Gamma Law Blog

Illustration by Kei; Copyright Crypton Future Media, Inc. www.piapro.net

On her own, Japanese pop superstar Hatsune Miku can’t sing. Nor can she rap, dance or DJ. She is drug- and alcohol-free because she can’t indulge in either, and she can’t have affairs or engage in offstage shenanigans fit for YouTube scandals or tabloid headlines. Now entering her sixth year as a beloved idol with a global fan base, she looks as youthful and demure as she did when she debuted. She can’t even get old.

“She doesn’t exist,” says her creator, Hiroyuki Itoh, with a brief shrug. “Never has.”

Itoh, CEO of Sapporo-based Crypton Future Media, is a software developer and so-called meta-creator, whose goal is to aid others in realizing their artistic endeavors. In 2007, he asked a graphic artist named Kei to create an anime-inspired digital avatar, the kind of cartoon-company mascot common in Japan, to represent both Crypton and its virtual-voice program for Yamaha’s Vocaloid software — a singing-voice synthesizer.

Vocaloid enables its users to create songs by typing in lyrics and melody, then hear them sung through a bank of prerecorded and remixed human voices. But in its initial incarnations, users found Vocaloid lacking. Something fundamental was missing — a visualized and visible singer. Kei’s creation, the long-legged, green-eyed, turquoise-pigtailed Miku, quickly emerged as the Vocaloid “performer” of choice, a mega-mascot for consumer-generated media (CGM). Read the rest of this entry »

The gaming world is buzzing with excitement as reports emerged earlier this year from the Chinese Ministry of Culture indicating that China might be ready to overturn the thirteen year old ban on gaming consoles. While investors are hopeful about this prospect, analysts warn that the effect may be moderate at best.[1]

In June of 2000, in a purported effort to protect the productivity of children and keep them from “wasting their minds,” the Chinese government banned video game consoles in China. The notice, issued by the Ministry of Culture, prohibited the production and sale of electronic gaming equipment or accessories to China.[2] While this ban seemed to encompass all types of electronic games, enforcement has been against only the sale of PlayStation, Xbox and Wii. Other gaming systems, PC games, arcade games, mobile games, and even some TV-based game devices are still considered legal. Now, over a decade later, Chinese authorities are considering lifting the ban.[3] An anonymous source from the Ministry of Culture spoke to state-owned newspaper ChinaDaily about the ban:

“We are reviewing the policy and have conducted some surveys and held discussions with other ministries on the possibility of opening up the game console market. However, since the ban was issued by seven ministries more than a decade ago, we will need approval from all parties to lift it.”[4] Read the rest of this entry »

If, in the mid-1990’s, you had asked any gaming industry expert about the future of gaming, you would have received a singular unequivocal response, in unison: Virtual Reality. Thinking back almost two decades, the hype and excitement were palpable; the possibilities and expectations for the technology, and the benefits it could bring to gaming were limitless. In retrospect, with clunky headsets, poor graphics, and prohibitive equipment prices, it’s pretty clear now, that 90’s era virtual reality was doomed to fail. These days, a quick survey of gaming expos and conferences in 2012, reveals that virtual reality is back and cooler than ever.  Is the gaming world ready for it – this time?

Before getting much deeper into the VR question, let’s first take a look at the console technology bringing VR, in whatever new form it comes, back to the forefront of gaming tech.

First, came Nintendo’s Wii in 2006, which revolutionized the user experience. Not only was the original bulky controller redesigned into a sleek and ergonomic wand, but it was wireless – with an innovative motion sensor that was capable of detecting movement and rotation in all three dimensions. For the first time, players could physically interact with the virtual world – a seachange in the gaming experience.[1] Read the rest of this entry »

Over the past thirty years, Japan’s Tokyo Game Show (commonly known as “TGS”, an annual video game expo held in the Makuhari Messe, in Chiba, Japan), and the country at large, have been a symbol of the gaming industry’s future. In the 1980’s Japan produced some of the best and brightest arcade games; in the 1990’s they were at the forefront of console innovation and design; but in recent years, Japanese blockbuster gaming series like Final Fantasy and Super Mario Bros. have been fading into the background, allowing games developed in the West to dominate the market (e.g. Skyrim, Battlefield, and Call of Duty). This shift has prompted industry leaders to question whether there’s any hope for a resurrection.

