Los Angeles Sues ‘Grand Theft Auto’ Makers, Seeks Portion of Profits

The characters in the wildly popular, extremely violent and graphically explicit video game “Grand Theft Auto: San Andreas” face crackdowns from police and other authorities responding to their evil doings.

Now the real life backers of the game are facing a crackdown of their own. The City of Los Angeles is suing Take-Two Interactive (NYSE: TTWO) and its subsidiary Rockstar Games, seeking some of the estimated US$10 million in “GTA” profits, after the game was found to include hidden, sexually explicit content.

The companies blamed hackers for hidden, sexually explicit parts of the game last year and were forced to re-rate “GTA: San Andreas” with an Adults Only (AO) rating. However, before the rating change from Mature (M), the game enjoyed sales of more than 12 million units worth some $600 million, according to the L.A. City Attorney’s office. In fact, “GTA,” released in the fall of 2004, was the biggest seller of the year for the video game industry.

Greed and Deception

L.A. City Attorney Rocky Delgadillo is now seeking court action to force Take-Two and Rockstar Games to inform consumers of the adult content that exists in PC versions of the game sold before the ratings change and to “disgorge” a portion of their profits. Delgadillo has charged the companies with unfair business practices.

“Greed and deception are part of the ‘Grand Theft Auto: San Andreas’ story — and in that respect its publishers are not much different from the characters in their story,” Delgadillo said. “Businesses have an obligation to truthfully disclose the content of their products — whether in the food we eat or the entertainment we consume.”

The L.A. suit — which claims “GTA: San Andreas” included an “embedded mini game” laden with sexual content — comes after an investigation led by U.S. Senator Hillary Clinton and the Federal Trade Commission, which resulted in the game’s re-rating and removal from thousands of retailers’ shelves last year.

A Piece of the Profits

Although makers of violent video games have been sued by individuals in the past for behaviors they say the games influenced in players, the latest suit is the first to seek penalty through taking portions of the game makers’ profits.

Delgadillo’s office said an estimated 200,000 units worth more than $10 million have been sold in California to date. The courts would probably look at the profit margins from the game to calculate any penalty, L.A. City Attorney’s Office spokesperson Jonathan Diamond told the E-Commerce Times.

The L.A. suit alleges untrue or misleading statements from Take-Two and Rockstar in their marketing of the game, claiming they engaged in unfair competition through their actions. The alleged violations carry a maximum civil penalty of $2,500 each.

Gaming Lessons

The “GTA” saga has put more pressure on game makers and publishers to be aware of the content and ratings of their games, Jupiter Research vice president Michael Gartenberg told the E-Commerce Times.

Much like online gaming, wherein games load with a barrage of warnings for users to read before they may play, titles on store shelves may come with more elaborate warnings that the content comes “as shipped,” and may be “subject to change” via add-ons, modifications or download, Gartenberg added.

“Clearly there’s a lesson for other game publishers that they must be aware of their content and ratings, and potential changes,” he said.

The gaming industry is also being forced to raise awareness that video games are not just for kids, Gartenberg added, indicating that despite common perceptions, more adult content is making its way to video game consoles and PCs.