The legal challenges of cloud gaming, the new trend in the gaming sector

Written on 23 Jul 2019

As telecommunication service providers improve their network connectivity offerings, new services that were not previously considered possible or feasible have arisen. Such is the case of cloud gaming, a "SaaS" service model that may eventually imply the demise of traditional videogame consoles. We take a look into the main legal implications concerning this new paradigm.

During the Electronic Entertainment Exposition –E3– that was held last month, new projects to provide gaming services from the cloud were introduced. With due time, these services might determine the course of the gaming market and it would be interesting to note the legal implications concerning this new model. In simple terms, cloud gaming is a way to play videogames using a remote hardware, thus, the consumer would only need a screen –generally a mobile device, a PC screen or a TV screen–, a controller and internet connection in order to play a game, as the whole hardware capabilities are provided by the cloud service.

Despite the fact that cloud gaming services might be seen as innovative to some, such services were firstly introduced in 2010. Nonetheless, this gaming system had not found its place in the market, as it entailed significant latency (response time) issues and did not offer an enjoyable experience to players. Latency is an especially important factor in gaming that relates to playability, which refers to the exact time difference between a request being sent to the network and the receipt of the first response bit. Now, with a much better connectivity at our hands and the expected implementation of 5G –the fifth generation mobile network that shall significantly lessen latency levels–, companies are beginning to wager on cloud gaming, as it would imply a more economic option for the user and a more comfortable experience for the casual player.

The first legal implication that we should address is the cross-border access to the content of the games that are located in the cloud. Indeed, the fact that players may access a videogame of their choice the same way that they watch audio-visual content on their usual VoD –Video on Demand– platform may pose cross-border access issues that we should be aware of. In this sense, Regulation (EU) 2017/1128 of the European Parliament and of the Council of 14 June 2017 on cross-border portability of online content services in the internal market is applicable, as we describe below.

The purpose of this Regulation is to broaden access to online content services for citizens travelling across the EU, without being required to pay any additional cost for such access, and EU citizens shall be able to fully use their subscriptions throughout the EU territory. Nonetheless, European consumers may have their licenses to use the certain games in the cloud exclusively limited to the EU territory, which would imply that EU citizens may not be able to have access to their subscriptions from third countries outside the EU. In these circumstances, regular portable consoles would still be the better solution for consumers (as they are the only way to ensure the access to their videogames when travelling outside the EU), so further legal developments would be desirable in this sense, such as guaranteeing access to content worldwide, regardless of the country in which the European citizen is located in any given moment.

Another legal aspect that would be interesting to comment relates to the type of licenses that should be granted by publishers to offer these “streaming gaming services”, which deserve special consideration on a separate page. What is certain is that this gaming system will make physical games obsolete and the sector would rather focus on digital games selling, whose format prevents game reselling and offers greater guarantees to developers. Currently, consumers have also the option to buy a license via internet that enables them to download and play a digital version of the game, however, we should note that licensees would no longer need to download the digital content to play a video game and they will be able to access such content remotely, as it will be installed in the cloud.

As already implied, a player using cloud gaming services will not be saving any data into the particular device used for that purpose, not even the data related to the particular game that the user has been playing. This fact may give rise to some questions on who owns the data of particular games that are remotely stored, questions that are not addressed under Spanish law as of today. In this sense, it would be necessary to determine whether the data of a particular game could be considered as a derivative work –taking the videogame as original work– in accordance with the Spanish applicable law in order to determine if a player may be the author of the work and thus subject to protection.

Likewise, it would be also necessary to provide legal certainty on who would be liable should the gaming services fail: the provider of network connection services or the cloud gaming service provider. Players usually blame latency and connectivity of any eventual error or lag while playing, but with cloud gaming other potential errors emerge such as malfunctions in remote hardware that is processing the game. For these cases, the relevant implementation of Directive (EU) 2019/770 of the European Parliament and of the Council of 20 May 2019 on certain aspects concerning contracts for the supply of digital content and digital services might be of importance. This Directive presumes that the trader shall be liable for any breach or failure to supply the digital contents or digital service, whom shall bear the burden of proof.

To finish with, using online services usually increases the risk of a cyberattack that may threaten users’ privacy. In this regard, we should note that Royal Decree-law 12/2018, of 7 September, on network security and information systems –regulation implementing the NIS Directive into the Spanish legal system– is applicable, which establishes certain legal obligations to all online gaming services providers with a view to strengthening network security.

Overall, although cloud gaming is not expected to become the main gaming system in the short term, we do expect a strong competition between incumbent market players to develop the most profitable projects.