Voices of VR Podcast Mike Gallagher Transcript [2015]

I'm Mike Gallagher and I am the CEO of the Entertainment Software Association which is the voice of the interactive entertainment industry. We are the place where the leaders of the  industry gather to set the path for the future and then ESA's job, me and my team, our role is to go out there and make sure that we're protecting the frontiers of the industry wherever they are. 10 years ago that might have been something like connected gameplay, gameplay that use the internet, today that's called gameplay. It's automatically assumed the new frontiers  that we're looking at and making sure we're doing our job to extend and protect to the frontiers is Virtual Reality, Augmented Reality, Mixed Reality, which is a topic of discussion for the last couple of days here.

"So what does that mean exactly to protect the frontiers?"

What that means is we are the policy and political arm of the industry. So as governments look to make laws or rules about how entertainment should be consumed or how it should be taxed or who should have it and who shouldn't, we're the ones that come up with what we think the right policies are so that the industry can continue to grow. We work with parents, we work with 3rd Party groups, they make sure that those are socially responsible & are growing the market, but at the same time, we stop those types of activities that we think would be harmful to the growth of the industry. So you have a new technology like Virtual Reality, Augmented Reality, it's natural for policymakers to either be afraid of it, try to control it, or stop it much like they did with Rock & Roll music or Cable Television or MTV, or to control it somehow, to bend it to their will. That's our job to go in there and make sure that doesn't happen.

"And so what's an example of like historically where politicians have been trying to exert their will on the gaming industry where you've had to as a collective come up with the counter arguments, to come up with the policies that works for everybody?"

I'll give you two different examples, one that ended well & one that did not- well actually, both ended well from the video game's perspective, but one pursued a path which is growing the industry & it's been terrific for parents & families and the other one ended in Supreme Court victory by the industry at the expense of those who wasted a lot of taxpayer money. The one that ended well was...we were pressured as an industry 20 years ago to develop a rating system because the games weren't rated, parents didn't know what they were buying, they were finding some of the content to be inappropriate for different age groups, there was pressure applied on the industry, the industry responded with the ESRB. The ESRB is now the gold standard in ratings, it's trusted by parents, & it's created an environment where parents feel very comfortable buying video games in their traditional format, the one that you see in the store shelves today & on your mobile device because we're pro-active in responding to that challenge from government. One that did not go well was when the state of California in 2005 passed a law that sought to control the content of video games through it's own rating system and then to impose that rating system at retail and fine retailers if any game were sold to underage purchasers. That type of regime was a complete mistake, it violated the first amendment, we had to fight that through 13 different court cases over 8 years, culminated in a supreme court victory in 2011, Brown vs. ESA and in that case we won 7-2 and established video games as having the same first amendment rights and privileges as motion pictures, books, and music. Those types of outcomes, both of them ended favorably for the industry, both of them required the industry standing together & answering a question in the first case developing a rating system and then in the other defeating someone who had a completely flawed view of the industry & a flawed approach to solve some fictional problem & today you see the industry flourishing because of that. VR could potentially face similar challenges & I think listening to the speakers in the room & the ability to create emotion, the ability to create immersion, the ability to enhance feelings by ten-fold which is what some of the speakers have spoken about, that type of thing is precisely what triggers the impulses that can be very unhealthy in policy-makers.

"What do you see as on the horizon, some of the challenges that may come up in terms of where you as an organization would have to step in in terms of Virtual Reality then?"

Well, we heard several of them from speakers here at VRX, one of them is content itself and what's the thought process of how we rate content and how do we make sure that responsibly we're working with consumers, consumers know what they're getting and it's a safe product and that has to do not just with the content, the gameplay, or the story that might be going on, but also what the device does itself. When you cover someone's eyes and then put them in motion, that can not end well so there's a whole series of steps that the industry would need to take to make sure that those are properly labelled, that the consumers are prepared to deal with them in responsible way and that there's good thought put into being a responsible producer of a great product in the US today otherwise you run foul of all sorts of problems whether it's FTC issues around disclosure or whether it's product liability issues if the product is considered "Dangerous" by some lawyer & their clients so the industry needs to be smart about that upfront. Another one is ratings themselves that you need to rate the games and the content so that parents are comfortable bringing those in the home. Another one is parental controls because if you're gonna have content that is not appropriate for certain age groups, the best way to make sure is a parent- and let's be clear, parents are the ones that are buying these devices, they're not cheap. If they're going to bring this in their home, there should be parental controls on the devices so that they could lock certain content out & it would be safe for their family to use in a way that they thought best. So those are some of those issues, but then you get into things like Virtual Currencies or Copyright Protection or Patents & Patent Reform, all of these are live issues today that impact the industry today and they will dramatically impact the future of the segment of the industry in VR & AR.