Perhaps however, an existential view of the Japanese industry is an outdated concept. While some suggest that Japanese developers should overcome their pride, and learn from their western counterparts how to compete in the global marketplace, others take a different view. Gavin Moore (producer of Sony’s Puppeteer) for instance, suggests that competing with the West for global market-share is a mistake; it’s not a question of dead or alive, but rather an issue of focus.

“Japan did something very, very wrong… They forgot who they were. They saw these big-selling western titles and they tried to make [them], and they didn’t have the staff and were slow to get used to the technology. They didn’t use any middleware, and for those titles you have to. They spent a lot of money on it, and it bit them – and then they retreated and thought that the west didn’t like their games anymore.”

According to Moore, western gamers love Japanese games, and they don’t want Japanese developers making western games. There is something very unique to the Japanese mentality; “that old-school sense of clearing the game,” as we saw in Demon’s Soul, that isn’t matched in the west. James Mielke, of Q Games, agrees. The Japanese conjure up fantastical environments, creatures, and characters, and they do a good job of making them cool. “Japanese [developers] need to get back to knowing what they do well and embrace that.” Read the rest of this entry »

Anime auteur Soubi Yamamoto.

Many women in Japan remain mired in a patriarchal culture that caps their career opportunities. Japan continues to rank embarrassingly low on the United Nations index of gender empowerment, beneath several of its less developed Asian neighbours. In the legions of action heroines and headstrong young women in Japanese popular culture, overseas fans often see an illusion of female empowerment, delivered via enticing visuals and story lines created mostly by men.

But the status of real women in anime production may be evolving through advances in technology and societal shifts accelerated by post-disaster turmoil. In Tokyo last year, I had dinner with a frustrated male company manager whose views skew conservative. He told me that what Japan needs now is its own Maggie Thatcher, a leader who doesn’t owe anyone anything because she’s a female in a male-dominated world. Regardless of Thatcher’s politics, he said, what Japan needs most is power and vision.

I was reminded of Hayao Miyazaki’s remarks when I interviewed him onstage at UC Berkeley in California in 2009: “These days, all of our best young artists [at Studio Ghibli] are women,” he said. “Maybe I need to make films about powerful young men now to give them the strength to compete.”

In the production of anime, Japanese women may also be liberated by changes in the creation of the medium. Just as self-publishing models are enabling writers to reach readers without the third-party involvement of publishers, computer software provides artists in anime the means to craft their art outside of studios, which remain largely male-dominated environs. Read the rest of this entry »

In staying with last week’s greatest-heist-of-all-time theme, it seems only fitting to dedicate a post to GEOHOT–real name: George Hotz. A twentysomething member of the Silicon Valley glitterati, Hotz humbly came to be known as one of the most famous hackers of all time, inadvertently igniting the hacking wars of the Summer of Lulz.

Hotz first entered the spotlight in 2007, as the first hacker to jailbreak the iPhone. The YouTube video demonstrating his success went viral – generating nearly two million hits, an interview with Erin Burnett on CNBC, and most notably, a congratulatory email from the archetypal hacker himself, Steve Wozniak. Technically, what Hotzdid was not illegal, but there were significant potential repercussions for both Apple and AT&T, and for the mobile industry at large. Yet neither company made any attempts to stop him.

Several years later, however, bored with unlocking iPhones, Hotz turned his attention to Sony’s PlayStation 3 – known at the time as the “only fully locked and secure system of the seventh generation era [referring to gaming consoles released by Nintendo, Microsoft, and Sonybetween 2005 and 2011].” In December of 2009, Hotz, who views hacking as just a competitive sport, blogged: “[t]he PS3 has been on the market for over three years now, and it is yet to be hacked… It’s time for that to change.” For Hotz, hacking is an escape from boredom that pits him against the machine – allowing him to commandeer and manipulate the system against the intent of the manufacturer.

Several weeks later, Hotz announced that he had successfully hacked the PS3 with hyperviser level access. On January 26th, 2010 he shared his exploit with the public. Sony quickly responded by announcing a firmware update that would essentially disable the hack. Undeterred, a month later Hotz posted a new video claiming his progress with custom firmware that would circumvent Sony’s efforts to stop him. It wasn’t until Hotz posted the root keys of the PS3 on his website that Sony upped the ante and took Hotzto court. It started with a temporary restraining order, then a demand for all the IP addresses of visitors to Hotz’s site, and ended four months later with a settlement agreement whereby Hotz agreed never to hack another one of Sony’s devices again.

