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Table of Contents A Message from Michael D. Gallagher . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Federal Government Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

State Government Affairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Intellectual Property Policy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Anti-Piracy Program. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Media Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

E3 Media & Business Summit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Video Game Voters Network. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Entertainment Software Rating Board (ESRB). . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

ESA Canada. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

The ESA Foundation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

©Entertainment Software Association 2008

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ESA Entertainment Software Association

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Dear Friends:

I am proud to submit to you Entertainment SoftwareAssociation’s (ESA) Annual Report for Fiscal Year 2008,our 13th year as the association representing theentertainment software industry’s business and publicaffairs needs. After undergoing an intensive listeningtour of ESA’s members and key stakeholders, I cancondently say that we are on a new path – one whichhas ESA mirroring the same respect and dominancethe industry itself is enjoying. This was a year of bothchallenge and accomplishment. The report providesa detailed review of how we have represented yourinterests across a wide range of elds and how we werecareful, responsible stewards of your resources. I’d liketo share a few highlights with you here.

w ESA elded a ground-breaking study on the specic

economic contributions of the entertainment softwareindustry to the U.S. economy. A key nding of thereport found that the U.S. computer and video gameindustry’s annual growth rate from 2003 to 2006exceeded 17 percent. This rate far outpaces the U.S.economy as a whole, which only grew at an averageof 2 percent per year during this same period.

w At the Federal level, we prevented enactment of anyharmful copyright legislation, and positive progresswas made as policymakers became better informedabout the ESRB rating system and the industry’s self-regulatory practices. Federal Government Relations(FGA) staff increased education and outreach effortsof the video game industry to the House CommerceCommittee in advance of a hearing on “Violencein the Media,” focusing mostly on TV violence andrecent Federal Communications Commission reportndings. In addition, ESA’s presence on Capitol Hillthrough one-on-one meetings, as well as special

A Message from Michael D. Gallagher

events where we showcased member productsfurther raised the visibility and understanding ofthe entertainment software industry among keypolicymakers and staff in Washington.

w At the state level, not a single bill regulating thesale of violent games was enacted.

w On August 6, 2007, Judge Ronald Whyte ruled infavor of an ESA Motion for Summary Judgment,permanently enjoining enforcement of the Californiaviolent video game law that was led back inDecember 2005. The court ruled that video gamesare protected by the First Amendment and foundthat there was no evidence that playing violentgames resulted in real world violence. Judge Whytefound that “the state has not shown that the Act

will accomplish the goal of protecting childrenmore effectively than existing, narrower industrystandards.” With respect to scientic evidence, JudgeWhyte found that there is no showing that violentgames, in the absence of other violent media, causeinjury to children. In addition, evidence presenteddid not demonstrate that video games – even thoughinteractive – are more harmful than movies, televisionor other speech related exposures. Governor ArnoldSchwarzenegger has appealed the decision but oralarguments have not yet been scheduled.

w The anti-piracy enforcement programs in Brazil,Hong Kong, Mexico, and Singapore continued toshow signicant positive results. Our Canadianprogram persued and obtained actions against gamepirates distributing and selling infringing products.Meanwhile, our online monitoring and takedownefforts continued to address online infringements ofmember companies’ IP rights in over 100 countries

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across the world. ESA’s outside monitoring servicedetected a monthly average of more than 700,000

infringements of the 200 member titles that ESAmonitors, ESA sent out more than six milliontakedown notices to ISPs in response to theseviolations.

w ESA’s ongoing media relations program garneredassociation and industry prominence through theproactive pitching of new and engaging story anglesto gaming press and mainstream media outlets.Outreach efforts also focused on educating reporters,

journalists, and editors about the issues facing ourindustry – helping to ensure balanced coverage andmore positive and objective looks at the computerand video game industry. With the landmark legalrulings, the evolution of the E3 Media & BusinessSummit, and a new study showcasing how our in-dustry drives many sectors of the U.S. economy, theESA’s media relations department had an unparal-leled year in promoting the industry and expandingawareness of key issues and facts.

w The Video Game Voters Network (VGVN), thegrassroots organization created for voting-aged

gamers to organize and take action on importantissues affecting the industry, grew to well over

100,000 members. To date, VGVN activists havesent over 44,000 letters to Capitol Hill and statelegislators across the country.

w The inaugural E3 Media & Business Summit withits more intimate feel with targeted, personalizedmeetings and activities was well-received bothamong the press and key industry constituencies.The second show with the new format will be held inLos Angeles, July 15-17, 2008.

Credit for our success goes to the record breakingyear we had by our member companies, broadening,innovating, and delivering great content to the videogame market place. In addition, I thank our dedicatedboard members who generously give of their time andleadership to guide ESA’s efforts. Finally, I thank thetimeless efforts of the committed individuals who makeup the ESA staff and the Entertainment Software RatingBoard (ESRB). With all of the continued support, Ibelieve ESA is well-positioned to advance the issues ofthe computer and video game industry.

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IN FY 08, ESA ADVANCED the industry’s objectiveson Capitol Hill by increasing its involvement indiscussions on legislation impacting ESA membersand hosting numerous events and briengshighlighting the computer and video game industry.ESA’s Federal Government Affairs (FGA) staff focusedits work on two priority issue areas identied by ESA’sPublic Policy Committee (PPC): content regulationand copyright/intellectual property protection. Inaddition, FGA staff took signicant steps towardincreasing the visibility and understanding ofthe entertainment software industry among keypolicymakers and staff on Capitol Hill.

Priority Issues

CONTENT REGULATIONIn FY 08, congressional attention on the entertainmentsoftware industry focused at times on video game contentand regulation. The following is a summary of key FY 08developments:

w Sen. Sam Brownback (R-Kan.) introduced a billcalling for full-game review by the EntertainmentSoftware Rating Board (ESRB) and for governmentstudies on ESRB’s accuracy and the effectiveness ofan independent system;

w Reps. Bobby Rush (D-Ill.) and Fred Upton (R-Mich.)introduced a bill penalizing game companies thatknowingly withhold pertinent ratings informationfrom ESRB;

w Sens. Joseph Lieberman(I-Conn.), Hillary Clinton(D-N.Y.) and Brownback introduced a bill seekingresearch into the possible effects of violent mediaon children’s behavior;

Federal Government Affairsw National Institute on Media and the Family (NIMF)

held its annual “Report Card” press event;

w Former Presidential candidate Mitt Romney’s (R)campaign released a television ad targeting violentmedia and video games; and

w Representative Joe Baca (D-Calif.) introduced a billcalling for the Federal Trade Commission to studyESRB’s effectiveness and the General AccountingOfce to study the effects of games on children.

However, considerable positive progress was madethis year as policymakers became better informedabout the ESRB rating system and the industry’s self-regulatory practices. FGA staff increased educationand outreach efforts of the video game industry to theSenate Commerce Committee in advance of a hearing on“Violence in the Media.”

In the House of Representatives, FGA staff lobbiedextensively against harmful content regulation legislationand at the close of FY 08, no action had been takenon content legislation affecting ESA members or theESRB. Furthermore, ESA continued congressionaleducation efforts by arranging a staff brieng by ESRBPresident Pat Vance on its rating system. Two importantHouse members circulated a letter to all House ofcescommending the ESRB and asking staff to attend thebrieng. Also in FY 08, Rep. Rush held a hearing toinvestigate negative stereotypes in entertainment. Thehearing mostly focused on music, and included testimonyby an industry executive. Through FGA’s work withHouse Commerce Committee members, the executive’stestimony, and overall contribution to the hearing,committee members made numerous positive statementsabout the industry.

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Additionally in FY 08, the Federal Trade Commission(FTC) released its latest “Report to Congress on the

Marketing and Advertising Practices of the Movie, Music,and Video Game Industries.” The report included severalfavorable ndings related to the industry and the ESRB’srating system.

INTELLECTUAL PROPERTY PROTECTIONESA’s other priority area of focus in Congress ismaintaining strong intellectual property protectionin the United States and abroad. FGA staff monitoredseveral copyright-related initiatives that could have

a signicant impact on the entertainment softwareindustry. These initiatives include a bill aimed atweakening the anti-circumvention protections in theDigital Millennium Copyright Act (DMCA), patent reform,and intellectual property enforcement legislation.

Legislation was again introduced in FY 08 to overturnkey protections of the DMCA vital to the entertainmentsoftware industry and other copyright-based industries.The bill allows for legal and widespread circumventionof copy protection measures and would pave the way

for uncontrollable and massive piracy. ESA and othersstrongly opposed the bill, and it stalled in Congress.

ESA closely monitored and reported on developmentsrelated to patent reform legislation, which passed theHouse in FY 08. Senate action on patent legislationis expected in early FY 09. Late in FY 08, the HouseJudiciary Committee Chairman and several other membersintroduced a package of intellectual property enforcementprovisions. The House measure was a counterpart tothe Senate intellectual property enforcement legislation

introduced early in FY 08 by Senate Judiciary CommitteeChairman. FGA and ESA’s IP Policy Team are monitoringthe progress of each legislative package and workingclosely with House and Senate Judiciary Committeestaff to ensure the industries views are included as thelegislation is considered.

Additionally, FGA’s Intellectual Property objectivesinclude obtaining congressional support for strong

intellectual property provisions in free tradeagreements. In FY 08, Congress passed a free tradeagreement with Peru, and in early FY 09, will likelyconsider a free trade agreement with Colombia.

PRIORITY INDUSTRY EVENTSIn FY 08, FGA increased the visibility of its membercompanies and their products with audiences includingcongressional staff. FGA accomplished this goal by:holding numerous events in ESA’s ofces highlighting

various games for congressional staff; hosting itsannual industry technology event on Capitol Hill, whichattracted 40 legislators and over 400 congressionalstaff; and participating in issue briengs. Each of theseevents generated positive dialogue about the industryand were well-attended by key audiences.

