ESA lobbying tops $2 million

Trade group's attempts to influence lawmakers go beyond censorship and piracy laws, branch out into overtime regulations, online gambling.

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The Interactive Digital Software Association was founded in 1994, in the wake of a nationwide furor over violence in video games sparked by gory or sexually suggestive offerings like Midway's Mortal Kombat and Sega's Night Trap. With legislators and parents alike calling for regulation of the gaming industry and a mandatory ratings system, game publishers needed a unified voice to represent their collective interests to the American public and government.

The IDSA quickly established the Entertainment Software Ratings Board and the Electronic Entertainment Expo, and it has spent the last 13 years fending off government regulation, working to end game piracy, and acting as the public face of a growing and often misunderstood industry. The organization changed its name to the Entertainment Software Association in 2003 and has continued acting as an advocate for the industry. It publicizes sales and demographics information to underscore the size and popularity of the industry to those outside looking in, and its ESA Foundation charity has raised millions in grants to support organizations like the Boys and Girls Clubs of America and the Juvenile Diabetes Research Foundation.

The ESA has spent more on federal lobbying since 2005 than the MPAA.

However, the organization's activities don't stop there. It also spends millions on lobbying, the practice of influencing public officials and pending legislation to better suit one's interests. The ESA actively lobbies government agencies and politicians at the federal and state levels on a number of issues that don't receive much attention or publicity, but to what end?

According to filings with the United States Senate Office of Public Records, the ESA spent more than $2 million on federal lobbying efforts in 2005 and was on pace to exceed that tally in 2006 with a first-half bill of more than $1.1 million. It's often said that the gaming industry is bigger than the film industry, and in the case of federal lobbying by their trade groups, it's actually true. The Motion Picture Association of America spent less than $1.6 million on federal lobbying in 2005 and $900,000 in the first half of 2006.

As for what the money is being spent on, the ESA official Web site lists intellectual property protection, content regulation, and efforts to regulate the Internet as its main areas of interest. Interestingly, the ESA also lobbies on free trade and Internet gambling, which Bobby Kotick, CEO of ESA-member-company Activision, recently referred to as the "Holy Grail" of the industry. According to the group's spokesperson, the ESA lobbies to advocate the strongest possible intellectual property regulations in trade agreements. As for gambling, he said the ESA's efforts are focused on ensuring legislation "is not written so broadly that our members' online businesses are negatively impacted."

On the state level, the ESA can be found courting lawmakers nearly anywhere game-restricting legislation can be found. However, the group's efforts in California have not been limited to the fight against AB1179, which sought to impose fines for selling violent or sexually explicit games to minors. According to ESA filings with the California Secretary of State's office, the organization is also lobbying on a number of other issues that haven't popped up in its federal efforts.

Since 2005, the ESA has been lobbying the state's Labor and Workforce Development Agency regarding meal and rest-period regulations for workers, as well as overtime issues. California serves as the home to much of the American gaming industry, including influential members like Electronic Arts and Activision, both of which have faced lawsuits from employees accusing them of skirting the state's labor laws. (EA settled its infamous "EA Spouse" suit in October of 2005, while Activision faced its own suit centered on overtime laws last year.)

The ESA's California lobbying efforts also extended beyond subjects that relate directly to the game industry or the interests of its members. For most of 2005, the ESA lobbied on California AB777, a bill that would have given tax credits for movies and commercials filmed within the state. Nowhere in the bill are games mentioned, and they did not appear to be covered under the bill's definition of a qualifying production.

The organization has also devoted funds to "obtaining interpretive guidance" on overtime laws in California for years.

The ESA also lobbied on AB1351, which doesn't bear any apparent relevance to the entertainment industry, much less games. It was eventually passed as a bill that lets the San Diego County Regional Airport Authority issue notes in addition to bonds for purposes relating to its duties. When it was originally introduced, AB1351 dealt with the Office of Administrative Law's ability to determine whether a guideline or regulation that hadn't been approved by and filed with the Secretary of State could still be considered valid.

While companies engaged in lobbying must report the issues and specific pieces of legislation on which they are lobbying, neither California nor the federal government requires them to disclose what changes they were trying to bring about through lobbying, or whether they lobbied for or against specific bills.

When asked what specific changes the ESA was lobbying for in overtime laws and what possible interest it could have in spending money to influence AB777 and AB1351, the ESA spokesperson denied that the organization had ever done such a thing. After having the California filings pointed out to him, the spokesperson offered another explanation.