The interesting part, however, came next. Enraged by Sony’s fierce response and the potential chilling effect of the company’s legal actions, the hackers of the world united against the entertainment giant, led by the notorious Anonymous network. Using the reluctant Hotz as their cause and martyr,the group attacked Sony’s sites, including sony.com and playstation.com, with simultaneous visits until the sites crashed. After the settlement was announced, the group blasted the injunction against Hotz as a form of censorship that just fueled the flames. Some of the protesters made “FREE GEOHOT” t-shirts, while others protested in Sony’s southern California stores. The radicalblack-hatters called for a substantially more destructive approach. About a week after the case was settled, Sony revealed that it was a victim of a cyber attack that exposed the addresses, passwords, birthdays, and email addresses of over 75 million Playstation subscribers. Anonymous denied responsibility for the attack, but a few weeks later, it was announced that Sony Online Entertainment was also breached, revealing the personal information of 24 million user accounts. The hackers of this latter attack, however, left behind Anonymous’ calling card in a digital graffiti: “We are Legion.”

Hotz denied involvement in any of these attacks, and in fact posted a condemnation of these actions, calling them “uncool.” At the same time, in an interview for The New Yorker magazine, he said he didn’t intend to spark the hacking wars, but “[i]f being a techno-libertarian leads to online anarchy, so be it… I’m not a cause. I just like messing with sh*t.”

As we’ve written before, the recent slate deal trend among Hollywood financiers can be very tricky, even for the savviest of investors. The latest and probably best-known victim is Aramid Entertainment, a sophisticated hedge fund with a Cayman Islands address. In a lawsuit filed last year, Aramid claims it was ensnared in “one of the greatest heist stories ever told in the movie business.”

The story begins with Relativity Media, founded in 2004 by the controversial Ryan Kavanaugh. Relativity bills itself as a full-scale movie studio, responsible for producing over 200 movies and grossing over $17 billion in worldwide box office returns over the past eight years. Kavanaugh’s claim to fame is his proprietary “Monte Carlo” algorithm, which Relativity utilizes to predict the success of proposed projects. Unfortunately, for Kavanaugh’s investors, the system hasn’t seemed to really work, and for the past several years Relativity has been on the brink of a monumental financial collapse. After the loss of its principal financial backer, the defection of numerous senior executives, multiple ill-advised acquisitions leading to unsustainable overhead, and management conflicts, by 2011 Relativity was in dire straits.

Back in 2007, however, Relativity had embarked on a slate deal with Sony Pictures Entertainment that was intended to be a “watershed event in the evolution of slate financing,” a $1 billion fund. It was the largest fund ever attempted in the film finance arena. Relativity created the slate entity, Beverly Blvd LLC, and unable to provide the $500 million on its own, enlisted Citibank to guarantee its position in the deal. The agreement was simple: each side invests $500 million, the money is used to cover production costs of forty-five of Sony’s movies over the course of five years, and Relativity uses its special secret formula to pick only the blockbusters. Everyone wins.

With a guarantee from the bank, Sony agreed to move forward and finalized the deal. Over a year later, however, Citibank hadn’t found any outside investors and decided to put up the money itself. Citibank then approached our victim, Aramid, to solicit investment in the Beverly fund. Aramid had allegedly turned down the opportunity to invest in Beverly several times before, but this time Citibank promised a large return for a “mezzanine level” investment, and Aramid agreed to participate. The class of shares that Aramid purchased (for $22 million) offered a high rate of return, but having been placed in second position, Aramid would only get paid after the Class A investors received their returns. A fateful decision.

In the meantime, Fortress Investment Group, LLC approached Aramid, expressing an interest in acquiring some of Aramid’s assets. After executing a non-disclosure agreement, Aramid handed over the books to Fortress for due diligence review. Fortress took a particular interest in the Beverly deal, which Aramid was happy to discuss in detail, but ultimately walked away without making an offer.

