Publications Classification potentially restricted video games in order Regulation 1994 (the ‘Regulations’) to avoid beaching the Act. states that classification labels should be

1 Section 120(5) of the Act 2 Section 120(5) of the Act

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 13 interactive games & entertainment association

5.3. The Classification Process for Since only restricted video games Video Games require classification and labelling in New Zealand, only video games that The classification process for video games are likely to be restricted are submitted involves cooperation between the video to the FVLB. In practice and in an effort game distributor, the Film and Video to ensure absolute compliance, video Labelling Body (FVLB) and the OFLC. game distributors will usually submit video games that have been classified The Regulations acknowledge that video M, MA15+ or R18+ by the Australian games and films are likely to have been Classification Board. While this practice classified by an overseas classification goes beyond the requirements of the authority, such as Australia’s Classification Regulations (since video games classified Board. The Regulations state that if a M in Australia don’t technically require video game is identical with a video game classification or labelling in New Zealand) that has been classified by an overseas this approach has been adopted to ensure classification authority as: more mature content is appropriately reviewed using New Zealand’s local • approved for supply to persons of all standards and criteria. ages, the FVLB shall assign a rating of G, ‘suitable for general audiences’. Once the classification or rating decision is made by the OFLC or FVLB, the FVLB will • suitable for supply to persons of or over issue labels to the video game distributor an age that is not more than 13 years, for display in accordance with the the FVLB shall assign a rating of PG, Regulations. ‘parental guidance recommended for younger viewers’. 5.4. Administration, operation and enforcement of the Act • suitable for supply to persons of or over an age that is not more than 14 or 15 The Act is overseen and administered years, the FVLB shall assign a rating by a number of Government and of M, ‘suitable for mature audiences 16 non-Government entities. The Act is years of age or over’. administered by the Ministry of Justice while the operational and enforcement • approved for supply to persons of or responsibility falls with the Department of over 15 years or more – the FVLB shall Internal Affairs. The OFLC is responsible forward the video game to the OFLC for for classifying restricted video games in classification. New Zealand and the FVLB is responsible for rating unrestricted video games, cross- Accordingly, if the Australian Classification classifying video games that have already Board has previously classified a video been classified in Australia and issuing game as unrestricted (i.e. in Australia’s classification labels to be displayed on G, PG or M classification categories), the video games. FVLB will cross-classify the video game with New Zealand’s equivalent unrestricted rating. If the Australian Classification Board has previously classified a video game as restricted (i.e. in Australia’s MA15+ or R18+ classification categories), the FVLB will forward the video game to the OFLC for classification. OVERVIEW OF GAME OVERVIEW IN NEW ZEALAND CLASSIFICATION

14 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 6. EMERGING ISSUES EMERGING ISSUES

The current requirements that apply • Inability to manage the high frequency to video games in the Act largely and volume of digitally distributed stem from the requirements that were games; previously applied to video recordings in the Video Recordings Act 1987. The • Uncertainty in the classification system’s current classification scheme is based application for digitally distributed on a system that was designed almost 30 games; years ago when digital distribution was not envisaged as a commercial method • Unfair application of the scheme on local of selling video games. The current Act distributors; ultimately came into effect in 1994 during the era of cartridge based console games • The Act is not evolving with international and when computer games were supplied classification practices; on floppy disks and the ‘new’ 3.5” disk. • Classification fees are unreasonable for The application of an analogue devised independent game developers; system in a digital environment has • The classification system’s failure with caused a number of significant issues that free-to-play games; undermine the intention and purpose of the Act, frustrate the provision of rating • The classification system’s failure with and classification information to New episodic games; and Zealanders, and place a substantial and unfair burden on local industry. These • The FVLB has not adapted to the issues will become increasingly more emerging games market and the online troublesome unless there are substantial environment. and immediate reforms to New Zealand’s classification laws.

