COMMENTARY | COLUMNISTS | A.T. NELSON

Sony, tax incentives among industry's latest controversies

As gamers and shareholders eagerly await Tuesday’s release of Epic’s “Gears of War 3,” the video game industry finds itself coming out of a tumultuous week of headlines highlighted by Sony’s move to quell future class action lawsuits, controversy over tax incentives for game makers, and assisting in AIDS research.

It is not uncommon for Sony to occasionally ask its users to agree to an updated terms of service upon logging on to their PlayStation Network accounts.

However, the latest revision from the electronics giant presents its users with a simple choice of either agreeing to waive their rights in seeking collective legal action against the company or be banned from using the network.

As part of the new terms outlined in Section 15 of the agreement, users who agree to the “Binding Individual Arbitration” clause shall only seek legal recourse on “an individual basis and not in a class or representative action or as a named or unnamed member in a class, consolidated, representative, or private attorney general action, unless both you and the Sony entity with which you have a dispute specifically agree to do so in writing following the initiation of the arbitration.”

Sony also notified users that it would be transferring its online operations from Sony Network Entertainment America Inc. to Sony Network Entertainment International LLC.

The reason behind this sudden change is not hard to understand, as the move comes in the wake of the massive compromise at the hands of hackers last April that not only saw the entire network crippled for months, but also exposed the personal information of nearly 100 million user accounts.

Users do have the option of opting out of this clause by writing a letter to Sony’s legal department in Los Angeles within 30 days of first agreeing to the amended terms of service.

Tax breaks for game makers was another hot-button issue for the industry last week, after tax professor at the University of Texas, Austin and former Treasury Department employee, Calvin H. Johnson, proclaimed that “video game production” has become “one of the most highly subsidized businesses in the United States.”

According to an article published in The New York Times, “Because video game makers straddle the lines between software development, the entertainment industry and online retailing, they can combine tax breaks in ways that companies like Netflix and Adobe cannot.”

Naturally, opinions differ on the subject, with some ardently supporting and in some instances encouraging even further incentives, while others contend that the industry is taking advantage of subsidies that could be going toward other markets.

However, with countries such as Canada quickly becoming a hub for video game development thanks in large part to its generous tax incentives for game makers, many also warn that the United States may lose even more of its share of the $15 billion a year industry to foreign competition.

Ironically, as some opponents argue that game makers are unfairly utilizing tax credits intended for research and development, a new report published in the journal Nature Structural & Molecular Biology is crediting gamers and researchers alike for cracking an enzyme of an AIDS-like virus that had stymied scientists for a decade.

Thanks to a game developed by the University of Washington called “Foldit,” it took gamers just three weeks to produce an accurate model of the enzyme scientists believe plays a key role in how the virus is spread.

In “Foldit,” players are segregated into groups as they compete to unfold chains of amino acids into different proteins.

The hope is that by finding out the correct structure of the enzyme, medical researchers could conceivably design a cure.

Seth Cooper, the University of Washington computer scientist who built the game, said, “People have spatial reasoning skills, something computers are not yet good at. Games provide a framework for bringing together the strengths of computers and humans.”

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