Enter the Lehman collapse in 2008 and subsequent recession. Citibank fell on some difficult times and began looking to sell its position in Beverly. Aramid offered to help, but it seemed that Citibank had already secured a buyer… (drum roll, please)… Fortress Investment Group. Fortress struck a deal with Citibank and took over its position in Beverly for 50 cents on the dollar. Then, looking to make a quick buck, Fortress approached Sony offering to discount amounts due and to relinquish all the rights to residual and ancillary revenues, in exchange for Sony’s agreement to wind up the Beverly fund early. Sony immediately agreed. Fortress then approached the now flailing Relativity, offering it nearly $15 million as compensation for approval of the new agreement to shut down the fund. Relativity agreed as well. Fortress then drained the fund, leaving nothing for second- and third-position investors, namely Aramid. The suit alleges that Beverly was “ultimately hi-jacked, forcibly dismantled and ruthlessly plundered in order to line the pockets of [Fortress] and to knowingly deprive [Aramid] of their rights…. [H]aving masterminded the break-in and switcheroo, [Fortress] booked a minimum gross profit of approximately $96.1 million [minus the $14.5 million it paid to Relativity].”

Aramid claims that Fortress used the confidential information it obtained from the alleged due diligence to strike the deal with Sony, which virtually destroyed Aramid’s investment. According to estimates, Aramid’s shares in 2011 were worth $44 million; after Fortress got involved, they became worthless. Aramid claims that Fortress intentionally and maliciously interfered with its contractual relations when it induced Sony and Relativity to terminate the Beverly fund early.

The lawsuit, which was initiated in February of last year, is ongoing, but before you waste any time pitying the victim, note that Aramid itself is no stranger to litigation. The LA Times reported in 2010 that Aramid was sued by its own investors for fraud and misappropriation. That lawsuit alleged that Aramid management used the fund as a “personal piggybank” and concealed Aramid’s financial woes from auditors, taking out more than $60 million from the fund to pay fees to himself and his associates. “The ‘looting’ left the fund in such dire shape that it was delisted from the Cayman Islands Stock Exchange.”

Terrible injustice or just desserts, you decide.

We continue our discussion of film finance and in particular foreign pre-sale agreements. This post will focus on the issues to be considered when structuring such agreements for distribution. It should be noted that in this context, much like with any other commercial venture, the party with the greater bargaining power will succeed in securing an agreement that best promotes and protects their interests. At the film distribution negotiation table (or film festival tent as it were), a filmmaker’s power comes in the form of studio backing, high production value, or a star-studded cast. A distributor’s power is based on reputation, contacts, and experience. An independent filmmaker with a low budget feature without any name actors will be forced to make all kinds of compromises, and that’s if he’s even lucky enough to attract a foreign distributor to begin with. On the other hand, a big budget post-apocalyptic studio film with an A-list cast will have distributors competing over the rights, and the filmmaker will be able to demand terms favorable to him.

At the outset, it is important to keep in mind that since these deals involve crossing cultural, political, and often linguistic borders, each term of the agreement must be thoroughly considered and then expressly defined, ideally leaving no room for ambiguity. We know that domestic transactions, where both sides speak the same language and are governed by the same set of laws and regulations, can often run into trouble. Parties negotiating these international agreements have to contend with all the usual issues, and with the addition of language barriers, currency exchanges, possibly dubious legal regimes, diverging accounting standards, and political differences, you begin to see how such deals can quickly go sideways. The following are the most common and arguably the most important terms in a foreign distribution agreement:

Territory – What foreign territory will the distributor cover precisely? Is it geographic? Linguistic? Is it physical borders or political borders? Are airlines or cruise-ships registered in those territories included? What about embassies or unincorporated islands territories?

Term – How many years will the distributor hold the rights before they revert back to the filmmaker? The filmmaker wants the shortest term possible so that it can re-license and re-release the film. The distributor instead prefers the longest possible term so that it may get the largest return on its investment. Current standards are ten to fifteen years; however, if the distributor pays a large advance for the rights, then 25 years might be expected.

Another aspect to consider is whether the distributor has the right (during its term) to bind the filmmaker to an exhibition agreement, for instance, that runs longer than the term of the distributor’s rights.

Rights – Generally the right to distribution includes marketing, advertising, and the actual exhibition of the film. It may also include rights to dubbing, subtitles, and perhaps even editing the film to appeal more to local tastes. (A filmmaker with significant bargaining power might be able to retain final approval over any proposed edits.) For marketing or advertising, the distributor might use posters, trailers, clips, musical score, and plot summaries.

Exclusivity – Is the grant of rights exclusive? Does the distributor have a right to take legal action against infringers within the territory?

Media – What types of media are included in the deal? Is it just theatrical? Video and DVD? Broadcast or cable television? If it’s multiple types of media, how is the timing of each release- date staggered so that the release in one format doesn’t hamper the others?