The following issues continue to challenge the New Zealand video games industry and market:

6.1. The high frequency and volume of video games under the Act is failing to digitally distributed games adapt.

The popularity and success of Over 150,00 games were independently developed video games released in Apple’s App Store continues to grow with the global increase in the past 12 months in Internet connectivity and speeds. While digital distribution has provided New The Act essentially requires all video Zealand game developers with direct and game suppliers to submit for video game low cost access to a global market, the classifications through the FVLB. This global market also has direct access to process requires the supplier to complete New Zealand consumers. Consequently, certain forms, pay prescribed fees and there are now more video games being provide the FVLB with a copy of the released in New Zealand than ever before relevant video game. The process is time and the current process for classifying consuming, manual and costly.

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 15 interactive games & entertainment association

The classification and labelling games that are released each year on the requirements in New Zealand only apply to Apple App Store that could potentially be unrestricted games, therefore the volume in the restricted category. of games currently being assessed by the FVLB and the OFLC is relatively small. Even if the OFLC decided to focus on 10% The OFLC classified an average of 78 of the 140,000 Apple App Store games video games per year – a small amount released each year, they would move compared to the average of almost 2,330 from considering 80 games per year to publications classified in general every considering 14,000 games per year. This year by the OFLC.1 is an impossible undertaking considering the OFLC currently classifies an average While the OFLC is currently classifying of 2,330 publications in general each year. less than 80 video games per year, in 2014 EMERGING ISSUES almost 140,000 games were released in The new generation of home entertainment Apple’s App Store, up from almost 80,000 consoles, including the PlayStation 4, in 20132. There are approximately 427,000 Xbox One and the Wii U, have promoted games currently available on Apple’s a renewed focus on independent game App Store – all of which are being made development. Game developers from available to New Zealand consumers. around the world, including in New This amount can be added to the tens Zealand, will soon be able to develop, self- of thousands of games that have been publish and digitally distribute their games released on other digital distribution on popular home entertainment consoles platforms such as Google Play, PlayStation with very little barriers to entry. Network, Xbox Live, Nintendo eShop, EA’s Origin and Valve’s Steam. The volume and frequency of video games released in New Zealand will continue It is difficult to determine how many of to grow exponentially and is outside the the hundreds of thousands of games that realistic regulatory scope of the current are released each year on Apple’s App Act. Store would be ‘restricted’ and therefore require classification in New Zealand by 6.2. Uncertainty for Digitally Delivered the OFLC. The best estimate is based on Video Games the percentage of video games that are classified MA15+ and R18+ in Australia There are ongoing uncertainties in the New each year. In 2014, 13% of games were Zealand scheme’s application on digitally classified MA15+ in Australia and 4% delivered video games. Such uncertainty of games were classified R18+. Just has been caused by a number of factors, under 10% of all games classified by the including the unrealistic application of the Australian Classification Board since 1996 classification system for the high volume were classified MA15+ or higher. 13% of of digital content (addressed above) and the 140,000 games released on the Apple the difficulty of enforcing the requirements App Store equals 18,200 and 4% of the that may exist in the Act for content 140,000 games released on the Apple App delivered online through offshore servers/ Store equals 5,600 – totalling 23,800 video businesses.