In addition, ESA hosted a brieng for congressionalstaff with Sen. Ted Stevens (D-Ark.) of the SenateCommerce Committee and Federal CommunicationsCommissioner Deborah Tate highlighting the importance

of Internet safety programs. Web Wise Kids wasprominently featured at the Senate brieng.

FGA staff organized meetings with Members ofCongress for the ESA CEO, ESA member companiesvisiting Washington, D.C., and others relevant to theindustry to further increase the visibility of the videogame industry.

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THE ESA’S STATE AND LOCALgovernment affairsprogram has four primary goals:

w Stop bills seeking to regulate the sale of videogames, including the imposition of taxes based ongame content;

w Develop positive relationships with legislativeleaders, governors, and state attorneys general,to enhance the industry’s access, inuence, andcredibility;

w Secure tax incentives beneting the video gameindustry; and

w Identify, defeat or amend legislation that increaseslegal liability and/or costs including, but not limitedto piracy, intellectual property, product warningspackaging, signage, privacy or the Internet.

To accomplish these goals, ESA established a networkof legislative advocates and allies across the country tohelp monitor and respond to legislation that affects theentertainment software industry.

In FY 08, ESA continued to face state governmentchallenges, including attempts to regulate the sale ordistribution of video games. A total of 75 bills werepending in 27 states as well as the District of Columbiaand Puerto Rico.

Thirty-six bills sought to regulate content and/or accessto video games. In general, most of the bills attemptedto limit a minor’s access to violent or M-rated games.

Of the 75 bills pending at the state and local levelin 2007, 22 content bills and 27 tax incentive billscarried over to the 2008 legislative session. Seven billsproviding tax incentives for game development were

State Government Affairsenacted; however, no bills to regulate the sale of videogames were enacted.

ESA developed and enhanced relationships withretailers and national and state retail organizations,encouraging them to support the ESRB rating systemand ESA at legislative hearings. SGA also worked withkey legislative leaders, state attorneys general andopinion leaders across the country to educate them onour positive industry efforts.

The following are highlights of state and local levelefforts.

ColoradoIn Denver, ESA defeated an ordinance prohibiting adsfor M-rated games on public transportation.

ConnecticutLegislation improving tax credits for qualied andeligible Connecticut productions, including videogames, was enacted.

DelawareLegislation regulating the sale or rental of M- or AO-rated games was introduced. The bill also requiredproof of age prior to sale or rental of a video game,prohibited a person from selling or renting a videogame, if rated, unless the ofcial rating is clearlydisplayed, and required unrated games to be somarked. As a result of ESA efforts, legislators agreedto cancel the bill hearing and instead meet with theESA and ESRB to learn more about the rating system.

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FloridaESA supported legislation providing an economicincentive to encourage interactive entertainment projectsin the state. The legislation was enacted and becameeffective in July 2007.

IndianaBipartisan legislation, which regulated the sale ofM- and AO-rated games was introduced. The bill wasoriginally assigned to the Corrections and Criminaland Civil Matters Committee. At the sponsor’s request,the bill was reassigned to the Economic Developmentand Technology Committee, which he chaired, and heconducted a hearing in which the ESA, EntertainmentMerchants Association (EMA) and Indiana Retailerstestied in opposition. Given constitutional concernswith the bill, the bill sponsor agreed to have it becomea resolution calling for the issue to be sent to a summerstudy committee. The bill was not considered by alegislative study committee.

MassachusettsAt the request of Boston Mayor Thomas Menino (D),Rep. Linda Forry (D) introduced a bill amendingthe Massachusetts Harmful to Minors law to requirethat material depicting violence in a manner that ispatently offensive to prevailing standards in the adultcommunity, so as to appeal predominately to the morbidinterest in violence of minors. The bill was debated ata mandated hearing on March 18, 2008 with testimonypresented in opposition by ESA, EMA, representativesfrom the development and retail community as well as

Motion Picture Association of America (MPAA). The billwas sent to a study committee.

MississippiAs in prior years, a bill was introduced that regulatesthe sale or rental of M- or AO- rated games. Thisbill was not acted on by the legislature prior toadjournment.

MissouriLegislation regulating the sale or rental of M- or AO-rated games was held in committee.

New JerseyESA successfully opposed three bills that regulated gamesales. None of the bills were acted on and died as a resultof the adjournment of the two-year session. To date,during the 2008 session, one of the bills was reintroduced,but was withdrawn by the bill’s sponsor.

New YorkESA opposed 14 bills that negatively impact the videogame industry in New York during FY 08.

The former governor strongly pushed for adoption of hisbill to make it a felony to sell a video game to a minorthat is violent and “harmful to minors” (obscene fora minor). The bill requires all video game consoles toinclude technology designed to restrict content basedon ratings by September 2009, and establish a stateadvisory commission on interactive media and youthviolence.

The Assembly overwhelmingly adopted the bill andthe Senate passed its version, which resulted in aconference committee between the two chambers – ararely used procedure to resolve the bills’ differences.

The compromise bill passed the Assembly and was sentto the Senate, which did not act on it before the end ofthe 2007 session. At the start of the 2008 session, the

legislation was sent back to its respective committees inboth houses.

New MexicoThe “No Child Left Inside Act,” was introduced onJanuary 30, 2008. The bill, pushed by the Sierra Clubof New Mexico, would impose a 1 percent “sin tax” onvideo games and televisions to fund an outdoor learning

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program for New Mexico children. The bill was tabled bya vote of 9 to 0 and is dead for the session. The Video

Game Voters Network (VGVN) New Mexico members whoweighed in with their elected ofcials were instrumentalin this effort.

North CarolinaLegislation was introduced that would add violent videogames to the state's harmful to minors statute therebyprohibiting the sale of a “violent” game to anyoneunless the game has a warning label on the front ofthe packaging regarding the violent content contained.

Twenty-nine out of 50 senators signed on as co-sponsors,and the Senate leadership endorsed the bill. In theprevious session, this bill unanimously passed theSenate, but was not considered by the House prior toadjournment. The bill has been carried over to the 2008session, convening in May.

Rep. Pryor Gibson (D), Chairman of the FinanceCommittee, reintroduced a bill, which provides taxincentives to encourage video game production.

OklahomaLegislation was introduced requiring retailers todistribute to customers purchasing or renting videogames a written notication that the video game maycontain violent content, and that the content may be“harmful” to minors. No action was taken on this bill soit has been carried over to the 2008 session.

OregonLegislation regulating the sale of “violent” games washeld in committee.

Puerto RicoLegislation, which sought to prohibit the sale or rentalof “violent” or “sexually explicit” video games or movies,carried over from 2007. The proposal was not acted upon.

Legislation was introduced that would impose a taxon video games to fund youth recreational programs

remains pending in the Finance Committee. Due to lackof support, the bill has not received further action.

TennesseeA resolution was introduced in 2008 that creates aspecial joint committee to study the adverse societalimpact of violence portrayed in electronic media.

Texas

The Texas lm incentive program was restructured toincrease funding and to include incentives for video gamedevelopment.

UtahLegislation regulating the sale and distribution of“violent” video games was introduced and was thesubject of several hearings. The ESA and Utah retailerstestied in opposition. Utah Attorney General MarkShurtleff (R) testied on the likely constitutionalinrmities of the proposal based on legal precedent.As a result of constitutional concerns, the bill was heldin committee. Ultimately, the bill’s sponsor introduceda nonbinding resolution urging the state attorneygeneral to intervene as a friend of the court on existinglitigation on the issue and urge other state attorneysgeneral to do so as well. While this resolution wasreported out of committee, it did not pass. Both billsdied.

WisconsinLegislation was introduced on January 18, 2008. Thebill proposed a special 1 percent tax on the sale ofvideo games and consoles in order to fund a juveniledelinquency prevention program. ESA activated theVGVN and developed an opposition coalition that iseducating legislative leaders and the Attorney General’sofce.

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RATINGS AWARENESS PROJECTSESA developed partnerships with state ofcials to launchratings education programs that include television andradio public service announcements, co-branded ratingsinformation with the ESRB, and billboards. In FY 08, ESAdeveloped programs with the following leaders at thestate and local level:

w Washington Gov. Chris Gregoire (D);

w Pennsylvania Gov. Ed Rendell (D);

w Texas Attorney General Greg Abbott (R);

w Rhode Island Attorney General Patrick Lynch (D);

w Idaho Attorney General Lawrence Wasden (R);

w Delaware Rep. Keeley, who sponsored video gamebills in 2006 and 2007 and Delaware Lt. Gov. Carney;

w Oklahoma Co-Senate President, Senator Glenn Coffee(R), who sponsored the Oklahoma Video Game law in2005;

w Puerto Rico Secretary of the Department of ConsumerAffairs, Victor Suarez; and

w Indianapolis County Prosecutor Carl Brizzi.

YOUTH INTERNET SAFETY PROJECTSIn conjunction with the ESA Foundation, ESA partneredwith state ofcials to bring Web Wise Kids (WWK)programs that teach kids how to stay safe online, tocommunities across the country.

In FY 08 ESA stood with the following ofcials in rollingout these proposals:

w Virginia Attorney General Bob McDonnell (R);

w Massachusetts Attorney General Martha Coakley (D);

w New York Senate Majority Leader Joe Bruno (R) inRensselaer County; and

w Utah Attorney General Shurtleff, Senate PresidentJohn Valentine (R), and Speaker of the House GregCurtis (R).

STATE CAPITOL DAYSESA held state lobbying days followed by a reception inSacramento, Calif., on June 13, 2007, Boston, Mass., onOctober 16, 2007, and Olympia, Wash., on February 19,2007. These receptions included game demonstrationsby member companies including Microsoft, Activision,EA, Sony Online, Sony, Konami, Disney, and Capcom. Inaddition, ESA organized a tour of Epic Studios in NorthCarolina with local legislators.

