Video Game Law Blog

August 30, 2006

There has been some recent hubbub over whether Konami's Pro Evolution Soccer 6 will be exclusive to the XBOX 360. Microsoft has announced that the game will be a 360 exclusive in Europe for the first year of its release; Konami, on the other hand, says that it will be releasing the game on multiple platforms. It's not clear why the parties aren't all on the same page, but the situation demonstrates that exclusivity is an important issue when it comes to licensing software and products.

Generally speaking, in Canada licences can be non-exclusive, exclusive, or sole.  In a non-exclusive licence, the licensor retains the right to use the licensed property and to grant licences to other parties. An exclusive licence means that only the licensee is able to use the licensed property "? the licensor cannot use it or license it to others. A sole licence allows the licensor to use the licensed property, but prohibits the licensor from licensing to other parties. Other jurisdictions may use different terms, or give different meanings to these terms.

Exclusivity is a key point in any licence agreement. Obviously licensees prefer exclusive licences, as that gives them a lock on the particular content or technology. Licensees expect to realize more return from an exclusive licence, because they will not have to compete with others using the same matter. The flip side, of course, is that licensors expect to be paid more for an exclusive licence because their income stream is limited to the single licensee.

Exclusive licences can be restricted in different ways. For example, an exclusive licence can be limited to a certain geographical area (e.g., North America, Europe). This gives licensors the flexibility to parcel out rights as they see fit.

The video game industry has seen some huge exclusive agreements in recent years. For example, EA has obtained exclusive video game rights to the NFL, NCAA football, and ESPN (see here ).  There is concern that exclusive licences like this might diminish the quality of games by reducing the number of competing games (for example, buyers are more likely to buy a football game using real NFL players and teams than one that does not), and there have even been claims that exclusive licences are anti-competitive (see here ). Some organizations take a different approach "? last year, for example, the NBA entered into non-exclusive licences with five different game publishers (see here ).

Coverage of the PES6 issue (