1 Since 2000 as indicated in each OFLC Annual Report since 2000/2001

2 http://www.pocketgamer.biz/metrics/app-store/

16 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand The OFLC website states the following: exploitation material, it is impractical to EMERGING ISSUES expect the OFLC or the FVLB to classify “Distributors must ensure that classification and label all film and video game content information is displayed online and must before such content is made available take steps to ensure that restricted content online. Such an approach would have a is not made available to underage people. devastating impact on emerging online If a distributor chooses not to comply with distribution methods and undermine New New Zealand’s classification requirements Zealand’s participation in the growing they may be liable for offences under global digital economy. the Classification Act. Furthermore, if an unclassified film or game was downloaded While the OFLC’s position on the Act’s onto a computer, console, or other device application to online content is clear, in New Zealand and was found to be there has been no enforcement activity objectionable (banned), the consumer undertaken to mandate the classification who downloaded the film or game would and labelling of digitally distributed video be liable to some serious offences games such as those on Apple’s App themselves.” Store, Google Play, Facebook and the many other emerging digital distribution The OFLC website goes on to state that: platforms. The reasons for the lack of enforcement may include: “While distributors may be supplying games and films from servers not based a) Scope of the Act - The suppliers of in New Zealand to New Zealand-based these online distribution services are customers, the supply activity falls under likely overseas businesses, operating the jurisdiction of the Films, Videos, and either outside the scope of the Act or Publications Classification Act 1993. outside the realistic enforceable reach Restricted games and all films that are not of the Act. exempt from the labelling requirements must be classified for supply to the New b) Priority of enforcement activity - Zealand public and display classification Compared to more damaging online information, regardless of the source of material, the potentially infringing supply or the platform used to download activity does not create a significant the material.” risk to the public, particularly because such content usually displays alternate Accordingly, the OFLC’s website suggests consumer advice and is subject to that online content is well within the scope parental controls. of the Act and therefore the supply of a restricted unclassified and unlabelled c) Consequences of enforcement – video game to a user in New Zealand If classification and labelling was would constitute an offence by the mandated for digitally distributed supplier. games, it is possible that digital distribution services will decide While it is important to ensure that parts to withhold content from the New of the Act address the supply of certain Zealand market (an outcome that will online content, such as those offence not necessarily prevent users from provision concerning the supply of highly accessing such unclassified material objectionable material such as child through unauthorised channels).

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 17 interactive games & entertainment association

Consequently, the ambiguous approach demand of consumers who have access to the classification of online content has to this content through other avenues created some significant uncertainties for in the digital environment means that the New Zealand industry, including: the product may end up back in New Zealand, unclassified still and revenues 1. Mixed messages for classification being collected offshore. This fails to information – Online computer game serve the consumer, local industry and retailers have started to establish the intent of the Act. their own classification systems, often resulting in the same computer game 3. The risks and costs to the local being classified separately by different interactive entertainment industry retailers. For example, first person – New Zealand game developers and zombie shooter DEAD TRIGGER is distributors have been placed in a EMERGING ISSUES available on a number of platforms difficult position - should they wear and storefronts, including Apple’s the cost and friction of compliance, App Store, the Appstore for Amazon’s withhold product or completely ignore Kindle and Google Play for Android. New Zealand’s classification scheme? While DEAD TRIGGER is classified This decision is made against the ‘17+’ on Apple’s App Store, it is labeled understanding that those same costs ‘Mature’ on the Appstore for Amazon and friction points are not applied to and ‘High Maturity’ on Google Play. This their offshore competitors. decentralised approach requires users, including parents, to leave behind the The massive scale of digitally delivered familiarity and trust of the New Zealand content, the relatively high cost of classification labels and struggle with classification and New Zealand’s small a variety of new classification systems percentage of the global market makes and labels. this position even more difficult. Compared to offshore distribution businesses, New 2. Some games are being withheld from Zealand businesses are particularly the New Zealand market - While some disadvantaged as they are more likely businesses continue to sell unclassified to be within the jurisdictional scope of games over the Internet, other enforcement. businesses simply are not willing to run the risk of potential non-compliance 6.3. Unfair application on New Zealand with New Zealand’s classification laws. distributors As a result, many digital exclusive titles are not being released in New Zealand. The Act was introduced at a time when Between PlayStation 3 and Vita’s online the distribution of entertainment content stores, there are at least 63 games that was centralised and relatively easy to have not been released in Australia due control within New Zealand. The Internet to classification requirements. Xbox has unlocked the global market and Live’s Indi Channel, comprised of almost entertainment content from around the 3,000 independently developed games, world is now significantly more accessible is not available in Australia due to the to New Zealanders. Consequently, prohibitive cost of compliance with the application of the Act and the Australia’s classification laws. requirements to classify and label video games are having an unfair impact on Unfortunately, even though a decision New Zealand publishers, distributors and may be made to prevent the ‘official’ developers, with local businesses carrying sale of these products in New Zealand, the regulatory and economic cost of the nature of the Internet and the regulation.