The ESA and the ESRB participated in a Florida DigitalMedia Interactive Entertainment Capitol Day in Tallahassee,Fla., spearheaded by Electronic Arts. The event showcasedthe economic, educational and technological benets andcontributions of the computer and video game industry tolegislators, members of the executive branch, including thelieutenant governor, and their staffs.

ESA hosted a breakfast for Utah legislators to educatethem about the industry’s economic contributions to thestate that included a demonstration of locally-createdgames by EA Salt Lake and Disney Interactive.

ESA continued working with California membercompanies to conduct tours of their facilities.These tours educate legislators about the positivecontributions of the video game industry.

LITIGATION STATUS REPORT In FY 08, there was activity in ESA’s lawsuits – broughtin Minnesota, Louisiana, Oklahoma, and California – tooverturn laws banning violent video games. Courtsgranted permanent injunctions in these four remainingcases. In two of those cases, attorneys’ fees were eitherpaid out or agreed to. As such, in the last six years, 12courts have reviewed this issue and found similar lawsunconstitutional.

MinnesotaThe ESA and EMA led their constitutional challenge toSF 785 on June 6, 2006. On July 31, 2006, the Minnesota

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District Court issued a permanent injunction against SF785. In addition, the state appealed the court’s decision

and the oral argument was held before the Eighth Circuiton February 12, 2007. ESA’s application for attorneys’fees was stayed pending the decision of the EighthCircuit Court. On March 17, 2008, the Eight Circuitafrmed the District Court ruling. The Court recognizedthe law’s presumptive unconstitutionality, yet expresseddisapproval of violent video games and urged the state toseek “En Banc” review of the decision to the Eight CircuitCourt. On March 28, 2008, the state led a Petition forHearing “En Banc.”

LouisianaIn Louisiana, HB 1381, which criminalized the sale of“violent” video games to minors, was signed into lawby the governor on June 15, 2006. The ESA and EMAled their complaint on June 16, 2006, and a temporaryrestraining order was granted on June 16, 2006. OnAugust 24, 2006, the district court granted a preliminaryinjunction barring enforcement of the Act. At thesummary judgment hearing on November 29, 2006, the

judge then ruled from the bench in our favor, grantingESA a permanent injunction against the Louisiana law.

ESA moved for attorneys’ fees, which was granted in theamount of $97,092. In his order granting, Judge Bradystated “[t]his Court is dumbfounded that the AttorneyGeneral and the State are in the position of havingto pay taxpayer money as attorney’s fees and costsin this lawsuit. The Act which this Court found to beunconstitutional passed through committees in both theState House and Senate, then through the full Houseand Senate, and to be promptly signed by the Governor.There are lawyers at each stage of this process. Someof the members of these committees are themselveslawyers. Presumably, they have staff members who areattorneys as well. The State House and Senate certainlyhave staff members who are attorneys. The Governor hasadditional attorneys – the executive counsel. Prior tothe passage of the Act, there were a number of reportedcases from a number of jurisdictions which held similar

statutes to be unconstitutional (and in which thedefendant was ordered to pay substantial attorney’s

fees). The Court wonders why nobody objected to theenactment of this statute. In this court’s view, thetaxpayers deserve more from their elected ofcials.”

OklahomaOklahoma HB 3004 was signed into law on June 9,2006, and became effective on November 1, 2006. HB3004 would prohibit the sale or rental of games withinappropriate violence to minors.

On September 17, 2007, Judge Robin J. Cauthron issueda permanent injunction, ruling that video games are aform of creative expression entitled to protection underthe First Amendment. In her decision, Judge Cauthronfound that there is no support or “substantial evidence”that video games are harmful to minors. “[T]here isa complete dearth of legislative ndings, scienticstudies, or other rationale to support passage of theAct,” Judge Cauthron wrote. “The court also ruled thatthe law was under inclusive because a minor preventedfrom buying a video game with ‘inappropriate violence’may still legally buy or rent the book or movie on whichthe game was based.”

ESA negotiated with the Oklahoma Attorney General’sofce for a Stipulated Order, settling an attorneys’ feesclaim for $56,367. ESA is waiting for court approval ofthe Stipulated Order.

CaliforniaESA challenged California AB 1179, which would banthe sale of violent video games to minors. The bill’sdenition of violence tracked the federal sentencingguidelines in death penalty cases and could include awide array of content. The California legislation alsorequired violent video games to be labeled with a solidwhite “18” outlined in black, with dimensions of no lessthan 2 inches by 2 inches. A Preliminary Injunction wasgranted by Judge Ronald Whyte on December 21, 2005.

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On August 6, 2007, Judge Whyte ruled in favor of VSDAand ESA’s Motion for Summary Judgment, permanently

joining enforcement of the California violent videogame law. The court acknowledged that video games areprotected by the First Amendment and found that therewas no evidence that playing violent games results inreal world violence. Judge Whyte found that “the statehas not shown that the Act will accomplish the goalof protecting children more effectively than existing,narrower industry standards.” With respect to scienticevidence, Judge Whyte found that there is no showingthat violent games, in the absence of other violentmedia, cause injury to children. Nor does it establish

that video games because of their interactive natureare more harmful than movies, television or other

speech related exposures.

On September 5, 2007, Gov. Arnold Schwarzenegger(R) announced that California led its appeal of JudgeWhyte’s decision during his address to the StateRepublican Convention. Both parties have led theirappeals briefs with the court. Oral argument has notbeen scheduled. The California Attorney General’sOfce agreed to pay ESA $276,000 in attorney’s feesrelated to the district court proceeding no later thanNovember 2008.

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Intellectual Property Policywith ofcials from Mexico, Thailand, and Sweden,among others; and

w Providing industry brieng papers to congressionaldelegations traveling to member priority countries.

Tariff 22 Proceedings in CanadaIn FY 08 ESA Canada (ESAC) continued participationas Objectors in the Tariff 22 Proceedings before theCopyright Board of Canada, providing both written andoral testimony on the tariff proposed by the Societyof Composers, Authors and Music Publishers of Canada(SOCAN). SOCAN seeks, through Tariff 22, to impose aroyalty on game sites and other sites that communicatemusic. The industry argued that the proposed tariffshould not apply to game sites, as they do notcommunicate music as part of games. In cases where a

transmission of music from a game site was involved,authors and composers were compensated and theirrights cleared.

In November 2007, the Copyright Board issued a partialdecision approving a tariff for online music sites inan opinion that does not bode well for its nal rulingwith respect to game sites. ESA and ESAC, along with abroad range of Canadian online business interests, willexercise all available options for an appeal of these andrelated decisions, including the music tariff leveled on

downloaded ring tones (Tariff 24).

IIPA MembershipLast year, the ESA continued full participation in theInternational Intellectual Property Alliance (IIPA)– forging common positions with other industriesconcerned with the protection of copyrighted works,

THE INTELLECTUAL PROPERTY POLICY Department (IPPolicy) furthers the interests of ESA members in areasof intellectual property rights protection, enforcement,trade, and technology policy. During FY 08, IP Policyaccomplished key objectives through engagement withthe United States and foreign governments, associationoutreach, coalition activity, and involvement inmultinational organizations.

IP POLICY – INTERNATIONAL

FOCUSING ON KEY INDUSTRY MARKETSIn FY 08, the IP Policy Department worked withmembers to identify countries and issues of paramountconcern from an anti-piracy perspective. ESA’s FY 08member priority countries include Brazil, Canada, China,Hong Kong, India, Malaysia, Mexico, Paraguay, Russia,

Saudi Arabia, South Korea, Sweden, Thailand, and theUnited States. Last year’s engagement include:

w Filing submissions with the Hong Kong governmentfor its review and amendment of the territory’scopyright ordinance;

w Participating in private sector-government meetingsunder the Security and Property Partnership (SPP)initiative among the NAFTA governments;

w Providing the industry’s perspective on the renewal

of the U.S.-Paraguay Memorandum of Understandingon Intellectual Property;

w Brieng U.S. government ofcials prior to visits toBrazil, China, Paraguay, Russia, and South Korea, toaddress intellectual property issues;

w Meeting with foreign government representatives todiscuss specic industry issues, including meetings

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including representatives of the lm, music, bookpublishing, and business software industries. During

FY 08, IIPA monitored and engaged in reform effortsin more than 50 countries. Together, industryrepresentatives made known to U.S. and foreignofcials collective concerns on thematic prioritiesincluding:

w Adopting effective laws and remedies againstInternet-based piracy;

w Combating organized criminal involvement inpiracy; and

w Controlling optical media overproduction througheffective licensing and regulation of productionfacilities.

In FY 09 ESA expects IIPA to more directly addressonline piracy and place renewed emphasis on theimportance of maintaining broad market access forlegitimate products as a part of any comprehensiveapproach to combating piracy in export markets.

“Special 301” FilingESA and its members again provided specicinformation on computer and video game piracy forinclusion in the IIPA’s annual “Special 301 Report onGlobal Copyright Protection and Enforcement.” Thereport is the U.S. copyright industry’s comprehensiveaccount of legal and enforcement deciencies notedin some 50 to 60 countries per year. The report is ledwith the U.S. Trade Representative, is furnished toother U.S. ofcials and lawmakers, and is publishedon the Web (www.iipa.com/special301.html) to aidcountries in the formulation of copyright laws andenforcement policies. The report also helps to denethe U.S. government’s agenda for engagement onintellectual property issues for the coming year. In2008, ESA estimated there to be more than $2.6billion worth of pirated entertainment software presentin 10 major export markets. The global impact ofentertainment software piracy is likely to be evenhigher.