Gross Receipts vs. Net Proceeds – Gross receipts is the actual amount the film generates across all media in a given territory (box office ticket sales, DVD sales, etc.). Net proceeds are profits or gross receipts minus costs (but, it should be noted, may bear little connection to the actual net profit generated by the film). What constitutes “costs” is usually negotiated, but may include the expenses incurred in distribution for marketing, advertising, exhibition, permits, fees as well as the distributor’s own fee and/or commission.

Expenses – Filmmakers will want to consider placing caps on how much the distributor can spend and claim as an expense. Advertising and marketing “expenses” have been known to swallow a filmmaker’s entire profit.

Distributor’s fees are calculated as a percentage of “adjusted gross receipts” – gross receipts minus taxes but before expenses are deducted. How much should the filmmaker pay for distribution? This percentage is negotiable and depends heavily on the film’s budget, earning potential, and whether an advance was paid.

The collection of net proceeds from the distributor can be difficult, to put it mildly. The filmmaker should require letters of credit, personal guarantees, and payment schedules. The agreement should provide for the periodic inspection of the distributor’s books and a term should be included to account for fluctuating currency exchange rates.

Delivery – Surprisingly, this term is often contested. As explained previously, the distributor will pay a certain small percentage of the pre-sale contract upfront and will tender the remainder when the film is delivered. It is this delivery that’s at issue and seems to be very controversial. From the filmmaker’s perspective, the delivery of the film (which meets objective criteria set out in the agreement) to a laboratory should trigger the payment. From the distributor’s view, the film should be available for inspection to confirm it is technically and artistically viable before the distributor is required to pay for it. The filmmaker’s concern is that once inspected, the distributor might arbitrarily or subjectively reject it and leave the filmmaker without distribution in that territory. The distributor may be concerned that the filmmaker has delivered unusable materials.

Termination – Whether by incurable breach or expiration of the term, the agreement will terminate at some point. Who owns the rights then? Will they revert to the filmmaker? Or will the distributor attempt to retain the rights in perpetuity to reap the profits over the life of the film?

Finally, the filmmaker must keep political issues in mind when considering foreign sales and make efforts to contract around these issues in advance. For instance, some governments restrict how much capital can leave the country. This phenomenon is known as blocked funds. Another issue is countries instituting quotas on foreign film releases in a given year, or censoring scenes, storylines, or banning certain films entirely. Yet another is the issue of the foreign territory’s commitment to enforce copyright laws — or lack thereof. The last one is probably the most detrimental. It is said that a film released in China or India, both of which don’t have firmly enforced policies on intellectual property, is pirated within minutes. Such pirating not only hurts sales in those countries, but with the internet, it may dilute sales worldwide. The best advice, it seems, is not to take anything for granted. A common business practice in one country might be unheard of in another.

The rights conveyed by a pre-sale discussed in Part 1 of this series typically include the theatrical and video release of a film. A release in the United States and Canada is considered “domestic.” The release of the film in all other geographic territories is considered “foreign.” For large budget Hollywood films (or independent films which have been bought by studios), a major distributor (usually an arm of the studio’s parent company) will purchase domestic rights, through a pre-sale contract, for approximately 50% of the negative cost of the film. The foreign markets are far more interesting.

The foreign box office (territories excluding the U.S. and Canada) generates more than double the domestic take; and it’s growing dramatically. In 2011, the Motion Picture Association of America reported that the domestic box office generated $10.2 billion, less than a third of the $32.6 billion in total worldwide gross receipts. The foreign box office figure, $22.4 billion, represents a 35% increase over the past five years. In the same time frame, the domestic market grew by only 6%. (1) Much of this foreign growth, no doubt, can be attributed to the rapid changes taking place in China.

Taking into account that foreign markets can yield greater revenues, how does a film-maker price his foreign pre-sale contract? How much does he expect a Japanese or British distributor to pay? The answer is surprisingly simple. Historically, each country makes up a given percentage of the foreign box office, with slight variations year after year. For instance, in 2011, Japan’s audiences generated $2.3 billion in gross receipts, or 10.3% of the foreign total. The United Kingdom accounted for $1.7 billion, or 7.6% of the total. It is according to these percentages that the value of foreign pre-sales is established. Based on 2011 figures, a pre-sale contract will cost a Japanese distributor 10.3% of the new project’s negative cost. Similarly, the pre-sale contract to a British distributor will cost 7.6% of the projects negative cost. Below are the top ten foreign markets, gross receipts, and respective percentages.

