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There’s a Legal Battle Against Video Game Rentals that Continues to This Day

Distressed Blockbuster Video Sign (via [Flickr/trebomb](https://www.flickr.com/photos/13988857@N00/5167599294/in/photolist-8SDiey-magPvv-7qqiVa-hVkB6H-hpit32-boJ3SW-n1hvRg-9DvemK-4PdZHZ-fjsA4j-cg3Qhb-a3sSZE-eeCqN8-ns4Uot-7fC2o2-7WaJCu-nCkrrh-aaD81a-8b6d1K-6ubrVz-7SfmQN-eeJac1-7z46J7-bBSVc-e6YUVR-4nwZn-4sSDCQ-kxgLR-bkLde5-8zJke9-cymuQ7-7N25GN-jLcQwT-6nAL5z-9BpcR-6W9EZ-ynNNR-8W3NoL-ynNRL-5KsR29-dFUwR1-8Wb8Vb-ZQMQK-dEtd6m-7Kk9Dy-4Pig2L-rZFHD-9nwpUf-4PieAU-m5F85))

Distressed Blockbuster Video Sign (via Flickr/trebomb)

It’s unlikely a person living in Japan has ever rented a video game, and Americans nearly weren’t able to either. Blame Nintendo—partially.

History shoves the game rental between a cross-section of intellectual property and copyright law. As Betsy Rosenblatt, Law Professor at Whittier Law School, told me, “It’s complicated.” So complicated that through a loophole, modern video game rentals in the US are—theoretically—illegal. However, the historical context is muddled.

After an explosion of Japanese record and software rental stores in the early ‘80s, Japanese lawmakers basically killed the practice. While English language sources are few, policy changes like the 1985 Amendments to the Copyright Act gave copyright holders final say on whether to license their products for rental. Movie studios allowed VHS tapes to be leased with certain conditions. The music industry instituted a time delay over a fear of piracy, and Nintendo (along with other software companies) said no, a decision which still stands today.

“In the United States, for most kinds of works, once you buy something that you obtain legally and was legally made, you can do anything you want with it, except copy,” explained Rosenblatt. “In Japan, you can transfer ownership but you can’t rent it.”

After the overseas ruling (with few exceptions), Nintendo came for America and challenged the game rental as we knew it here.

The situation Stateside was not dissimilar. A 1984 change to copyright law meant records, cassette tapes and CDs could not be legally rented (exemptions for non-profits and libraries aside). If Nintendo had a chance, this was it, but they were blocked by the Computer Software Video Rental Amendments Act of 1990. While the act stopped computer software rentals—most software deemed too easy to copy—the language used in the bill cited video game consoles as of “limited use.”

It wasn’t as degrading as it sounds. “The rule existed because it was so trivially easy to copy software and records at that time. Renting them was essentially tantamount to copying them,” said Rosenblatt. “That’s not true—or at least it wasn’t at the time—for video games. You put them in the Atari and the Atari doesn’t copy them, it just plays them.” Thus, the “limited use” term. “That piece of software didn’t need an exception to First Sale Doctrine,” continued Rosenblatt.

The First Sale Doctrine (in brief) allows you to do as you wish with legally obtained, copyrighted, and physical belongings on secondary markets. In context, this means trading, borrowing, and yes, renting video games.

THE BLOCKBUSTER WARS

photo courtesy Video-N-Game Gallery

photo courtesy Video-N-Game Gallery

As government authorities considered their decision, Nintendo took another approach. In 1989, they sued industry giant Blockbuster Video for copying game manuals when a customer lost them. Then-Nintendo of America Chairman Howard Lincoln referred to game rentals as “nothing less than commercial rape” in David Sheff’s Game Over: How Nintendo Conquered the World. That was extreme, but in the Blockbuster case, Nintendo had a point.

“Blockbuster had the right to rent things that it legally obtained under First Sale Doctrine, but not to copy them. Blockbuster could continue indefinitely to rent that manual, but once they copy it, they are exceeding the range of what First Sale Doctrine gives them,” said Rosenblatt.