"Maybe you could expand a bit more. What do you mean about the currencies & the patents. Give it a little bit more context as to how that plays out."

So I'll point at currencies, game systems, and then patents. So currencies are used to facilitate comers within a game & often times our industry has created virtual currencies. These are great utilities to gamers. When they play, they're a natural thing to have. They're also a way of monetization for the industry that gives us a leg up on motion pictures & music & other forms where digital entertainment is eating them alive, it's an opportunity for us because of things like virtual currencies. The government, the federal government through the US treasure department has published rules to control & regulate those, largely because they're concerned about digital currencies feeding or fostering revenue flows for terrorists or illegal enterprises. Well that's not whats happening in our industry, we know that's not true. You don't convert Xbox Live points into some sort of contraband in the Middle East, that's not how it works, but we have to go in try & help straighten all that out. So on virtual currencies, that's one that's relatively obvious. When you look at systems, today a game system like a console, it's an entire ecosystem of activity. It's games, it's monetization, it's hardware, it's software, it's downloads, and all of those things. In the eyes of a creator of that system, say today's Xbox or Oculus, if 5 years or 10 years from now and you look & say "Well who's the next big player in VR?" It could be Oculus, it could be any one of the companies here today. They've created a system to recover the investment & all that hardware, and in the games that are created. That system is protected by the DMCA, the Digital Millennium Copyright Act, but every 3 years, people line up at the copyright office and ask for exceptions to the DMCA to jailbreak, hack, or break open sealed systems like a console today. We have defended consoles several times now very successfully and saying that those systems should not be allowed to be jailbroken because of some concerns that are raised by different groups because the integrity of the economic of the system is more valuable than that & we've prevailed on that. So those two are very important & they're relevant to what you're hearing maybe the future trajectory here. So patents today, that this is how you take your idea, the new thing and make sure that you are able to recoup your investment & reap a profit from coming up with something thats truly revolutionary. Our patent system is constantly being challenged in the courts, it's challenged by policy makers, and today patent reform is being considered in Washington DC to a very great degree. There are two different approaches that are being debated, but in the eminent future we would expect to see that reform. Well the industry as a whole through ESA is speaking to policy makers and saying "If you want to continue to create jobs & the average wage in our industry is $95,000 a year. It's great to be in the video game industry because of innovation & the like. If you want to keep that industry growing here at home, you need to do the patent reform in the right way." So let's make sure you do it in a way that's gonna continue to grow interactive entertainment & similar industries. And those are 3 examples.

"My own personal experience with having immersive experiences within Virtual Reality is that I have had experiences where I have shot a man in Virtual Reality & it was different than anything else I have ever experienced in terms of 2D mediums or video games. Having some traumatic experiences in my life, I could say that there is some low-level triggering of PTSD that I experienced. I imagine that because Virtual Reality has capability to treat PTSD, it also has the potential to cause or trigger PTSD in people, given that they may have already had some experiences in their life, trauma & that, it's just getting activated...it may not cause it, but it's hard to kind of dilleniate where to begin & end, it happens when it come to trauma. So these I think are real concerns when it comes to Virtual Reality & how do you see that kind of playing out in terms of like rating systems?"

Well it's a great question so I'll give you two lines of thinking. 1 is absolutely that VR & AR have tremendous potential to help in the education space, in treatment of different mental illnesses, we've heard a presentation today that a pain reduction, dramatic reductions in pain without using any medications at all through use of VR. That's powerful. Those are things that should be fostered & grown & have an opportunity to flourish because that's what innovation is all about. So I expect to see more next year when we come back along those lines & I would expert there to be a strong appetite among policy makers and the country as a whole to see those types of things take root. Now the other side of it that you pointed to where the content may seem too real, too visceral, that's been the march of content since the beginning of time & Justice Scalia's majority opinion in the Supreme Court case that we won on behalf of the industry points to this & it starts with cave drawings on the wall that were drawn 10,000-11,000 years ago, those were the first representations of art or immersion. Then you look into a book and when you read a good book, you are drawn in. A good author pulls you in. When you looked at a movie for the first time, again motion picture industry went through this more-or-less 100 years ago, that was a whole different way of engaging with content & it was a moving picture & that was something that was going to potentially lead to disturbed people doing things or cause behavior, never did, it did not have any effect & here we are today doing just fine with all sorts of movies available to us again with a rating system, with a robust rating system. You march in, you get Cable Television, the internet, music went through the same thing, true crime novels. There was an outcry in this country about 50 years ago that true crime novels, novels were you would learn how to commit a crime were going to teach young people & old people alike how to aspire them to commit crime. Of course, it did not come to pass and the Supreme Court opinion follows that arc of development and entertainment history. I see VR, AR, as being just another movement along that arc and one that we would seek to include and that same type of protection but you can bet that critics will be out there saying it's not entitled to that same treatment.