"In 2005, we were uncertain of the scope of our project, and so, in an abundance of caution, we registered for a broad range of activities," the spokesperson said. "In the end, our work was limited to obtaining interpretive guidance on the overtime laws from the Labor & Workforce Development Agency."

In the first quarter of 2006 alone, the ESA spent more than $100,000 obtaining interpretive guidance on overtime laws. For the full year, the ESA spent almost $279,000 lobbying in California.

E3 2004 accounted for nearly $16 million of the ESA's $19.8 million income that year.

To give an idea of how much the cost of lobbying has skyrocketed for the ESA in recent years, that California-specific total easily eclipses the group's entire federal lobbying total in 1998, when it spent just $180,000. An ESA spokesperson brushed aside concerns over the rising costs, saying, "As the industry has evolved over the years, so have, and will, its lobbying efforts. Speculating on what might be or might have been is not relevant in our view."

That money comes primarily from the organization's membership dues, revenue derived from E3, and fees paid for ESRB ratings. In 2004--the most recent year the ESA has filed its tax-exempt status form with the Internal Revenue Service--E3 brought in almost $16 million, with $1.7 million coming from ratings and $980,000 from membership dues. All told, the ESA brought in about $19.8 million for the year.

While the amount of revenue lost from the switch to a smaller E3 is unclear, at least part of it will be made up by a hike in membership dues, ESA president Doug Lowenstein told GameSpot last year. An ESA spokesperson also dismissed concerns that it would impact the group's lobbying, flatly saying, "It will have no impact whatsoever."

Of the US-based nonprofit game-industry advocacy groups, the ESA easily devotes the most money to lobbying federal lawmakers. In the first half of 2006, the Entertainment Merchants Association (formerly the Interactive Entertainment Merchants Association and the Video Software Dealers Association) put up $120,000 to influence federal policymakers and lobbied on just two issues: the regulation of games and record-keeping requirements surrounding sexually explicit videos. EMA vice president of public affairs Sean Bersell told GameSpot that proposed changes to record-keeping requirements would have applied retroactively to some mainstream movies.

"Retailers would have had to identify and remove the existing stock of movies containing such depictions from their shelves and replace them, if possible, with complying products," Bersell said. "This would have presented significant operational challenges and subjected retailers to substantial federal criminal penalties if they made a mistake."

While advocacy groups for the publishers and the retailers are actively lobbying now and have been for years, the major groups representing those who make and buy the games have stayed largely on the sidelines. The International Game Developers Association and the recently established Entertainment Consumers Association have yet to bring their members' interests straight to legislators. Instead, the IGDA helps to foster grassroots lobbying, mobilizing its members to write their legislators on specific issues when appropriate.

"We've actually never paid a penny for a lobbyist," said IGDA executive director Jason Della Rocca. "It's sort of outside the scope of our budget and also doesn't really fall in with our mandate."

According to the IGDA's 2005 annual report, it brought in about $367,000 for the year (mostly from membership dues and studio fees) but spent more than $416,000. Even if the organization did have money to throw around, Della Rocca said there hasn't been much call for it from the developers the IGDA represents.

The IGDA advocates quality-of-life issues for developers, but it limits its actual lobbying to grassroots efforts.

"The vast majority of game developers really don't have the legal expertise to fully comprehend the labor laws and all that intricate, very complex stuff," Della Rocca said. "So while someone might have the bright idea to check out the labor laws, no one takes it much further than that. And from an IGDA point of view, there's so much low-hanging fruit in dealing with the issue ourselves...often times those kinds of efforts have the potential for much more dramatic results and impact than squirreling away [money] trying to affect some kind of tweaked labor laws."

As for the voice of consumers, ECA president Hal Halpin said the group's advocacy activities are still taking shape after its formation last October.

"It really depends on the feedback we get from the membership as the organization grows," Halpin told GameSpot. "My hope is we'll be using grassroots measures and chapters eventually to have people testify and show up who are constituents of the respective legislators."

As far as additional lobbying, Halpin said he suspects the group will work on issues like digital-rights management and licensing, as well as disclosure issues in the area of in-game advertising. Regardless of the topics the ECA winds up dealing with, Halpin stressed that the industry needs advocacy groups like his, saying the industry as a whole has been slow to join the public discussion about gaming.