WIPO Treaties ImplementationAccession to and the effective implementation ofobligations arising out of the World IntellectualProperty Organization (WIPO) Copyright Treaty (WCT)remains a priority for the IP Policy Program. Thetreaty, now in force in over 50 countries, providesthe necessary legal baseline for the protection ofcopyrighted works distributed via the Internet andthe safe and healthy growth of e-commerce.

ESA continues to impress upon countries throughcoalition activities and individual opportunitiesthe importance of effective implementation andenforcement of these treaty obligations. Importantly,the treaties require signatories to develop andenforce laws prohibiting circumvention of effectivetechnological measures (TPMs) used in connectionwith authors’ rights – that is, to create effectiveprohibitions on manufacturing, trafcking in andusing circumvention devices such as “mod chips” and“game enhancers.”

ESA also uses the opportunity to impress uponforeign governments the importance of clarifyingISP responsibilities particularly in light of thedramatic increase in the nature of online piracy onPeer-to-Peer [P-2-P] protocols such as BitTorrent.

Optical Media RegulationESA continues to highlight problems with factory-style optical media piracy throughout Asia andEastern Europe, emphasizing the need for problemcountries to adopt, implement and enforce opticalmedia production regulations. The Associationhas continued to provide guidance to the U.S.government, international organizations, and keycountries on the elements that must be made partof effective licensing regimes, such as licensingof production facilities and equipment, requiringaccurate record keeping, mandating rigorous and trulyrandom inspections, and imposing deterrent penaltiesfor non-compliance.

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The IP Policy Department also noted for U.S. and foreigngovernments the shift being made to commercial

scale “burning” operations, whereby CD-R and DVD-Rtowers are banked together to produce thousandsof pirated products for local sale – all without thehefty investment and risk associated with costly andconspicuous factory replication machines. In manycountries, locally burned pirated video games arebecoming the predominant form of optical disc piracyfor PC and console games.

FOREIGN GOVERNMENT INTERACTION

ESA’s ofces are regular stops for foreign copyrightpolicy and enforcement ofcials visiting Washington,D.C., including those attending training opportunitiessponsored by the U.S. Patent & Trademark Ofce’s GlobalIP Academy (GIPA). These programs go beyond basic IPRto a higher-level message – that all countries can share inthe computer and video game industry’s economic successthrough policies that foster industry growth. IP Policystaff also participated in a number of roundtable dialogueswith foreign ofcials under the International VisitorPrograms sponsored by the U.S. Department of State.

IP POLICY – DOMESTIC

U.S. GOVERNMENT INTERACTIONESA continued to raise awareness within the U.S.government of the unique piracy-related challenges facedby entertainment software publishers. During FY 08, ESAIP Policy staff maintained industry-focused dialoguewith U.S. Executive Branch ofcials through meetingsand briengs with the Departments of Justice, State,Commerce, and Homeland Security, USTR, the U.S. Patentand Trademark Ofce (USPTO), and the U.S. CopyrightOfce. ESA IP Policy staff also provided training toU.S. government trade and IP ofcials through variousprograms, providing specic industry perspectives on theissues and concerns faced by the industry.

During FY 09, ESA will again turn attention to theCopyright Ofce’s triennial Section 1201 Rulemaking.

Every three years, the Copyright Ofce receivesproposals for specic exceptions to Section 1201’s

prohibitions on the circumvention of TPMs, includingthose employed in industry products. In each of theseproceedings, ESA offered submissions on its own and inconjunction with representatives of other industries torebut and narrow these proposals.

ENFORCEMENT LEGISLATIONFederal lawmakers introduced several IP enforcementbills in Congress in the closing months of 2007.Some proposed sweeping changes in the way that the

U.S. government coordinates IP enforcement amongvarious agencies. These bills aim to enhance howthe U.S. government combats piracy through a mixof increased funding, bureaucratic restructuring, andtargeted adjustments to remedy provisions. ESA IPPolicy coordinated with ESA’ s Federal GovernmentAffairs Department to analyze these bills, brief memberson developments, and act upon member-identiedpriorities.

In mid-2007, the IP Policy staff teamed with the ESA

Anti-Piracy Department to advocate for enhancedsentencing guidelines for certain DMCA violationsbefore the U.S. Sentencing Commission. ESA’s effortssucceeded, as the Commission recommended to Congressan enhanced sentencing level for criminals convicted oftrafcking in circumvention devices.

TRADE POLICY

ESA’s Trade Policy Reform agenda sets forth long-term objectives aimed at strengthening the tradingenvironment for industry products. These includeensuring favorable treatment for software acquired bydownload, reducing tariffs on industry software andhardware, and ensuring broad market access for onlinegame services. Advancing these objectives demandsbacking from industry and governments in major game-producing countries, and action from governments inbilateral and multilateral contexts.

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ESA IP Policy staff is committed to educating theindustry about the benets of trade policy reform, and

to exploring joint advocacy opportunities with otherindustry representatives. ESA made great strides duringFY 08 to engage in expanded policy dialogue on tradeand other common policy issues with Europe, Japan,Canada, and Australia.

INTERNATIONAL LIAISONAs relevant IP, trade, and technology policy issuesarise with increasing frequency in key markets, ESAmember committee representatives placed greateremphasis on promoting consistency through intra-association communications. In January 2008, IP Policystaff initiated a series of quarterly conference callswith CESA and CESA member companies on issues thatinclude copyright, enforcement and trade policy. InFebruary 2008, ESA held a multi-day working sessionwith the Interactive Software Federation of Europe(ISFE) Secretariat on immediate and long-term action, to

jointly advocate for trade policy reform.

Also during FY 08, ESA expanded its overseas advocacyefforts to deliver important messages on trade andintellectual property policy. During 2007, IP Policystaff traveled to Leipzig, Tokyo, and Dublin as part ofthe association’s efforts to increase cooperation andshare views on the state of intellectual property andtrade policy issues of importance to the industry. IPPolicy staff also coordinated meetings in Brussels, withtrade and economic ofcials at the U.S. Mission to theEuropean Union. The meetings were the rst time ESAcould provide U.S. government ofcials responsible forEU relations with the industry’s perspectives on leadingintellectual property concerns, our trade reform agendaand concerns over how European cultural policies couldobstruct free trade in industry products.

WORLD TRADE ORGANIZATION LOBBYINGIn FY 08, IP Policy staff sharpened and rened ESA’strade policy strategy in light of evolving industrypriorities and the shifting dynamics of the Doha Roundof global trade talks.

While efforts in FY 07 focused predominantly on howentertainment software products can be most favorably

classied under the WTO framework to promote tradeand market access for industry products and relatedservices, ESA’s trade agenda was expanded to address ingreater depth other business interests of entertainmentsoftware publishers. These include:

w Advocating extension of the WTO moratoriumon customs duties for electronically transmittedproducts;

w Promoting the inclusion of entertainment softwareproducts as “software” within the WTO E-Commerce

Framework; andw Reducing or eliminating tariffs for entertainment

software products and peripherals in key markets.

FREE TRADE AGREEMENTSDuring FY 08, the ESA engaged trade ofcials onsignicant bilateral and multilateral developmentsrelating to intellectual property rights protection,enforcement, and trade in entertainment softwareindustry products. Chief among these are efforts bythe U.S. government to include rigorous and mutuallybenecial intellectual property obligations and market-opening features in newly-initiated bilateral Free TradeAgreements (FTA).

Efforts over the past years resulted in highly benecialprovisions appearing in agreements with Singapore,Chile, Australia, Jordan, Morocco, Central America(CAFTA), the Dominican Republic, and Bahrain. Morerecently, the U.S.-South Korea Free Trade Agreement(KORUS FTA) concluded, and ESA continues its efforts,both through association and coalition activity, tohighlight the benets of the KORUS FTA and urge itsratication by Congress.

TECHNOLOGY POLICY

With greater migration of industry products to onlinegame play and online modes of delivery, technology

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policy issues have taken on greater economicsignicance to the industry. ESA responded through the

recruitment of a new IP & Technology Policy Counsel,which continues to explore with members, the bestissues for ESA engagement.

During FY 08, focus has been on three principal areas:

w Preserving public access to the Internet’s directoryof domain name owners;

w Analyzing emerging legal issues related to virtualproperty; and

w Resisting calls to weaken Digital Rights Management(DRM) protections.

ONLINE ACCOUNTABILITYContinued access to the Internet’s databases of domainname owners (i.e., the “Whois” service) remains akey policy priority for ESA. The Whois service plays avital role in supporting members’ enforcement effortsby helping IP owners identify those responsible forinfringing content. That concern prompted ESA torejoin the Coalition for Online Accountability (COA), anadvocacy group representing IP and business interestsin dealings with Internet Corporation for AssignedNames and Numbers (ICANN).

During FY 08, ESA participated in an ICANN workinggroup examining a proposal to replace the current “openaccess” Whois model with a more restrictive proxy-basedsystem. ESA, COA and other business interests evaluatedthese models and urged defeat of the proxy proposal –which ICANN’s advisory council eventually dropped. Itwill, however, commission further studies on the privacyimpacts of the Whois service, and we will continue toremain engaged in the debate going forward.

During FY 07 ESA submitted a ling urging the NationalTelecommunications and Information Administrationnot to grant ICANN early release from its governancecontract with the Department of Commerce. ESA’sling questioned the efcacy of the contemplated

“working group” model and Generic Names SupportingOrganziation (GNSO) Council restructuring to adequately

represent commercial interests, as well as ICANN’swillingness to use contractual tools to enforcecompliance with Whois obligations.

VIRTUAL PROPERTYThe growing popularity of MMOs and MMORPGs broughtwith it media and academic attention to virtualproperty – the digital objects and in-game currencyavatars collect in the course of playing the game. Somescholars argue for policies that vest players with quasi-

property rights. Others call for a “bill of rights” foravatars. The rst lawsuits to test these novel theoriesare appearing in U.S. courts. Meanwhile, tax authoritiesin Korea, the United Kingdom, and the United Statesare examining the tax implications of real moneytrade (RMT) of virtual property. ESA monitored thesedevelopments and will explore with members potentialindustry positions on the ownership, taxation, and RMTof virtual property.