Blockbuster relented and a settlement was reached out of court. Exhausting their options to find a favorable ruling similar to Japan, Nintendo ceased their battle against the rental industry, but their actions carried a trickle down effect. Santa Cruz, Calif. independent Westside Video, founded in 1985, stopped renting games entirely for fear of repercussions. “The original owner was renting games like crazy,” said current owner Ashlyn Adams. “The court case happened. That put some fear in him. He stopped actively buying games for a while.” Westside Video didn’t begin renting games again until 1994, then under different ownership.

Few remember the era of game rental litigation. Contacting a multitude of video stores for this story, only Adams had knowledge of the suit. It’s 30-year-old history, and besides, rental stores have other battles to fight in today’s changing marketplace.

Digital killed the rental store, or so we’re supposed to believe. But the story is really about the perseverance of those dedicated to keeping video stores—and with them game rentals—alive.

You don’t have to be the back [of the box]. Be a real human.

Ashlyn Adams
Westside Video

You can own a video store, rent video games, and be successful. Robert Kulpa opened his shop in July of 2010 in Elkhorn, Wisconsin, at a time when most were already spouting the stigma, “Video stores still exist?”

His did. Kulpa purchased Video-N-Game Gallery from his father, a 30 year rental veteran. “Instead of liquidating and closing up, I figured I would give it one more shot and go back to the old way video stores were back in the '80s through the '90s and 2000s. They were downtown. They were small. That’s basically how I found this location,” explained Kulpa.

Renting games is risky. Each of the store owners I interviewed cited a price between $4-$6 for a week. Even if they purchase games in bulk, it takes months to see profit. Jennifer Robbins of Premiere Home Video in Lexington, Ky. spilled some ugly numbers. “We had 22 Xbox 360 games that have not made profit. We have 24 PlayStation games that have not made profit and 17 Wii games. Being as cheap as they are [to rent] and being there’s a risk of people stealing it, you have to make your money up elsewhere in the store.”

Those alternatives are key. Kulpa stated, “You couldn’t survive just as a rental store.”

Adams noted all stores need to diversify their offerings, even if this does lead to some customer confusion. “Somebody came in the other night a little stoned and he looks over. I pulled out the vacuum because we’re about to close and he’s like, 'How much for the vacuum?'” Confused, Adams said he pressed on. “He’s like, 'I don’t know, you guys sell all kinds of stuff.'”

Peering through a list of 150 video stores I found a number of gimmicks. Some have bulk candy shops running through their new release sections. There are community movie nights and lounges. Westside Video offers a cafe and rents retro Sega Genesis, Super Nintendo, and early PlayStation games.

Kulpa’s Video-N-Game Gallery offers a full service game store. “I buy, sell, trade accessories. I sell Nintendo, Super Nintendo, Sega Genesis, N64, controllers, and systems. The key was to expand the options and inventory so you get a wider amount of client coming in so you’re not just trying to make money on game rentals.”

A lot of stores seem resistant to change. Many of 150 locations cited on the list had little to no web presence. If they did, their home page appears frozen in the early 2000s, without links to social media or even an email account. “A lot of video store owners have been doing this so long they’re like, 'We’d put an ad in the paper if I wanted to advertise,'” said Adams. “Then you have to tell them that no one looks at ads in the paper, or at least people who aren’t already coming into your store.”

The game rental players remaining in 2016 are few outside of the independent video store. Redbox and by-mail GameFly are nearly all that’s left of the big ones. One privately owned rental chain, Family Video, spreads across the midwest, but they declined to be interviewed for this piece for unknown reasons.

photo courtesy Video-N-Game Gallery

photo courtesy Video-N-Game Gallery

Awareness of the game rental business is low today. Blockbuster and Movie Gallery soaked in corporate-level profits and made the business visible. Yet to the independents, GameFly and Redbox, like Blockbuster, have made themselves unsustainable because of their scale. “This is not a business you can manage at that type of level. You need to have a lot more personal touch,” explained Kulpa. “The corporations don’t have that ability. It’s not something you can do that way.”

Adams concurred. “You don’t have to be the back [of the box]. Be a real human. That human touch to the game will make a big difference.”

Overcoming low profit margins is key, but so is introducing a generation to the video store. Reaching kids who lose weekends to an iPad download—who may not even know of the video store—can be a struggle.