18 Current and Emerging Issues for the Classification of Video Games in New Zealand Besides the unbalanced application IGEA shares the concerns expressed by EMERGING ISSUES of the Act on New Zealand industry the OFLC and support a review of the compared to overseas competitors (as OFLC’s funding model to ensure that the discussed above), the Act and relevant classification scheme is able to survive fee regulations place an unfair cost on the shift towards digital distribution in a the New Zealand distributors that initially reasonable manner that does not place import, classify and label a video game. significant and unfair costs on local New Zealand businesses. New Zealand distributors incur significant costs to obtain and exercise the right 6.4. The Act is not evolving with to distribute video games locally in international classification practices New Zealand. In addition to any costs associated with the distribution rights The OFLC’s international counterparts for New Zealand, local distributors will for the classification of video games also be responsible for classifying and have undergone significant reviews and labelling a video game before distributing changes in an effort to adapt to new digital to retailers. This classification and labelling distribution models. process costs the New Zealand distributor approximately $2,150 per game3. Once a Pan European Game Information video game has been classified, any third (PEGI), the ratings body responsible party, such as a parallel importer or online for classifying video games in over 30 distributor, is able to pay a nominal fee European countries (including Austria, ($19.55) to the FVLB to receive the benefit Denmark, Hungary, Latvia, Norway, of the New Zealand distributors original Slovenia, Belgium, Estonia, Iceland, application for classification. This point is Lithuania, Poland, Spain, Bulgaria, Finland, expressed best by Chief Censor Andrew Ireland, Luxembourg, Portugal, Sweden, Jack in his 2014 briefing to incoming Cyprus, France, Israel, Malta, Romania, Minister of Internal Affairs, the Hon. Peter Switzerland, Czech Republic, Greece, Dunne4 where he describes the OFLC’s Italy, the Netherlands, Slovak Republic funding model as follows: and the United Kingdom), introduced a streamlined method for classifying “The Office’s current funding model digitally distributed games in 2011. The is unfair, unprincipled, sanctions anti- streamlined system, first referred to as competitive commercial behaviour, PEGI Express and later called PEGI encourages non compliance, and imposes for APPS, provides PEGI ratings to an unnecessary impost on businesses.” certain digitally distributed games via a streamlined questionnaire process without Chief Censor Andrew Jack goes on to any charge to publishers. highlight the issue about unfair costs to New Zealand distributors: The Entertainment Software Ratings Body, the ratings body responsible for classifying “…the first importer of a film pays the video games in the United States and classification fee and all subsequent Canada, also introduced a streamlined importers of the same film do not have to method for classifying digitally distributed pay anything; they effectively ‘freeload’ off games in 20115. Through this process, the first importer.” publishers of digitally delivered games and apps complete a series of multiple- choice questions that address content across relevant categories. The responses 3 This cost comprises the prescribed classification fee by the OFLC, relevant fees by the Film and Video Labelling Body and the urgency fee which is commonly required so distributors can meet international release dates. 5 ESRB press release titled, ‘ESRB INTRODUCES NEW RATING PROCESS FOR CONSOLE DOWNLOADABLE 4 OFLC briefing to incoming Minister of Internal Affairs, 2014. VIDEO GAMES’ published 18 April 2011

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 19 interactive games & entertainment association

to these questions automatically determine video games, to be classified using the game’s ESRB rating category, content an approved automated classification descriptors and interactive elements, tool. On July 1, 2015, the Australian which are issued immediately upon Government commenced a pilot of the completion of the questionnaire. This IARC classification tool to generate process is used for digitally distributed Australian classification markings for games on a number of platforms, including digitally distributed games.6 Since March the PlayStation Network, Nintendo eShop, 2015, Australia has recorded over 282,000 Xbox LIVE Arcade, PlayStation Mobile, classification decisions which have been Windows Phone, Windows 8 and PC digital made utilising the IARC tool. In the same download. There are no costs or rating period prior to IARC’s introduction, only fees to the developers for ratings assigned 305 games were classified.7