INTERPLAY BETWEEN FAIR USE AND DIGITALRIGHTS MANAGEMENT User generated content (UGC) is a high-prole policyissue in the copyright community, sparked by thephenomenal success of social networking sites likeYouTube. Inuential policy papers from the U.K.IP Ofce and the Organisation for Economic Co-operation and Development (OECD) cite UGC as atremendous social benet of the Internet and callupon policymakers to tweak current legal regimes tobetter accommodate UGC. This issue has captured theimagination of critics of the current U.S. copyrightsystem, who argue that Digital Rights Managementrestrictions confound legitimate fair use.

ESA IP Policy staff is bolstering its ability to push backagainst this assertion. In discussions with domestic andforeign IP ofcials and the OECD, ESA emphasized therich and varied UGC-features currently incorporated intoDRM-protected games.

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Anti-Piracy ProgramESA’S ANTI-PIRACY DEPARTMENT is responsiblefor the following core areas of activity aimed atmaximizing the protection of the ESA members’software products from piracy, counterfeitingand other forms of unauthorized use. Thisdepartment accomplishes these goals by:monitoring and taking down infringing Internetsites or user accounts; conducting investigationsand obtaining actions by law enforcementauthorities against game piracy in the UnitedStates, Canada and a number of overseasmarkets; supporting criminal prosecutionsresulting from such actions; pursuing civilremedies against individuals or enterprisesinvolved in different kinds of game piracy;training of U.S. and foreign law enforcementofcials to enable them to detect and identifyillegal game product; targeting educationinitiatives at younger age groups to promotetheir awareness of, and respect for, creators’ andinnovators’ intellectual property rights.

ESA’s anti-piracy program focused its efforts onthe dual priorities of online pirates operatingin warez groups involved in the creation anddissemination of downloadable pirate gameles via the Internet, and criminal enterprisesinvolved in the production and distribution ofpirated ESA member games, as these displacelegitimate game sales.

ESA made progress in a number of areas toaddress different facets of the global gamepiracy problem aficting ESA members and thedistribution of their game products. The followingis a summary review of some of the year’shighlights.

U.S. Enforcment

CRIMINAL INVESTIGATIONS AND PROSECUTIIn FY 08, ESA succeeded in obtaining and supportinglaw enforcement investigations, raids, and prosecutionsagainst many game piracy targets in the UnitedStates. The most notable was Operation TangledWeb, an August 2007 enforcement action by theDepartment of Homeland Security Immigration andCustoms Enforcement (ICE) division against mod-chipdealers across the country, involving the simultaneousexecution of search warrants on 32 target locationsin 16 states. The action required the participation ofover 100 ICE agents and eld support by the entire ESAanti-piracy staff resulting in the seizure of thousands ofmod-chips, modied consoles and pirated game discs.Other actions included: the raid, arrest, conviction andsentencing of a California man who sold pirated gamesthrough Internet listings; the federal conviction andsentencing of a New York man who sold pirated gamesand modied consoles via a Web site; and the federalconviction and sentencing to two years in prison of anIllinois man who operated a Web site offering piratedgames for sale.

In addition, ESA has several ongoing investigations ofpirate targets in New York, New Jersey, Los Angeles andthe San Francisco Bay area, with criminal enforcement

actions against some of these anticipated in the nextfew months.

ONLINE MONITORING AND ENFORCEMENT ESA’s monitoring of pirate activity on the Internetduring FY 08 has continued to reveal high levels ofillegal activity involving the copying and transmissionof pirated game les through peer-to-peer networks

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like eDonkey and Bit Torrent, particularly inmajor Western European markets. While the rst

pirate versions of games cracked and releasedby “warez” groups continue to appear on IRCchannels and FTP sites, the les are found almostinstantaneously in peer-to-peer environments,with large volumes of copying and transmissionsby growing numbers of users across the world.The steady growth of broadband access to theInternet accelerated the scope and scale of thedownloading of pirate game les, with the highestlevels of infringing activity in countries with highhousehold penetration of broadband connectivity,

particularly Spain, France, and Italy.

ESA’s online monitoring and takedown efforts in FY08 continued to address online infringements ofmember companies’ IP rights in over 100 countriesacross the world. ESA’s outside monitoringservice detected a monthly average of more than700,000 infringements of the 200 member titlesthat the ESA monitored, with ESA sending outmore than six million takedown notices to ISPs inresponse to these violations. Pursuant to memberrequests, towards the end of FY 08, the ESAbegan a monitoring program using a specializedservice for Korea to take advantage of a favorableenvironment for online IP enforcement.

In FY 08, the ESA pursued investigative effortsagainst a number of warez groups specializingin cracking new games’ protection measuresand releasing pirated versions on the Internetwithin days of, if not before, legitimate release.Where possible, the ESA used the intelligencedeveloped and evidence collected through theseinvestigations for referrals of these cases to lawenforcement in the relevant jurisdictions. Becauseof the extended duration of these investigations,the law enforcement investigation and targetingof the targets, enforcement actions against these“warez” groups are unlikely to occur before theend of 2008.

International Enforcement

CANADADespite an unfavorable environment for enforcementof IP laws, ESA continued to be active during FY 08pursuing and obtaining actions against game pirates,who distribute and sell illegal products in Canada.Because most ofces of the Royal Canadian MountedPolice (RCMP) claimed a shortage of manpower andresources to take on piracy cases in FY 08, ESA hasturned to working with local police departments forcriminal enforcement actions, and using self-helpcivil remedies, such as delivering cease-and-desist

notices along with requests for the surrender ofinfringing products. Local police departments wereinvolved in criminal actions against game pirates inVancouver and Calgary.

In addition, ESA delivered more than a dozen cease-and-desist notices and seized infringing game productfrom targets in Vancouver, Toronto and Calgary.Further, ESA was also active in supporting the criminalinvestigation and prosecution of two game pirates whohad been the subject of RCMP actions the year before.The rst of these, a Toronto game pirate, Ka Man Chan,received a sentence of two years of house arrest, a$40,000 ne and forfeiture of the $37,000 in cash andthe computer equipment seized by RCMP. The other,a Vancouver pirate named Terry Wong, was sentencedto pay a ne of $25,000 and to forfeit all seizedmerchandise.

ESA worked with ESA of Canada to address theenforcement challenges in Canada by lobbying thegovernment to assign more resources to RCMP forenforcement and make criminal prosecutions of gamepirates a higher priority resulting in jail time and heaviernes. ESA of Canada continued to press for legislativechanges to prohibit the manufacture and distribution ofcircumvention devices, such as modication chips, thatare found easily throughout Canada. These chips cause amaterially higher rate of local console piracy than in theUnited States.

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BRAZILIn FY 08, ESA’s joint anti-piracy program with ABES,the Brazilian software association, increased itsenforcement activity levels against retail hot spotsin Sao Paulo and Rio de Janeiro, as well as localburning labs and warehouses supplying sellers inthese locations. The rst nine months of FY 08 sawthe program generate 11 actions against upstreamtargets and 64 enforcement actions against piratesellers in major retail centers. These actions, combinedwith continuous seizure actions against street sellersin Sao Paulo and Rio, resulted in the seizure ofover 447,000 illegal game copies. In addition, theBrazilian authorities stepped up efforts to controlthe inow of counterfeit products from Paraguay,seizing over 517,000 pirated and counterfeit gamesoftware products in the border region. While programactivity levels and seizure results were higher thanthe previous year, ESA’s funding of the program wasundermined by the declining value of the dollaragainst the Brazilian currency.

Finally, ESA/ABES representatives were invited to joinas members of the National Council Against Piracy, apublic-private sector body that the Brazilian governmentcreated in 2004 to help guide and prioritize thegovernment’s anti-piracy efforts.

MEXICOIn FY 08, responding to the Mexican program’s lowlevels of enforcement activity during the prior year,ESA changed its local representation to a new law rmwhich elevated the productivity and visibility of ESAand its members, establishing a stronger enforcementpresence for the game software industry in Mexico. Withfour different raid actions against pirate game sellers atthe Pericoapa shopping center in Mexico City, an actionagainst street sellers, two raids against pirate vendorsand warehouses in Plaza Meave, and seizures at theborder and at the Mexico City airport, the ESA programhas seized over 175,000 copies of pirated games. Thisis a dramatically higher level of seizures than the prior

year. Key to this success was the new law rm’s strongand effective working relationship with PGR, the key

enforcement body covering IP crime in Mexico. Therm also procured over seven trainings thus far in FY08, helping increase the visibility of ESA and the gamesoftware industry with law enforcement. In October2007, ESA promoted its anti-piracy message at theElectronic Game Show in Mexico City through a boothwhere it provided attendees with materials on piracyand the harm it causes the game software industry.

HONG KONGIn the rst nine months of FY 08, the ESA was asked toprovide examinations of seized game product in morethan 90 Hong Kong Customs cases, a signicant jumpover the prior year. The Hong Kong authorities are alsomore active in addressing locally-based Internet piracy,including auction sites and peer-to-peer networks.Working through an arrangement established by the HongKong Customs, ESA can now get local online auctionstaken down almost immediately. Fortunately, ESA andits members benet from the hospitable environmentfor IP enforcement that prevails in Hong Kong. This

environment improved this past year with the adoptionof copyright amendments that subject the trafckingof circumvention devices such as mod-chips to criminalsanctions. Hong Kong Customs conrmed they intendto enforce these anti-circumvention provisions. ESA willwork actively with Hong Kong Customs as they roll outtheir efforts against individuals and entities trafcking ingame product circumvention devices.

