Italy: Limits And Opportunities Of In-Game Advertising Under Italian Law

Last Updated: 16 June 2007

Article by Francesco Portolano and Matia Campo

The videogame market has undoubtedly become a new investment frontier for advertising professionals, who have begun taking advantage of the enormous opportunities In-games advertising (whether in the form of product placement or otherwise) has to offer.

Product placement occurs when a commercial product or a brand is placed in a television or film production or in any other audiovisual work to become an integral part of it. While product placement is extremely common in the film industry (and could become more common in the TV industry, following the coming revision of the TV Without Frontiers Directive) it has only recently begun to develop in the world of videogames.

In the field of videogames, "in-game advertising" may take many forms. From the typical product placement concept (posters in the background showing a brand, or a product is part of the game), to other forms of presence of the brand (e.g., the whole game may be branded, or a brand/product may appear between levels, etc.).

According to recent statements by the world’s major software companies (e.g., Microsoft), huge investments are being made in the field of in-game advertising. Due to the latest technological developments, especially with respect to the high level of Internet interactivity, videogames can be constantly updated by downloading new brand names or products on a periodic basis.

Even more interestingly, the interactivity of an online game would allow the manufacturer to profile the taste and interests of the player and automatically select, for "placement" in the game, the most suitable product for the user.

Compared to product placement in movies, in-game advertising may have further advantages.

As the so called "episodic" videogame series become more popular, players\users spend more time playing than watching a movie or a TV show, and in most cases, the marketing of expansion packs, which are sold separately, trigger a high user retention.

There is more.

According to a recent study, the use of a brand name taken from real life adds a great level of realism to the game and increases users’ appreciation for the game, and in all likelihood, for the advertised brand as well.

Sometimes (for example in online games), the advertiser could pay the product placement on a "pay-per-impression" basis (i.e., a set amount each time its brand is shown in a game to a player).

What does Italian law say about Product placement in videogames?

As of now, no specific legislation exists in Italy for in-games advertising (neither, more generally, for product placement).

Given that product placement in games (or other forms of in-game advertising) is made for promotional purposes, then it is subject to the same rules regulating more traditional forms of advertising.

In this respect, it should be noted that the inclusion of a recognizable brand or product should not automatically be deemed as advertising. For example, when the primary purpose of the inclusion in the game of the brand or product is to characterize the characters represented, and therefore such inclusion is due to the storyline (e.g., the Ferrari logo in a videogame inspired by the 80s’ TV series Magnum P.I. or Miami Vice).

In this case, and in similar cases, placing a specific brand in an audiovisual work is not aimed at promotional purposes, but is the result of the game authors’ choice, and therefore would not be subject to advertising regulations.

What happens then if, instead, a brand or product is placed in a videogame for advertising purposes (and is therefore advertising)?

In this case regulations on advertisement would apply.

As mentioned above, although in the Italian legal system there is no rule explicitly banning product placement (neither in videogames nor elsewhere), however product placement has generally been deemed unlawful for its alleged "surreptitious" and "undisclosed" nature. Product placement, some argued, is not recognizable as advertising and is therefore illegal.

Following such line of reasoning, regardless of whether it is grounded, one could easily solve the problem by making product placement "recognizable" as advertising (e.g., by means of disclaimers).

And this is indeed what the Italian Competition Authority (AGCM) has repeatedly stated: product placement is unlawful only if no means are used to make the product placement recognizable by the viewer\user. Similar principles may be found in decisions of the Giurì di Autodisciplina Pubblicitaria (the Italian advertising self regulating body).

Neither the law nor AGCM, however, clarified the nature of such means to be adopted.

In the field of videogames, proper captions could be added at the start or end of the videogame (e.g., in the credits), and/or in any material distributed with the videogame itself (on the box, in the manual, etc.); audio or visual means could be used to alert the player that a product is being displayed. Other means may be used, also depending on developments of the technology.

Finally, it is worth mentioning that product placement in videogames may be deemed more critical since games, at least certain games, are generally targeted at minors.

According to Italian law, further precautions must be enforced when individuals considered "weak" by definition, like minors, are involved.

More specifically, and in light of the strict regulations provided for by Italian law, brand names shall not be used so as to induce minors to think that a particular product may provide distinctive skills and\or abilities. This may happen, for example, when the player’s virtual alter ego is given specific powers by using the product advertised in the game, or when the use of that specific product allows progressing to the next level or eventually winning the game.

In addition, the message delivered should not induce the minor to adopt "unbalanced life styles" or "unhealthy eating habits."

Other rules impacting on in-game advertising can be found in legislation on consumer protection (mainly Legislative Decree no. 206/2005, the Consumer Code), e-commerce (Legislative decree no. 70/2003), data protection (Legislative Decree no. 196/2003, Data Protection Code), etc.

For example, profiling of players in online games would be regulated by the provisions of the Italian Data Protection Code.

In the light of the news coming from overseas, it is very likely that the technological development and the implementation of the game/player interactivity will have a significant influence on advertising investors, always in search of new business opportunities.

In-game advertising will find in Italy a very receptive market, but software houses and advertising investors shall need to carefully review the sensitive legal issues triggered by in-game advertising.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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