EMERGING ISSUES using the ESRB digital rating service. Prominent classification and rating Since 2010, relevant ratings bodies bodies around the world have changed (including rating bodies from Europe, or have started changing their approach United States, Canada, Brazil, Germany, to the classification of games in order South Korea, South Africa and Australia) to keep up with the new era of digital and the international video games industry distribution and the rapid development have been working together to develop an and release of video games around the international approach to the classification world. New Zealand’s current approach of digitally distributed computer games. to classification is lagging behind such international developments. Collectively, the group has formed an entity known as the International Age 6.5. Classification Fees are Rating Coalition (IARC), successfully Unreasonable developing a computer program that will, following input from the user (such as the For video games that are likely to game developer or publisher), generate be restricted, the average cost for a rating or classification that is consistent classification in New Zealand is with each participating jurisdiction’s approximately $1,430 (or $2,150 if the standards. The IARC classification application is urgent). In comparison, tool operates without any cost to the the classification for digitally distributed developer/publisher and provides a games in USA and Canada (with a centralised and controllable process collective population that is almost 80 that still accommodates the massive times the size of New Zealand) is provided volume of digitally distributed games on for free and in PEGI territories (with a the international market. A number of collective population that is almost 100 significant ratings bodies from around the times the size of New Zealand) for free world (including Germany’s USK, Brazil’s for ‘PEGI for APPS’ games or for €260 for ClassInd, PEGI and ESRB) have already small online games that aren’t using the incorporated their local standards and ‘PEGI for APPS’ service. Australia’s current logic into the IARC classification tool and classification fee of $430 with the use of an have embraced this new approach to the authorised industry assessor is a fraction digital marketplace. of New Zealand’s current classification fee. Rating bodies from around the world, In 2014, the Australian Classification including ESRB, PEGI, Germany’s USK (Publications, Films and Computer Games) Act 1995 was amended to allow certain 6 http://www.classification.gov.au/News/Pages/10-March- 2015-New-trial-for-classification-of-online-games.aspx video games, such as digitally distributed 7 http://www.classification.gov.au/Pages/Search.aspx

20 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand and Brazil’s ClassInd, have recognised the “However it is important to note that the EMERGING ISSUES need to remove classification fees in order Classification Act’s offence provisions to ensure the widespread participation relating to restricted and objectionable with local rating systems. IARC’s material apply, even if the online content is classification tool does not charge any being provided free of charge. This means fees to game publishers/developers and it is an offence to make banned content therefore provides a friction free and no available, or restricted content available to cost process for responsibly rating digitally young people.” distributed games. Accordingly, while there remains a The current fees charged for the requirement to classify games that classification of video games in New are likely to be restricted, there are Zealand are excessive, disproportionate no requirements to communicate the and are particularly unreasonable in the classification to the New Zealand public. digital market. New Zealand’s classification This inconsistent approach to such a system must adapt to the realities of an rapidly growing category of video games open and uncapturable Internet and, in the digital market highlights the need consistent with global standards, review for reform of New Zealand’s classification the classification system funding model system. and remove the current excessive costs and friction points of classification. 6.7. Episodic Games

6.6. Free-to-play games As previously explained, episodic games involve video games being sold in smaller The Act generally requires any video game separate instalments over a period of time. that is ‘supplied to the public’ to display The Act would require each instalment relevant classification labels. The definition to be classified separately, therefore of ‘supply to the public’ in the Act is limited multiplying the classification costs for to supplied by way of sale, hire, exchange episodic games. Such games are often or loan and potentially does not include withheld from New Zealand storefronts the distribution of video for free (such as and subsequently classified and sold as via the free-to-play business model). This collections once all episodes have been analysis is confirmed by the OFLC, which developed and released. This prevents states:8 New Zealand consumers from accessing such content within the same period as “Please note that the Classification Act’s overseas markets – a situation that leads definition of ‘supply’ does not extend to to a number of undesirable consequences content made available online free of such as the distribution of unclassified charge.” versions of such games through unauthorised distribution channels. While the requirements to display classification labels do not apply to free- It is important that any reforms to the Act to-play games, the general prohibition provide for such episodic games and against the distribution of objectionable remove the requirement to classify such video games still continues to operate. content multiple times. This is confirmed by the OFLC in the following statement:9

8 http://www.classificationoffice.govt.nz/industry/films-and- games-supplied-via-download.html

9 http://www.classificationoffice.govt.nz/industry/films-and- games-supplied-via-download.html