SINGAPOREWith lower game piracy levels in Singapore in recentyears, ESA operated its enforcement program at areduced “maintenance” level of funding. Most of thisfunding derived from private criminal actions thatESA’s local counsel les against outlets offering pirateNintendo games. This helps fund the investigativeand legal support that ESA provides to police for theirenforcement actions against individuals or enterprisesengaged in game piracy. In the rst nine months of

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FY 08, the police undertook 10 actions against targetsengaged in game piracy, with ESA supplementing this

effort by ling seven private actions. Four of theseprivate actions were led late in the year against localdealers of R4 devices that circumvent Nintendo DSsecurity technology. These actions are important testcases as they are among the rst based on Singapore’sprovision criminalizing the trafc in circumventiondevices. While local game piracy in Singapore is likelyto persist due to its proximity to the large pirateproduction facilities in Malaysia and Indonesia –particularly with the anticipated growth in Wii piracy– ESA expects to continue beneting from the strong

relationship it has with the Singapore police to maintainlower levels of game piracy in the local market.

PARAGUAY-MALAYSIALast year, the ESA Board authorized an anti-piracyprogram to undertake enforcement efforts in Paraguayand Malaysia, aimed at disrupting the pirate productionand distribution axis between the two countries. The ESAbegan enforcement work in Paraguay at the beginning ofFY 08. Through the rst nine months of FY 08, ESA’s local

representatives obtained enforcement actions covering 74locations, including 28 retail outlets and 32 warehouses,resulting in the seizure of 157,000 pirate game discs and8,600 Nintendo cartridges. The most signicant of theseactions was an August action against the Galeria Pagein Ciudad del Este, a notorious seller of pirated games topeople exporting this product to Brazil.

In late October 2007, the ESA launched its enforcementefforts in Malaysia, in partnership with MFACT, the localenforcement group of the Motion Picture Association.Working closely with enforcement agents of the Ministryof Domestic Trade and Consumer Affairs (MDTCA),MFACT supported an MDTCA enforcement initiativecalled Operation Games Attack. This initiative focusedits efforts on local game pirates and, in the rst threemonths, produced outstanding results through a seriesof actions resulting in the seizure of almost 37,000pirated game discs and the arrests of 36 people. Among

these actions were raids on burning labs and opticaldisc factories, as well as local retail outlets.

Training and IP Education

TRAININGBy the conclusion of FY 08, the ESA training programwill have conducted or participated in more than 55training sessions with more than 1,000 law enforcementofcials in attendance. The ESA was very active inboth the United States and Canada, and expanded itstraining in Canada to new areas. In the United States,the ESA training program worked closely with the U.S.Department of Homeland Security’s Immigration andCustoms Enforcement (ICE), and the New Jersey ofceof the Federal Bureau of Investigation, in its initiativeto train local law enforcement ofcials in cyber crimeand IP crime throughout the state. ESA also traveledto Malaysia to train local law enforcement ofcials inconnection with the launch of its new enforcementprogram in that country.

IP EDUCATIONIn FY 08, ESA undertook a focused marketing effort withrespect to the “Join the © Team” curriculum materials thatit designed to promote awareness of intellectual propertyamong elementary school students. The curriculummaterials are available for free via download from the ESA’scurriculum Web site. ESA worked with Classmates Marketingto obtain commitments from 7,500 teachers, schoollibrarians and media specialists in elementary schoolsacross the country to download and use the materials intheir classes. The number of materials downloaded fromthe Web site tripled in the month following this marketingeffort. To date, there have been more than 35,000downloads of materials from the Web site in FY 08. ESAsupplemented the elementary school curriculum programwith its in-school IP education workshop initiative aimedat middle school students and high school students andreached more than 400 students in schools in Princeton,N.J., Kansas City, Mo., and Fairfax, Va.

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media coverage and other tactics, attracted morethan 100,000 members.

Public Information InitiativesAn important component of ESA’s media relationsdepartment is providing journalists a full and accurateunderstanding of the computer and video gameindustry. To do so, ESA distributed thousands of keyinformation pamphlets and brochures to press andthird-party inuencers. Among the collaterals providedto these journalists and third parties this year were:“Essential Facts About Games and Youth Violence,” and

“Essential Facts About Games and Court Rulings.” All ofthese documents provide readers with an understandingof complex issues in a simple, easy-to-understand, andbalanced manner.

The “Essential Facts About Games and YouthViolence” includes overviews of the objective

scientic research done on games, provides statisticsabout who is purchasing and playing games, andpresents the industry’s core positions on youthviolence.

“Essential Facts About Games and Court Rulings”summarizes all of the relevant court rulings, allowingthe press to include key, positive portions of judicialrulings in their stories without having to read entiredecisions.

ESA also educated producers, reporters, and analystson the state of industry-relevant academic researchby updating them on positive studies throughResearch Update summary documents.

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E3 Media & Business SummitFY 08 WAS A TRANSFORMATIVE YEAR for the E3Media & Business Summit. Following a decision by theESA Board of Directors to better address the needs oftoday’s global computer and video game industry, E3evolved into a more intimate event focused on targeted,personalized meetings and activities.

The new event, the E3 Media & Business Summit, tookplace in Santa Monica, Calif., July 11-13, 2007. Thethree-day summit was by invitation only, and providedESA members and non-members the opportunityto stage major press events, and have one-on-onemeetings with media, retailers, developer partners,and other key audiences. In addition, Santa Monica’s

Barker Hangar was converted into a software showcasewhere attendees previewed featured video gamesplanned for the coming holiday season and beyond.Other elements of the summit included a Serious GamesShowcase, an Indie Games Showcase, and an exhibitionof winning art from the “Into The Pixel” video game artcompetition.

The summit was well received, and ESA’s Board decidedto continue with this new format. The 2008 E3 Media& Business Summit will return to the Los AngelesConvention Center, meeting the desire for the event tobe more centralized in nature, and be held from July15-17, 2008.

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Video Game Voters Network IN FY 08, ESA CONTINUED BUILDING and moreimportantly activating the Video Game Voters Network(VGVN), a grassroots political network created as ameans for voting-age American gamers to organize andtake action on important policy issues affecting thecomputer and video game industry.

In its rst year, over 100,000 activists joined the VGVN.Through its Web site, www.videogamevoters.org, gamershave the ability to register to vote; learn about issuesthat could affect their rights to play computer and videogames; reach out to federal, state, and local ofcials; anddownload VGVN banners and IM buddy icons.

Highlights of the VGVN program from FY 08 include thefollowing:

w VGVN members have sent over 44,000 letters to

members of Congress and state legislative ofces inresponse to Action Alerts about possible federal andstate legislation;

w VGVN members wrote letters to theirrepresentatives in 17 states;

w VGVN MySpace page now has over 2,869friends;

w VGVN launched its “Wall of Protest”, whereactivists from across the country and aroundthe world, can help make a powerful statementto politicians and video game critics bytaking a picture of themselves holding a signespressing their frustration with politiciansview of the game industry. To date, 310pictures have been assembled on the wall andcontinues to grow everyday; and

w Asked VGVN members to write their personaltestimony about why self-regulation andparental education are better than government

interference. Over 1,500 testimonies weresubmitted and are highlighted on the VGVNsite.

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of gamers who are spending more time playinggames report watching less television as a result, 42

percent go to movies less often.

VIDEO GAMES IN THE 21ST CENTURYIn FY 08, ESA also elded a ground-breaking studyon the specic economic contributions of theentertainment software industry to the U.S. economy.

Conducted by Economists Incorporated on behalf ofthe ESA, the report, Video Games in the 21st Century:Economic Contributions of the U.S. Entertainment

Software Industry , showed the U.S. computer andvideo game industry’s annual growth rate from 2003to 2006 exceeded 17 percent which far outpaces theU.S. economy as a whole which only grew at 4 percentduring this same period. According to the study, theU.S. entertainment software industry directly employsmore than 24,000 individuals, with an average salary of$92,300 in 2006.

Other highlights from the report are:

w The computer and video game industry’s value addedto U.S. Gross Domestic Product (GDP) in 2006 was$3.8 billion;

w In 2003-04 and 2005-06, the industry’s contributionto real growth exceeded its share of GDP by morethan four to one;

w The entertainment software industry directly andindirectly employs more than 80,000 people in 31

states;w U.S. industry employees received total compensation

of $2.2 billion;

w California is the largest employer of computer andvideo game personnel in the nation, accountingfor approximately 40 percent of total industryemployment nationwide. These companiesprovided over $1.8 million in direct and indirectcompensation to Californians last year. California’scomputer and video game industry grew by 12.3percent last year, nearly three times faster than thestate’s overall growth, and added $1.7 billion to thestate economy;

w Virginia’s computer and video game industry grew by552 percent in 2006, more than 172 times as fast asthe commonwealth’s overall growth;

w Washington state ranked second nationally incomputer and video game personnel in 2006, with9,284 direct and indirect employees at more than 59facilities across the state; and

w New York’s entertainment software companiesdirectly and indirectly employ 4,415 individuals atmore than 25 facilities across the state.

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ESRB Enforcement

w The ESRB enforcement system continues to holdgame publishers accountable for full disclosure ofpertinent content during the rating process, as wellas responsible marketing and advertising of theirproducts.

w In the FTC Report, the Commission commended whatit termed ESRB’s “active” enforcement system.

w ESRB was selected by the FTC and the U.S. Councilfor International Business (USCIB) to be used as acase study for effective industry self-regulation in

the United States in a report that is to be sharedwith international participants in Organization forEconomic Cooperation and Development (OECD).ESRB provided information about the video gameindustry’s self-regulatory efforts to the FTC, whichwill ultimately be part of a report reecting fourcase studies of industry-led regulation in the UnitedStates. It is a good reection on the industry thatESRB was chosen by these organizations as anexample of successful self-regulation to be sharedwith the rest of the world.