"You decided different judgements from the Supreme Court. Is it just a basic first amendment right to be able to express yourself given there is an appropriate rating system so that people can kind of choose at what level of intensity they want to have?"

Well what it is is that the three courts said "You're allowed to write whatever you want. You're allowed to speak whatever you want other than 'Fire!' in a public theater & things of that sort or slander. You're allowed to write a song, you're allowed to make a motion picture about virtually anything that you would like, that's your expressive right as an American citizen. You can also make a game and sell a game because games are equally expressive & the government has no role in controlling, taxing, or otherwise limiting that right." That's what that case stood for & up until that point, it had not been decided with finality.

"There's also the potential for 'Kids are playing violent video games. That's gonna cause them to go actually take guns & shoot up a high school or something like that.' So is that something that has also been within the Entertainment Software Association's legal battles to be able to give protections or fight against any sort of restrictions when it comes to violence in video games?"

ESA is the top of the sphere that defends the industry against those types of allegations and we have been for 20 years now. When the media or politicians come at the industry & make false claims that there's real world violence caused by fantasy violence, we're the ones that bring forward the information, the research, the testimonials, the academics that point to the data that proves that it's absolutely not true. However reflexively popular it might feel at the time to Cable Television after some sort of tragedy has happened, it's just flat not the case & over time we have proven that over & over again & the Supreme Court decision that I referenced specifically says that the research on the other side of that, the research that says there is a link is wrong & debunked & it names the researchers that did that research by name. So it's a very powerful outcome, but it takes constant vigilance from ESA to continue to protect that frontier so the industry can continue to innovate, including through VR & AR.

"I wonder if that's some artifact of the difference between a 2D medium & your ability to have a objective distance from it vs. being in a immersive 3D medium when you have the ability to overtake your perceptional system & communicate directly to your limbic(?) mind that your rational mind may have one interpretation of it, but your serviciul(?) experience may have a completely different experience. So I think that right now, I don't know if that research even exists to be able to defend that there is no cause or link between experiencing extreme violence within VR experience to then what impact it even has, especially when you have phenomenal like the virtual body ownership illusion where you actually feel like you're in the scene rather than having something where you're watching a movie. When we watch a movie, we see it but we don't have a feeling as if we were there. So I wonder if that's something as things move forward if the research has to be done or how do you defend against something where nobody really knows?"

Two thoughts on that: I would ask [James] Cameron who did Avatar whether you felt like you were really there when you're watching one of his movies in 3D. If you like at Titanic in 3D or Avatar, the full intention of 3D and its existence in other films today is to pull you in, is to give you that feeling of suspension of disbelief, to pull you in where you have agency which is a word that's used here quite a bit, and really well done motion pictures do create that, books do create that, where they feel like you're there and that's what makes them a fantastic entertainment vehicle. I see VR as an extension of that same principle, thats the principle ESA will defend and the burden of proof in this case because of the work we have done for 20 years lies on the other side of the equation, not on the innovators, the artists, and the entrepreneurs that are in this room.

"So when it comes to Virtual Reality, when did that first come on to your radar in terms of the Entertainment Software Association?"

I would say the first year of the Oculus exhibit at E3 which I believe is three E3s ago so that'd be 2½ years ago right about then.

"And then what was your...like, how did it sort of come into your purview in terms of something that you're gonna have to deal with?"

It came I think as it grew to greater acceptance and greater excitement and you see the numbers of company participation. For example, Xbox or Microsoft, Sony Playstation, Warner Bros. They're major members of ESA. They're all aggressively interested in VR & AR, and so it was a natural extension of their interests & E3's magnet for new technology & new innovation that those two forces are what ignited it for us & we're always looking ahead trying to see where the industry's going & proactively putting ourselves in a position to protect that new frontier. So that's really probably about the time that it started for us.

"And finally, what do you see as kind of the ultimate potential of Virtual Reality and what it might be able to enable?"

What's really fun is, I don't pretend to be a wise soul on this, but I think I might I have gotten one thing right. Five years ago at E3, the only 3D interview of me was done at E3 & I said "The future of video games was the Holodeck of the Enterprise in Star Trek: The Next Generation" and I sit in this room and listen to what's coming down the pike & we're awfully close to creating that so...I'm gonna stick with that original prediction from 5 years ago because it looks like it's holding true at the moment.

"Awesome, well thank you so much."

You bet. Thank you.