"By not being involved, we've abdicated our voice to the other side--the opposition," Halpin said. "And in doing so, we've empowered them to sort of tell our story to the mass media and the public. I think that lobbying is an extraordinarily important aspect of what each of the organizations--ours included--does. It helps tell the story of what's going on, and only by working together--the IGDA, the ESA, the ECA, and the EMA--are we going to be able to affect that change that we need."

Tomorrow, Halpin, Della Rocca, and Bersell will lose a partner in telling the industry's story, as Lowenstein will vacate the top position at the ESA following a keynote address at the D.I.C.E. summit in Las Vegas, Nevada. While the organization searches for Lowenstein's permanent replacement, his duties will be taken over by ESA chairman Robbie Bach, who is also president of Microsoft's Entertainment & Devices Division, which makes the Xbox 360.

Discussion

43 comments
Light_Bahamut
Light_Bahamut

You know, it's easy to get down on how the system works. It's really easy to paint the lobbyists as evil men doing evil deeds because they "hinder social progress", but you know what? This is the best damn system available, alright? Thousands of years of human history, crumpled empires to learn from, and you know what? America's system WORKS. It's not perfect, but it can't be, so get over it. Stop complaining about the rich getting richer and blah blah blah. There will always be rich people and there will always be poor people. That's human nature. If you think some sort of egalitarian state is possible I need point you not to history, but to your own soul. Human beings are twisted, messed up things, and we do everything we can to get ahead. And through some lucky stroke, this nation has managed to counter-balance human being's iniquities into a system that functions pretty friggin' smoothly. So, marco_poalo, just because you wrote a paper about the evil lobbyists doesn't mean that we're all doomed or whatever it is your pessimistic mind wants to believe.

marco_poalo
marco_poalo

For anyone who thinks lobbying is a good thing, please take a political science course. The government is run by special interest. We are always happy when things go our way, but how often is that. Lobbying is the reason the gap between the rich and poor is growing, why the minimum wage hasn't gone up in America, why no one really understands the true definition of socialism. The corporations run the show and that's the way it is. Things like civil rights are things that shouldn't have to be lobbied. It should be heard by politicians from the people. I could go on but I already wrote a paper on this crap in school.

Jab_Jackal
Jab_Jackal

All lobbys are bad? Not a chance. It allows groups to directly influence the government for their interests. Big business has definitely been helped by this, but so have others. Ever hear of AARP? Thats one hell of a big lobby.

Splintersixcell
Splintersixcell

So thats why no laws on banning games came up since... well... mortal kombat

GrgSpunk
GrgSpunk

Whoa...No wonder the government is having such a hard time passing anti-video gaming laws. I think the MPAA should learn a thing or two from this because... IF THE MPAA DEVOTED THIS MUCH TIME AND MONEY IN LOBBYING THE GOVERNMENT FOR THEIR INTERESTS, THEN WE WOULD NOT HAVE THOSE BASTARDS IN THE FCC RUINING OUR TELEVISION!!!

chakan2
chakan2

Wow, who paid you for that? Lobbying is BAD, VERY BAD. It's not a way for the people to check the government, it's a way for cooperations to change laws to what they want. It's going to destroy this country soon. Why do you think all the bankruptcy laws changed? It wasn't the American public voting on that, that's for sure. And look at the crazy stuff going on with health care? Do you think that has any policies that have the public in mind, hell no, it's all the drug companies lobbing like mad. Lobbying is BS.

Irve
Irve

they should be in favour of working with law makers to introduce sensible laws ... rather than let people vote on laws that are far too restrictive

thepyrethatburn
thepyrethatburn

Of course, there is a negative view on lobbying, Sept2788. Lobbying is a direct result of a Constitutional Republic being put up for sale. In fact, the only reason there are any positive comments on here is because it is the ESA. If the article were referring to any other lobby, the hate on this page would be enough to shatter stone. While it is, at this point, irrelevant to discuss whether this is the way things should be, this aspect of government isn't anything to be celebrated.

GhaleonQ
GhaleonQ

Though I'll always argue for more restriction, I appreciate Mr. Sinclair taking on a true overview of the ESA's lobbying. It was long overdue.