Advertising Review Council

w ESRB’s monitoring and enforcement of its marketingguidelines continues to ensure that game packagingand advertisements are correctly labeled withthe appropriate rating information; productsare marketed to audiences for whom they areappropriate; and advertisements are truthful andresponsible.

w The FTC Report, which looked at the motion picture,music recording and electronic game industries,found that the ESRB “leads all three industries inproviding clear and prominent disclosure of ratinginformation in TV, print and online advertising.” Thecommission also found no evidence of inappropriatetarget marketing of M-rated games in the gamepublishers’ marketing plans reviewed by the FTC.

ESRB and RetailersOver 20 national retail chains in the United Statesand Canada and many local independent retailerscontinue to display ESRB ratings education andstore policy enforcement signage in their stores.Many of those retailers provide additional support ofthe ratings on their Web sites, in circulars, and onin-store television networks, generating well over 1billion impressions on an annual basis.

Nine retailers in the United States including BestBuy, Blockbuster, Circuit City, Game Stop, MovieGallery (Hollywood Video / Game Crazy), Sears,Kmart , Target, Toys R Us and Wal-Mart currentlyserve on the ESRB Retail Council (ERC). One of thepriorities of the ERC is to continue to improve thelevel of store compliance in the display of ratingseducation signage and the enforcement of storepolicy with respect to the sale of M-rated games,both of which are measured through mysteryshopper audits. The most recent audit conducted inNovember 2007 indicates that ERC retailers displayedratings signage in 77 percent of their locations andenforced their store policy regarding M-rated games76 percent of the time. This reects an improvementof 11 percentage points in both categories whencompared to audit results from October 2006.

In addition to the activities mentioned above,ESRB launched new ratings awareness initiativesthis past year which include the following:

w Wal-Mart showing PSAs on its in-store network,generating 245 million consumer impressionsover the course of a year-long run;

w GameStop hosting satellite and radio mediatour leading up to the holiday shopping season;and

w Ingram Entertainment, the largest wholesalerof games in the United States, distributingin-store signage about ESRB ratings to 10,000independent retailers around the country.

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Consumer Education

PSA CAMPAIGNSThe ESRB PSA campaign, launched in December 2006,generated 711 million impressions from nearly 8,000airings on seven cable networks, three in-store networks,and local stations in 53 markets. Radio spots havegenerated nearly 40 million impressions from 7,500 airingson English and Spanish language networks and stations.The USA Radio Network has been particularly supportive ofthe campaign and ran spots on “Black Friday” (November23) and again on December 7, 2007, generating over sixmillion impressions on key holiday shopping days.

ESRB also continued its work with elected ofcials,launching a series of statewide ratings educationcampaigns with elected ofcials, including:

w In August 2007, Rhode Island Attorney GeneralPatrick Lynch;

w In October 2007, Washington Gov. Chris Gregoire andIdaho Attorney General Lawrence Wasden;

w In November 2007, Marion County, Indiana

Prosecutor Carl Brizzi;w In December 2007, Oklahoma State Sen. Glenn

Coffee, Texas Attorney General Greg Abbott,and Delaware Lt. Gov. John Carney and StateRepresentative Helene Keeley; and

w In January 2008, Pennsylvania Gov. Edward Rendell.

The campaigns typically include PSA featuring theelected ofcials encouraging parents to check theratings and to use parental controls. ESRB producesthe PSAs and secures placement on local TV and radiostations, and in some cases, billboards, mall kiosks andonline media rich banner ads. ESRB has implemented10 state ratings education campaigns since 2006,generating nearly 96 million impressions.

The Ok To Play? PSA campaign appeared in sevenconsumer print publications (including a Hispanic

magazine), generating nearly six million impressionsfrom 11 ad placements. ESRB also secured placement

of the gamer-focused PSA campaign in six game andyouth-oriented magazines, generating over 4 millionimpressions.

WWW.ESRB.ORGTrafc to the ESRB Web site continues to increase eachyear. In 2007, 7.1 million people visited www.esrb.org, an increase of 22 percent over to the prior year,conducting nearly four million rating searches.

PartnershipsAmong the most signicant of new consumer educationinitiatives in FY 08, ESRB launched a partnership withGoodHousekeeping.com, one of the most prominentand trusted consumer brands in America, to educateits audience about ESRB ratings, parental controlsand playing games online. The partnership includesa series of articles by ESRB President Patricia Vanceand a monthly “Top Ten” games list provided by theNPD Group with complete rating information anda summary of the content in each title listed. Thiscontent continues to be among the most popular on theGoodHousekeeping.com web site.

Consumer ResearchAccording to consumer research commissioned by theESRB and conducted by Peter D. Hart Research Associatesin April 2007, awareness of the ratings among parents ofgame-playing children under the age of 17 is at an all-timehigh of 89 percent, with regular use of the ratings at 85percent. Moreover, awareness of the content descriptors isat 64 percent with regular use increasing to 54 percent.

Ninety percent of parents believe the ratings are“somewhat” to “very helpful” in selecting appropriategames for their children and the same percentage arecondent that the ratings accurately describe gamecontent.

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The ndings from the Hart Research are generallyconsistent with the FTC Report, which found that:

w 87 percent of parents are aware of the ratings;

w 73 percent use the ratings “all,” “nearly all,” or“most” of the time;

w 87 percent are “very” or “somewhat” satised withESRB ratings; and

w 94 percent say the ratings are “moderately” to “very”easy to understand.

ESRB Privacy Onlinew The ESRB Privacy Online program remains one of

only four privacy programs in the United States

approved by the Federal Trade Commission (FTC) asan authorized COPPA Safe Harbor. It currently has

34 member companies enrolled in the program, andactively monitors over 1,500 member Web sites.

w To better serve the global needs of members,Privacy Online has expanded its reach outside theU.S. by creating an European Union Seal programbased on the privacy standards in the E.U. PrivacyDirective. Members will be guided on how best tomake their sites compliant under the E.U. Directive,and will receive a newly-designed E.U. seal to alertconsumers that the company Web site meets E.U.standards.

w Privacy Online continues to work on several third-party initiatives with companies in the Internetsafety, child protection and privacy sectors.

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ESA CanadaIN FY 08, ESA CANADA (ESAC)introduced a new Frenchbrand, ALD Canada (L’ Association canadienne de logicielde divertissement ) and added two new staff members tofocus on key areas of policy and public relations.

ESAC continued to be the voice of the entertainmentsoftware industry in Canada and worked on increasingits brand awareness and messaging.

Video Game Ratings

w ESAC met with the Quebec Minister of Cultureand Communications, and afrmed the Quebecgovernment’s commitment not to legislate on videogame ratings during their current mandate.

w ESAC continued positive relations with Film Boardrepresentatives from all jurisdictions in Canadathrough participation in the ESAC/ESRB-led CanadianAdvisory Committee.

w To increase compliance with the national voluntaryCommitment to Parents program, ESAC worked withretailers and the ESRB to improve signage auditaccuracy, undertook audits of in-store CTP signage,and conducted national research on awareness ofvideo game ratings.

w ESAC continued to work on ensuring ratings-relatedlegislation is consistent across the board. ESACalso continued to work with Saskatchewan, BritishColumbia, and New Brunswick on implementing theirexisting legislation.

Intellectual Property Policy and Anti-Piracy

w ESAC provided video game industry informationand developed relationships with ofcials andParliamentarians related to copyright reform, IPenforcement and international trade. Such ofcialsinclude Members of Parliament, the Ministers ofIndustry, Canadian Heritage and InternationalTrade, the Parliamentary Committee chairs ofIndustry and Heritage, and the Chair of theInterdepartmental Working Group on IP Policy.

w ESAC made submissions to the federal government onissues including copyright reform, privacy concernsrelated to provisions in the Copyright Act, proceeds ofcrime, border enforcement, legislative reform relatedto intellectual property rights, and trade policy forvideo game products and related services.

w ESAC presented before the Standing Committee onIndustry, Science and Technology on counterfeitingand piracy of Intellectual Property.

w ESAC continued to work closely with all Canadiancopyright industry associations and participatedregularly in “ad hoc copyright coalition” meetingswith Canadian Recording Industry Association(CRIA), Canadian Motion Picture DistributorsAssociation (CMPDA), Business Software Alliance(BSA)/ Canadian Alliance Against Software Theft

(CAAST), book publishers, movie and televisionpublishers, and music publishers associations.

w ESAC continued its involvement with the CanadianAnti-Counterfeiting Network (CACN), and participatedon the Government and Legislative Affairs Committee.

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w ESAC worked with the CACN to develop a draftomnibus bill on counterfeiting and piracy

enforcement – this was endorsed by the CanadianChamber of Commerce and the Retail Council ofCanada – and delivered to the Ministers of Industry,Public Safety and Security, International Trade andthe Prime Minister’s Ofce.

w ESAC attended the OECD conference called “TheParticipative Web: Strategies and Policies for theFuture.” ESAC raised the issue of the right of creatorsto control access to their IP and highlighted some ofthe entertainment software industry’s unique uses of

DRM. Outcomes from the conference established thepolicy direction and agenda for the upcoming OECDMinisterial Meetings in Seoul, Korea in June.

w ESAC met with the chair of the OECD Information,Computer and Communications Policy Committeeand the Director General of Electronic Commerceat Industry Canada to provide input on Canada’sposition in preparation for the Ministerial.

w ESAC continued to work with ESA and the RCMPon supporting Canadian anti-piracy enforcement

activities.