1. Japan $2.3 billion 10.3%
2. China $2 billion 8.9%
3. France $2 billion 8.9%
4. UK $1.7 billion 7.6%
5. India $1.4 billion 6.2%
6. Germany $1.3 billion 5.8%
7. Russia $1.2 billion 5.4%
8. Australia $1.1 billion 4.9%
9. South Korea $1.1 billion 4.9%
10. Italy $0.9 billion 4.0%

Motion Picture Associate of America, “2011 Theatrical Market Statistics,” pages 2 and 5.

Thus, if the budget for the new project is $100 million dollars, our Japanese distributor will be expected to pay 10.3%, or $10.3million, for the rights. As previously discussed, the distributor doesn’t pay for the rights up front. Typically only 10-20% of the value of the contract is paid at the outset. The remainder is tendered when the film is complete and delivered. With respect to actual monies earned in these territories, the precise split (between the distributor and filmmaker) from the proceeds of the release is a matter of negotiation. Given the significant amounts at stake in these contracts, and the exponential potential for profit/loss, the arrangement is fraught with pitfalls. We’ll discuss these hazards and safety nets further in our next installment.

(1) Statistics from Motion Picture Associate of America, “2011 Theatrical Market Statistics,” pages 2 and 5.

What do a Kindle Fire, a Google Nexus 7, and a two-year old HTC Incredible have in common? They all run some version of Google’s popular Android mobile operating system, though you wouldn’t necessarily see the similarities immediately: The Nexus, Google’s new tablet, is optimized to run with Android 4.1 (Jellybean) while my friend’s increasingly decrepit HTC Incredible is stuck with Android 2.3 (Gingerbread), a version of which is also used by the Kindle, though the Kindle’s OS forked off of the main Android development track so long ago that it’s barely recognizable as an Android product. OK, that’s three different permutations of the same OS. Now imagine that you’re an Android app developer, trying to ensure that your app runs on all three. Now realize that the number of combinations of different Android devices and service providers is fast approaching infinity, each potentially using a different version of the OS. Reconsidering your career choice?

One of the oft-cited benefits of Android is that it’s an open source platform, in contrast to proprietary platforms like Apple OS and Windows Mobile. Anyone who wants to design an Android-based device is free to do so. Problem is, as the example above shows, this openness has also created a lot of fragmentation among Android devices. What works beautifully on one Android phone or tablet might not work on another.

Well, there is one thing that tends to work well across versions: piracy. Find a copy of a paid app on any number of less-than-reputable websites, sideload it (a file management process that would be basically familiar to anyone who’s ever used a computer), and you now have a free copy of Angry Birds, or whatever. This isn’t just a theoretical issue: Developer Madfinger Games recently made the Android version of their game “Dead Trigger” free, because, even at 99 cents, the piracy rate was “unbelievably high.” It’s possible to pirate Apple OS apps, but considerably riskier and more difficult for the average user: It first requires jailbreaking the phone or tablet, a process which can “brick” the device. New distributions of the Android OS versions 2.3 and above support paid-app encryption but, as noted above, whether any given Android distribution has rolled out to any particular device is a question of luck.

According to a study carried out by market research firm IDC and mobile development services provider Appclerator, these sorts of headaches are leading many mobile developers to reassess their commitment to coding for the platform. In the first quarter of 2012, developers who are “very interested” in developing for Android phones “dropped 4.7% points to 78.6%, and [interest in developing for] Android tablets dropped 2.2% points to 65.9% from the previous survey. Although close to or within the margins of error, these drops are consistent with the trend of small but steady erosion in Android interest over the last four quarters, even as enormous growth in Android unit shipments continues.”

Despite these issues, Android likely isn’t going anywhere. Android devices remain extremely popular for manufacturers and consumers, and as long as that’s the case, developers will need to grin and bear it. Still, it wasn’t too long ago that Research in Motion and Nokia were the mobile world beaters, and it’s not like Google’s infallible.

The fragmentation problem is a consequence of Android’s open source model, and unless Google dramatically changes the manner in which it offers Android, not likely to go away immediately. The piracy issue, on the other hand, is a legal problem that, while abetted by Android’s openness, is endemic not just to Android but to every extant digital distribution model. In a forthcoming series of posts on the Gamma Law blog, we’ll be engaging in a larger examination of digital piracy, with a focus on the gaming sector: Just how big of a problem it is, the business and legal implications for gaming and online companies, the current legal framework in place to combat piracy, and what could be done in the future.