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 21 interactive games & entertainment association

6.8. The Film and Video Labelling Body 1) Unnecessary fees for digital and Online Content storefronts – Notwithstanding that a film or video game has already On 10 November 1994 the FVLB was been rated or classified, and a label appointed as the approved labelling has already been issued, the FVLB body pursuant to section 72 of the Act. has insisted that distributors pay an The FVLB’s responsibilities include rating additional licence fee for the use of unrestricted content, issuing labels, cross- labels on online retail platforms – a fee classifying content that has been classified the is payable for each online retail by an overseas ratings authority, assigning platform. For example, the FVLB has content descriptors and examining film charged licence fees for the display of posters. The Act specifically requires the classification and rating labels on films FVLB to be representative of persons

EMERGING ISSUES sold through Apple’s iTunes store and engaged in the distribution, production an additional licence fee is payable and exhibition of films and video games. for the same content that is sold on The FVLB was appointed at a time when any other online retail platform. This the distribution of home entertainment is equivalent to the FVLB charging content was relatively centralised and retailers such as The Warehouse, JB easy to control – with only a handful of Hi-Fi or Dick Smith each a licencing video game distributors operating in New fee to stock video games that display Zealand. More importantly, the FVLB was New Zealand’s classification or rating appointed before the prevalence of online information – an absurd proposition digital distribution models. that is equally ridiculous in the digital world. The FVLB’s objective should Unfortunately, the FVLB’s operation be to ensure consumers are properly and the laws that underpin the FVLB’s informed about the content they’re functions have not adapted to the growing about to consume rather than creating video game market and developments commercial barriers to the widespread in the digital economy. The following adoption of New Zealand’s classification examples demonstrate some of the FVLB’s labels in the digital market. challenges in the digital market.

22 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 2) No incentive for voluntary rating (by, for example, providing templates, EMERGING ISSUES – The cost and operational barriers guidelines and artwork online), the to rating unrestricted video game FVLB is legally embedded in the content prevents the widespread process of displaying classification and voluntary classification of unrestricted rating labels. This redundant statutory video games in New Zealand. Since monopoly provides an unnecessary unrestricted video games do not require layer of cost and friction point to the classification in New Zealand, the FVLB distribution of entertainment content in should go to greater lengths to ensure New Zealand. the voluntary classification process is streamlined, simple and cost effective. 4) Unnecessary intermediary – The vast majority of unrestricted Restricted video games are the only video games are already classified in type of video games that are required Australia and therefore could easily to be classified in New Zealand and be cross-classified in New Zealand they can only be classified by the using an automated online process that OFLC. Notwithstanding this, the Act is consistent with the logic for cross- still requires video game distributors to classification set out in the Regulations. apply for classification via the FVLB. If This approach is particularly essential the distributor knows that a video game in the digital and mobile game market will require classification by the OFLC where a majority of video games fall (if, for example, the video game was within the unrestricted category. previously classified MA15+ or R18+ by the Australian Classification Board), why 3) Label issuing is redundant – The Act should they be prevented from applying states that the FVLB is responsible directly to the OFLC? This is yet another for issuing labels and that it is an example of a statutory requirement that offence for any person other than adds unnecessary costs and time to the the FVLB to issue classification or process of classifying video games in rating labels.10 Accordingly, the FVLB New Zealand. holds a statutory monopoly on the provision of classification and rating These examples demonstrate how the labels – a concerning proposition as FVLB and the laws that underpin the there are no safeguards in the Act or FVLB’s operation are struggling to adapt the Regulations to ensure the FVLB’s to the digital market. The challenges often operation and fees are transparent or create barriers for the wider industry’s reasonable. Consequently, instead of engagement with the FVLB and New giving distributors and retailers the Zealand classification system generally. tools necessary to print and display classification and rating information

10 Section 121 of the Act

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 23 interactive games & entertainment association

7. REFORM OF AUSTRALIA’S CLASSIFICATION SCHEME

Similar to New Zealand’s classification • A single regulator with primary system, Australia’s classification scheme responsibility for regulating the new was designed more than 20 years ago in a scheme. market that was relatively easy to regulate. With the Internet and digital distribution • Authorisation of classification challenging the effective operation of decision-making instruments, such as Australia’s classification scheme, on 24 online questionnaires. March 2011 the Australian Government referred the classification scheme to • Power to deem content with an the Australian Law Reform Commission equivalent Australian classification (ALRC) for a comprehensive review. – for content that has already been classified by an approved overseas The ALRC’s review attracted considerable classification system.

