December 20, 2012
Video-game makers and retailers are facing growing pressure from Washington and advocacy groups concerned about possible links between violent games and tragedies like the school massacre in Newtown, Connecticut.
A bill introduced yesterday by U.S. Senator Jay Rockefeller directs the National Academy of Sciences to examine whether violent games and programs lead children to act aggressively, the West Virginia Democrat said in a statement. He will also press the Federal Trade Commission and Federal Communications Commission to expand their studies. The advocacy group Common Sense Media cheered the moves. "Recent court decisions demonstrate that some people still do not get it," Rockefeller said. "They believe that violent video games are no more dangerous to young minds than classic literature or Saturday morning cartoons. Parents, pediatricians and psychologists know better."
Shares of video-game makers and retailers fell as investors weighed possible fallout. Combat titles like the top-selling "Call of Duty" series from Activision Blizzard Inc. generate more than 20 percent of video-game software sales. U.S. retail sales of games, consoles and accessories fell 8 percent to $17 billion last year, according to NPD Group Inc., an industry researcher. "We don't know the facts yet about Newtown and the shooter," said James Steyer, head of Common Sense Media, a San Francisco-based group that backed California limits on sales of violent games before they were overturned by the U.S. Supreme Court in 2011. "We do know that ultraviolent video games and other forms of violent media more broadly contribute to a culture of violence in American society." The renewed focus on violent games will deter some parents from buying such games for their children, said Colby Zintl, a spokeswoman for the group.
Activision Blizzard, the largest video-game company, fell for a third day yesterday after the Dec. 14 shooting, losing 2.4 percent to $10.85 in New York. It's down 4.9 percent this week. Maryanne Lataif, a spokeswoman for the Santa Monica, California- based company, didn't respond to requests for comment. The game companies, through the Entertainment Software Association trade group, say their products are protected speech under the First Amendment of the U.S. Constitution. Like movies, games are rated for violent content, with retailers voluntarily limiting sales of products rated M (Mature) and AO (Adults Only) to customers over ages 17 and 18, respectively. The industry adopted a voluntary rating system in 1994 under congressional pressure.
"The Entertainment Software Association, and the entire industry it represents, mourns the tragedy at Sandy Hook Elementary School," the group said. "The search for meaningful solutions must consider the broad range of actual factors that may have contributed to this tragedy. Any such study needs to include the years of extensive research that has shown no connection between entertainment and real-life violence." Adam Lanza, 20, the shooter in last week's murders of 20 children and six women at the Sandy Hook Elementary, spent hours playing computer games such as "Call of Duty" and studying weapons in the basement of his mother's home, the Sun newspaper in the U.K. reported on Dec. 17. Legal efforts to limit or bar the sales of violent video games to minors have been struck down by federal courts. In June 2011, the U.S. Supreme Court ruled such a ban is an unconstitutional infringement of speech rights. "Even where the protection of children is the object, the constitutional limits on governmental action apply," Justice Antonin Scalia wrote for five justices. The vote to strike down the law was 7-2, with the majority divided in its reasoning.
The attention generated by the Connecticut school shooting is unlikely to reduce sales during the Christmas season, according to Doug Creutz, an analyst at Cowen & Co. who recommends investors buy shares of the largest game companies. "If you go to Amazon.com right now, and you look at their top selling games, four of the five are what you'd classify as violent games," Creutz said. "People are still buying these games. It's not kids playing these games, by and large. Parents already don't buy their kids these types of games." Those top sellers at the site include Microsoft Corp.'s "Halo 4," "Call of Duty" and "Assassin's Creed 3" from Ubisoft Entertainment SA. The drop in the shares is largely a kneejerk reaction, Creutz said.
Electronic Arts Inc., publisher of "Medal of Honor," fell 3.4 percent to $14.40 yesterday. Shares of the Redwood City, California-based company lost 3.3 percent a day earlier. Take- Two Interactive Software Inc., the New York-based maker of "Grand Theft Auto," fell 5.4 percent to $11.98. GameStop Corp., the video-game chain, slid 0.6 percent to $27.55. Alan Lewis, a spokesman for Take-Two, referred inquiries to the Entertainment Software Association. Jeff Brown, a spokesman for EA, also referred calls to the group. Beth Sharum, a spokeswoman for Grapevine, Texas-based GameStop, didn't respond to e-mailed and phone requests for comment. While sales may not suffer, the threat of increased regulation may be weighing on the stocks, said Daniel Ernst, an analyst with Hudson Square Research in New York. "One should assume that as of today there is greater likelihood of regulation," Ernst said. "I think that translates into the cost to the industry going up," possibly in the form of more detailed labeling on packages.
The companies themselves will probably remain quiet on the issue, Creutz said. "It's tough to come out in the midst of a very emotional situation like this and defend your product," Creutz said. "They've been through this cycle before, and it's never impacted their industry before. The likely scenario is neither will this." Past studies have failed to demonstrate a link between violent games and real violence, said Christopher Ferguson, an associate professor of psychology and communications at Texas A&M International University in Laredo, Texas. Policy makers should focus on more important issues including gun control and mental health, he said in an interview. "We can't find any evidence to support this idea that exposure to video-game violence contributes in any way to support the idea that these types of games or movies or TV shows are a contributing factor," Ferguson said. "It doesn't need to be studied again." Bloomberg
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