Public Relations and Issues Management

w On behalf of the industry, ESAC signed an agreementto provide French language games in Quebec. Thiswas announced at a joint news conference with theQuébec Minister of Culture and the Ofce québécoisde la langue française (OQLF). The agreement wasalso endorsed by the retail council of Quebec(CQCD). As part of the agreement, the OQLF agreedto drop all outstanding language complaints againstcompanies covered by the agreement.

w ESAC held the industry’s second annual Ottawa Dayevent for Parliamentarians, ofcials and staff to

build awareness of industry issues and ESAC. Theevent drew a large crowd, including several Membersof Parliament and Senators, and most notably theMinister of Finance who spoke at the event regardingthe importance of the industry to the Canadianeconomy.

w Produced the third-annual Canadian Essential Facts,in French and English;

w Produced the rst ever white paper on theentertainment software industry in Canada;

w Joined other CACN members to contribute to aspecial section on anti-counterfeiting and piracy inthe Toronto Star ;

w Participated on Ontario Ministry of EconomicDevelopment and Trade committee regarding thedevelopment and growth of Ontario’s video gameindustry;

w Built media relationships and continued to establisha presence for ESAC among key English and French

media, including coverage on local and nationaloutlets including CTV, National Post , Financial Post ,Globe and Mail, Musique-Plus, CBC and CFRB radio,LeDevoir and canada.com, and increased coverage ofanti-piracy raids in mainstream publications such asthe Vancouver Sun and the Toronto Star ;

w Had extensive media coverage of Quebec languageannouncement on French and English radio, in printand online media; and

w Continued to represent the video game industry on

the board of the Kids Internet Safety Alliance topromote the safety of children online.

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The ESA FoundationTHE ESA FOUNDATION (ESAF)is dedicated to supportingpositive programs and opportunities that will make adifference in the quality of life, health and welfare ofAmerica’s youth. The Foundation seeks to harness thecollective power of the industry to create positive socialimpact in our communities and supports geographicallydiverse projects and programs that benet Americanyouth of all races, denominations and genders.

Nite to Unite – for KidsThe 10th annual Nite to Unite (NTU) was held at theWestin St. Francis in San Francisco on October 17,2007, and raised over $900,000 thanks to generouscontributions by members of the industry.

The industry honored Ken Kutaragi, Sony ComputerEntertainment, Inc., with the ESA Champion Awardin recognition for his outstanding service andcontributions to the industry. Event co-Chairs includedRobert Bach, president, Entertainment & DevicesDivision, Microsoft Corporation; Reggie Fils-Aime,president and chief operating ofcer, Nintendo ofAmerica, Inc.; and, Jack Tretton, president and chiefexecutive ofcer, Sony Computer EntertainmentAmerica, who were joined by 15 distinguished membersof the industry serving as vice chairs.

In keeping with the foundation’s mission to supportpositive programs and opportunities that make a differencein the lives of America’s youth and teens, the followingorganizations were chosen to receive grants in FY 08.

HopeLabHopeLab is a nonprot organization that combinesrigorous research with innovative solutions to improve

the health and quality of life of young people withchronic illness. HopeLab’s rst innovation is Re-Mission,a PC game developed for teens with cancer. Re-Mission allows the player to kill cancer as the player pilotsRoxxi, the nanobot through the body of ctional cancerpatients. Re-Mission was engineered and tested with theassistance of oncologists, nurses, cell biologists andbehavioral psychologists and is the rst game shown tohelp teens and young adults with cancer improve theirquality of life, their sense of control and knowledgeabout cancer, and maintain adherence to theirprescribed treatment regimen. It is rated “T” (for Teen).

Re-Mission.net also serves as an interactive, onlinecommunity for teens and young adults, who are oftenisolated as a result of their disease. The Web site isdesigned to allow teens with cancer to connect witheach other and share information. The game, availablein English, French and Spanish, is free of charge toteens and young people living with cancer.

The game was extensively researched for reliabilityand validity prior to release. HopeLab conducted arandomized, controlled, multi-center trial to test theeffect of Re-Mission on adolescents and young adultswith cancer. The conclusion of the research showedthat a theory-based, data-driven intervention deliveredin an appealing interactive game context can producesignicant increases in cancer-related knowledge andself-efcacy.

In FY 08, the foundation sponsored a project betweenHopeLab and Starlight Starbright Foundation (SLSB) todistribute the game on SLSB’s PC Pals program. PC Palsprovide pediatric patients with a variety of entertainingand educational software such as disease managementtools. The Foundation also sponsored the production

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and distribution of 6,000 disks to approximately 100cancer camps in 41 states through SLSB’s network. The

game was made available for age-appropriate campers;approximately 40 percent of total campers are above theage of 12.

Federation of American Scientists (FAS)FAS is an organization formed by atomic scientists fromthe Manhattan Project. In recent years, the missionof FAS has expanded to include our country’s criticalchallenges in housing, energy and education. TheInformation Technologies Project works on strategies to

intensify and focus research and development to harnessthe potential of emerging information technologies toimprove how we teach and learn. Under this branch,FAS along with Brown University and the NationalScience Foundation have developed a game called

Immune Attack to teach students about immunology andinfection.

Immune Attack is a game that can be used to teach highschool students and college freshman about immunologyin a multimedia environment supported by instructionalcontent. The goal of the game is to educate playersabout the human immune system, increase interest inbiology and science, and demonstrate that computergames can be used to teach complicated subjects.

The foundation awarded FAS a grant to assist in buildingadditional environment levels for the game, add newfunctionality, distribute and test the games in schools,and develop curriculum.

PAXPAX is a nonprot organization working to end thecrisis of gun violence in America. Its creative and yetcommon-sense programs are based on simple, focusedand empowering public health insights. PAX currentlyhas two programs: the ASK Campaign urges parentsto ask whether there are accessible guns where theirchildren play; and the SPEAK UP campaign empowers

students with the resources to prevent violence intheir schools and communities by providing a hotline

where they can report weapon threats anonymously.The hotline was created because in over 80 percent ofschool shootings, the attackers tell other students oftheir plans in advance.

The Foundation awarded a grant to PAX to expand itsnetwork of new schools in Los Angeles, San Diego,Chicago and North Carolina. Over 3 million audienceimpressions were created in these markets in FY 08.

Web Wise Kids (WWK)Web Wise Kids (WWK) is a nonprot organizationworking to promote Internet safety by using Missing ,a computer game developed by Live Wires Designs inCanada that teaches Internet safety.

Thanks largely to the support extended by thefoundation, WWK has been able to produce a three-yearInternet safety curriculum for middle schools usingthe games Missing and CyberCops, a follow up seriesto reinforce the safety messages learned in Missing .Missing , AirDogs, and Mirror Image are designed to beplayed individually, with parents or in a classroomenvironment. Extensive training and support is providedby WWK staff to educators and other communityleaders on how to use these games and the curriculumeffectively in a classroom environment. In addition tothe games, WWK has developed Wired with Wisdom, aprogram specically targeted to educating parents ononline safety. WWK programming has been successfullyused by teachers, law enforcement, and othercommunity leaders.

WWK was founded in 2000 and has been an ESAFsupporter since 2001. During this time WWK hasexperienced growth and recognition by Members ofCongress and safety organizations, and now is one of themost recognized and effective organizations on Internetsafety. WWK regularly appears before congressionalcommittees on Internet safety issues in Washington,

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D.C., as well as state legislative committees includingCalifornia. It was recognized by former U.S. Attorney

General Alberto Gonzales as one of the top three InternetSafety organizations when he launched “Project SafeChildhood.”

Notable achievements in FY 08 include:

w WWK, the foundation and the ESA state legislationdepartment worked collaboratively to offer internetsafety programs through WWK to attorney generals(AG) in Massachusetts, Virginia, New York, Louisiana,Washington and Florida. This new approach allowedthe State Legislative Department to proactively makepositive connections with AG’s in specic states; and

w WWK Launched “Wired with Wisdom” with theCalifornia PTA.

Work, Achievement, Values & Education, Inc.(WAVE)WAVE’s mission is to motivate youth to complete school,lead productive lives and make a valuable contributionto their communities. The focus of WAVE is to curtaildropout rates and the problems associated with thefailure to graduate. A young person enters a WAVEprogram as a school dropout, delinquent, truant, orstudent otherwise labeled at-risk of school failure.That young person completes WAVE as a young adultequipped with new assets and a fresh sense of self-worth and their role in the community.

WAVE was founded in 1969 by business and governmentleaders including former Delaware Governor and U.S.Congressman Pete DuPont. WAVE is proud to havemaintained a well-respected prole among Washington,D.C., leaders.

In 2004, the Foundation and WAVE established the ESA/ WAVE Incentive Grant Program. These Incentive Grants

enabled community-based organizations, schools andWAVE to help more at-risk youth and build professional

capacity of local teachers and youth development staffworking directly with these youth. WAVE and its localprograms partners have made signicant strides in itswork with school dropouts and at-risk youth in Texas,Tennessee, New York and Virginia.

The foundation was pleased to support WAVE’scontinued work with these partners in FY 08 to reducethe number of students who drop out of school. Supportfrom the foundation enabled WAVE to work withstudents in some of the nation’s neediest communities

providing professional training, consultation andongoing support to educators and staff from schools andcommunity organizations.

ESA Foundation ScholarshipsThe ESAF scholarship program is designed to providenancial assistance to women and minority studentspursuing degrees in game design arts. To be eligibleapplicants must be a woman or minority studentenrolled in a full-time undergraduate course of studyat an accredited four-year college or universitypursuing a degree in Video Game Development orDesign, Graphic Design and Multimedia, ComputerAnimation, Computer Programming, Simulation orDigital Entertainment, Software Engineering, ComputerScience, 3D Animation or another related degreeprogram, and have a grade point average of 2.75 orabove on a 4.0 scale (or equivalent).

In the rst year of implementation, six students majoring

in Computer Animation, Illustration, InterdisciplinaryArts, Game Design, and Sound Engineering were chosento receive scholarships. The awardees attend thefollowing schools: Arizona State University, CaliforniaCollege of the Arts, Collins College, Full Sail Real WorldEducation, and Parsons New School for Design.

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Documents

ESA_2008_AR