GonzoGuy
GonzoGuy

I'm hoping that more of this money goes into pacifying the anti-gaming politicians and avoiding a game tax than changing labor laws so the publishers can shaft their workers harder than most other corporations. However, considering the degree of greed that's infused in American politicians, I am surprised that 2mil is enough to get anything done. I'd think Leiberman alone would want more padding in his pocket than 2mil. Five mil might shut him up. I hate politicians.

LosDaddie
LosDaddie

Gaming is big money!! Go, Wii60!!:D

Dante565
Dante565

nappan "OmegaSin What is lobbying? What does all of this mean? " Organized legal bribery over lunch and drinks. So so true my friend.

spelledarn
spelledarn

Government regulation is a terrible thing. Hopefully the ESA will have some success driving it back, and no success in making it worse.

cjcr_alexandru
cjcr_alexandru

Probably this article should have been posted on wikipedia...

umbracascade
umbracascade

blah blah blah, most of these people probably are the typical corporate snobs who haven't played a game in their life. They don't care about gamers, they want cash. The people on the top pay others to care about the ratings and all that. It's all the same.

sept2788
sept2788

I find it sad to see almost all negative views on lobbying. You do realize that its not such a bad thing all the time. People are so caught up in their irrational one sided views that they never are able to see the reasoning why something might exist. For one lobbying is one of the few ways that people can "check" the government in between elections. And while there are a lot of large companies that lobby: 1) everyone deserves to be able to have their input including big businesses, and 2) there are a lot of pac groups representing groups such as unions as well. And additionally lobbying does not corrupt government, its money that can do that and to say that our government is just one corrupt mess is ridiculous. Money has become a major player in government and will continue to be regardless of lobbying.

nappan
nappan

"OmegaSin What is lobbying? What does all of this mean? " Organized legal bribery over lunch and drinks.

OmegaSin
OmegaSin

What is lobbying? What does all of this mean?

VegetaMaelstrom
VegetaMaelstrom

Looks like the ESA is going to jack up their membership fees to offset the projected loss of income from a neutered E3. I wonder if stingy Capcom will opt out of this organization now?

FilthyYamBag
FilthyYamBag

Sometimes i love lobbying, times like now, most of the time it annoys me to no end TLTR???

RaiKageRyu
RaiKageRyu

[This message was deleted at the request of a moderator or administrator]

Redsyrup
Redsyrup

[This message was deleted at the request of the original poster]

blueflamedino
blueflamedino

American government and money, lobbying is what keeps a broke country rich

Agreb91
Agreb91

Lobbying is not my kind of game. But if they are doing it for us gamers, I hope ESA gets what they want out of this.

kenerhai
kenerhai

So the ESA is basically a union kind-a thing. . .i guess.

Chief_Kuuni
Chief_Kuuni

gamers need to put their 2 cents in too, not just the people who are trying to make things more strict against games

Hellsing212
Hellsing212

I kinda agree, but gamers should also voice their opinion some how, so that the world will know that gamers dont only have their heads in world of warcraft (or something like that) and actually know what is going on in the real world.

caesarbites
caesarbites

The organization should have hired someone that DOESN'T already have a "celebrity" face in gaming, like Robbie Bach with Microsoft. They should have hired someone that is unfamiliar to gamers so that it looks less like a "friendly face in gaming" taking up for the industry and more like a "non-gamer who can and will protect the rights for the gaming industry even though he or she rarely or never games."

chakan2
chakan2

Lobbying is a legal way to bribe officals so they vote for what you want.

comthitnuong
comthitnuong

wait so whats lobbying? i can't seem to find it in teh article

Dace67
Dace67

It's sad to see how the government is for sale...

cancer_777
cancer_777

[This message was deleted at the request of a moderator or administrator]

thedavidtran
thedavidtran

[This message was deleted at the request of the original poster]

anarchicgoth
anarchicgoth

im sick of the government banging down on us gamers. Look what we have to resort to! Just wait until the new wave of gamers reach political positions!

SuperSayinSean2
SuperSayinSean2

boo esa, they r trying to serve me with a lawsuit for downloading a game i own!!!! wtf, i used to support the esa till it turned into the riaa and mpaa, when will the insanity end?

SacerdoteX
SacerdoteX

Hmpf. I don't like lobbying too much, so I still feel cautious about the ESA doing it.

Sonic43090
Sonic43090

Lobbying corrupts the government, but anything to keep Jack Thompson at bay is OK with me.

Trigun1
Trigun1

Good for them. I hope they get even more money!