REFORM OF AUSTRALIA’S REFORM OF AUSTRALIA’S SCHEME CLASSIFICATION constructive public attention and a significant number of submissions. Over Following the ALRC’s recommendations, 2,300 submissions were reviewed in in April 2013 the Australian Government response to the May 2011 issues paper announced that an initial stage of reforms and 77 submissions were received in would be introduced to implement seven response to the ALRC’s discussion paper. of the ALRC’s recommendations. In The ALRC also undertook 63 consultations September 2014 Australia’s legislation was with relevant companies and industry amended to give effect to the initial stage associations, government agencies, of the ALRC’s recommendations. This community stakeholders, academic reform allows the Australian Government experts and other interested individuals. to authorise the use of automated In March 2012, after a year of consultation classification tools for the classification of and review, the ALRC tabled its final report content, including video games. The pilot for its inquiry into Australia’s classification for utilising IARC as the approved tool scheme. commenced on July 1, 215.

The ALRC’s final report recommended With the September 2014 amendments the development of a new scheme for becoming effective in 2015, the Australian classifying content. Some of the key Government’s next step is to consider the features of the ALRC’s recommended new more comprehensive recommendations scheme include: put forward by the ALRC and potentially introduce a new classification scheme in • Platform-neutral regulation with one Australia. set of laws establishing obligations to classify or restrict access to content across media platforms.

• Co-regulation and industry classification, with more industry classification of content and industry development of classification codes, but subject to regulatory oversight.

24 Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 8. RECOMMENDATIONS

New Zealand’s classification system • Existing New Zealand classification laws is in desperate need of substantial for all content, including film, television, reform to ensure that it is able to streaming, video games and literature. achieve its full objectives in a digital and converging environment. Content • The principles that should underpin standards and censorship in the digital New Zealand’s classification system in a age is a complicated issue that deserves digital world. significant consideration, consultation, planning and review. The lengthy reform • Technological change and how process in Australia began in 2010 classification laws should apply to when the issues were first brought to the digitally distributed content. Australian Government’s attention. With digital distribution quickly becoming the • How content should be classified, primary method of video game acquisition including the role and operation of the CONCLUSION RECOMMENDATIONS & in New Zealand, there is now an urgent OFLC, the Film and Literature Board need for review and reform of New of Review, the FVLB, industry and the Zealand’s classification system. public.

Any review of New Zealand’s classification • What content should be classified, and censorship system will involve including consideration of how New careful consideration of complicated Zealand’s classification system should and often conflicting matters with input deal with the high frequency and volume from the New Zealand public, the FVLB, of digitally distributed content. the OFLC, industry groups and other • How New Zealand’s classification system interested stakeholders. Such a review could integrate with similar overseas must be conducted independently and classification systems. be able to responsibly address inevitable resistance to reasonable change from • How New Zealanders should be vested stakeholders while navigating the informed about classification information. challenges of the digital market. • How New Zealand’s classification IGEA recommends that an exhaustive system can remain fit for purpose in a review of New Zealand’s classification convergent sector. system be conducted. The review should consider New Zealand’s classification system in the digital market and include consideration of the following matters:

9. CONCLUSION

The interactive entertainment industry and market in New Zealand has experienced significant change, primarily in how consumers are able to play and acquire game content over the Internet. With the hundreds of thousands of unclassified games being made available, it is clear that New Zealand’s classification system is in desperate need of reform. The need for reform is beyond doubt and a formal, independent review of New Zealand’s classification system is required to ensure New Zealand’s approach to classification and censorship remains practical and reasonable in the digital age.

Current and Emerging Issues for the Classiﬁcation of Video Games in New Zealand 25