This younger generation of owners (Kulpa is in his 30s) are quick to cite social media. “Facebook reaches those kids who haven’t see a video store. They come in because they remember when they were five years old and their parents brought them in,” Kulpa stated. “You give them a feeling that they have their own video store.”

Within five years, Kulpa is already seeing turnaround. An eighth-grader when his Video Gallery opened is now of college age, maybe just a few more years away from having a family of their own. “They’re coming in now as a second generation because we’ve been here long enough to do that,” said Kulpa.

“When you’re in the middle of a neighborhood, then you have a lot of kids. During that downtime when they’re not in school, they’re all over the place,” said Robbins, who set up her shop directly across from a residential area.

To Adams, it helps if the cynicism regarding video stores is brushed aside. “This whole, 'What do you mean there are still video stores?’ People are constantly surprised. A little bit of hometown country culture shift could make a big difference.”

THE FUTURE

photo courtesy Premiere Home Video

photo courtesy Premiere Home Video

With or without local support, looming overhead is another round of potential legal battles. Although Nintendo failed to gain congressional help back in the ‘80s, the adaptive nature of copyright may still cause problems. In 2008, Autodesk, a company producing among other things architectural software, sued eBay seller Timothy Vernor for reselling Autodesk’s products. Vernor lost.

“The court held that when you got a copy of Autodesk, you got this physical thing, but you didn’t own the software on it. You just got a license to use it,” explained Rosenblatt. “The courts blessed that it’s okay for a company to claim that it is licensing rather than selling software. Now, often, when you buy a game, you’re actually only getting a license to play. You don’t even get ownership of your copy.”

Upon booting many contemporary video games, the screen floods with text which states your rights as a consumer. Buried in the wording is the language stripping ownership. In Bethesda’s Doom, the text reads, “You agree not to: Distribute, lease, license, sell, rent… without the express prior written consent of the Licensor.” In 2K’s Battleborn, the language is the same, adding additional restrictions for “Virtual Goods or Virtual Currency.”

Are game rentals now illegal in certain circumstances? “Yes.”

Betsy Rosenblatt
Whittier Law School

Because the rental industry relies on rights granted by the First Sale Doctrine and Video Rental Amendments Act of 1990—rights being eroded by Vernor v Autodesk and the legalese agreed upon when booting a new game—are game rentals now illegal in certain circumstances? “Yes,” stated Rosenblatt. “Unless [the video store] obtained separate permission from the game company they are probably violating copyright or a contract. And if they do that, they’re taking a calculated risk.”

In a cruel if lucky fate, video game rentals are likely too small a business for corporations to fight in court. “I figure at this point nobody is going to bother us. We’re a random little video store. I don’t know if we’re big enough to affect them,” said Adams.

When asked if the consolidation of video stores was scary, the owners showed no fear.

“It’s super exciting,” exclaimed Kulpa. “Last month was one of my best months ever. As everything has grown and changed from back in the ‘80s and ‘90s, with the corporations dropping out, it’s allowed for a new resurgence of something like this.”

Robbins was hesitant to move forward with game rentals for current Xbox One and PlayStation 4 consoles, but has noticed the opportunity. “I say we’ll eventually invest in the newer platforms. Each year that goes by, there’s going to be more demand. We could go on eBay and order a lot of 10 games for less than what we’ve had to spend through a distributor.”

Adams remains keen on keeping customers feeling happy. “You have to keep on top of it and be knowledgeable for your customers. If somebody comes in and says their kid is nine and a half, I’m not going to show them Mario and be like that’s all you get. Let’s talk. Let’s see what this kid likes, what your expectations are. It makes a big difference if you can talk about gameplay. If we can keep pulling through for people, they’ll keep coming.”

So the modern game rental story isn’t one of a fading business model or encroachment on the part of digital media. It’s that of American small businesses using their personal touch to stay afloat. Consolidation became natural as the media landscape changed, but it’s critical to note that playing a new video game for a few bucks is still possible.

If a new generation can discover the means to play the latest Call of Duty or Madden for $4, maybe they will—if the rights holders continue to let them.


Matt Paprocki has critiqued home media and video games for 16 years. His current passion project is the technically minded DoBlu.com. Follow him on Twitter @Matt_Paprocki.


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