Grand Theft Auto Editorial

On February 14, 2006, Max Kaplan filed a class action lawsuit alleging violations of the federal securities laws against Take-Two Interactive Software, Inc., Paul Eibler, Karl H. Winters and Gary Lewis. Take-Two is a global publisher of interactive software titles for video game consoles and handheld platforms manufactured by the three gaming conglomerates: Sony, Nintendo, and Microsoft. Take-Two develops, publishes, and distributes well-known video games such as Grand Theft: San Andreas, Grand Theft Auto: Liberty City Stories, Midnight Club 3: DUB Edition, and The Warriors. Its financially successful games can be purchased just about anywhere one looks and billboards abound in Los Angeles.

Through Take-Two's subsidiary Rockstar Games, the company publishes the best-selling Grand Theft Auto franchise. The franchise is on the forefront of glorifying street gang violence. In fact, its last game, San Andreas, is set in part in a fictional version of Los Angeles, home of numerous gangs. The Grand Theft Auto franchise was a huge financial cash cow, accounting for more than 38 percent of the company's total revenues for fiscal year 2005. The San Andreas game sold more than 5 million copies in 2004, even though it did not launch until the fourth quarter of that year.

Max Kaplan alleges in his class action suit the following: "Unbeknownst to investors, however, defendants engaged in an undisclosed illegal and fraudulent scheme to bolster sales of Grand Theft Auto: San Andreas by including pornographic content that was embedded in the programming of the video game. The pornographic scenes were triggered by downloading from the Internet a third-party program called 'Hot Coffee' that unlocks pre-existing codes built into the game and allow the game player to see their characters engage in sexual conduct. Defendants concealed the hidden sex scenes so that they could get the video game onto the shelves of major retailers that otherwise refused to carry products containing sexual content."

On July 8, 2005, the Entertainment Software Rating Board ("ESRB") commenced an investigation into Grand Theft Auto: San Andreas' "Hot Coffee" modification. The ESRB felt that Rockstar may have violated ESRB rules and regulations requiring full disclosure of the sexually explicit content in its game, effectively changing the rating of the game from "Mature 17+" (suitable for ages 17 and older) to "Adult Only 18+", a rating that is detrimental to Rockstar as most major retailers refuse to carry such Adult content products on their store shelves.

Approximately two weeks later, on July 20, 2005, Rockstar pulled the San Andreas game from store shelves. The game became an instant collector's item on eBay. Rockstar announced that it was to re-release the game without the "Hot Coffee" modifications. This directly impacted Take-Two's publicly traded securities. Less than a week later, on July 26, 2005, Take-Two was slammed with a Federal Trade Commission ("FTC") investigation from its Division of Advertising Practices pertaining to its Grand Theft Auto: San Andreas video game. The FTC was concerned that Take-Two used deceptive advertising practices to circumvent its Adult Only rating.

Six months down the road, on January 18, 2006, Take-Two brought excuses to the SEC, claiming it was unable to file its annual report for the year-ending October 31, 2005. Since its game was released a year prior, the company had hoped to soar its revenue and security prices through the sales of San Andreas. Thanks to the combined efforts of the SEC and FTC, Take-Two was thwarted in those efforts. A week later, on January 25, 2006, Barbara Kaczynski resigned. Ms. Kaczynski was a board member, audit committee chairperson, and member of the corporate governance committee of the company. Her attorney filed a letter to the SEC that stated "she is unable to express to you directly the reasons why she resigned." Her attorney does make clear that Ms. Kaczynski had "concerns" that included "Take-Two's discovery of illicit images depicted in its 'Grand Theft Auto' videogames, the Federal Trade Commission's investigation of Take-Two following that discovery, and various SEC inquiries directed at Take-Two and its employees."

Two days after Ms. Kacynski's resignation, the City Attorney for the City of Los Angeles allegedly filed an action against Take-Two and Rockstar for its misleading statements in the marking of Grand Theft Auto: San Andreas and its engagement of unfair competition in violation of the California Business and Professions Code. According to Kaplan's complaint, the City Attorney demanded that Take-Two and Rockstar "stop marketing the games to children, disgorge the profits from the estimated 200,000 copies of the game it sold for about $10 million in California, and that it disclose the sex scenes to customers who purchased the video game before the change in ratings."

Take-Two's stock price plummeted under the combined stress of these respective investigations, falling $2.34 a share. Kaplan alleges that as a result of defendants' fraudulent and illegal conduct, it artificially inflated Take-Two's stock price and took advantage of that inflation to sell off more than 661,000 shares of their personally held Take-Two stock. These insider sales netted proceeds of over $18 million. The fact that video game giant Electronic Arts closed in on Take-Two's video game sports franchise didn't help the stock price either. Many investors also sold off their shares of Take-Two, causing the stock to plummet further.

Sexual content is nothing new to the Grand Theft Auto franchise either. In Grand Theft Auto III, the player (depicted by a male two-bit thug avatar) can have sex with a female prostitute to regain much needed health and stamina. Of course the player has to pay for this service. However, by killing the prostitute after health is restored, the player is able to recoup the lost expense. Apparently, sex and violence have always gone hand-in-hand with Rockstar's franchise.

But when does this young male fantasy of illicit sex and gang violence cross the line into reality? Does the average young adult and teen male player play this video game series to act out fantasies or is he being programmed by the game designers to act out these fantasies in real life? Is the Grand Theft Auto series a release from real life aggression or does it promote it? Let's take a look at what the professionals report in their respect findings.

Grand Theft Auto allows the player to engage in various forms of violence that include, but are not limited to, decapitating police officers, shooting them with sniper rifles, setting them on fire or using an all out massacre approach. In February 2005, a multi-million dollar lawsuit was filed in Alabama, alleging that months of playing the game day and night led a teenager named Devin Moore to go on a "rampage" in which he killed three men, two of which were police officers and one who was a 911 dispatcher. According to CBS News online 60 Minutes report, Grand Theft Auto is "360 degrees of murder and mayhem: slickly produced, technologically brilliant, and exceedingly violent." Well-known Attorney Jack Thompson, who has brought this suit forth, loudly proclaims that Grand Theft Auto is a "murder simulator" that effectively trained Moore to kill these police officers. Thompson goes on to state: "He bought it as a minor. He played it hundreds of hours, which is primarily a cop-killing game. It's our theory, which we think we can prove to a jury in Alabama, that, but for the video-game training, he would not have done what he did." Not only did Moore murder these law enforcement agents, but he had stolen two vehicles, one of which was a police cruiser. After all, the game is called "Grand Theft Auto."

Does Moore feel any remorse for his crimes? He allegedly informed police after his inevitable capture: "Life's like a video game. You've got to die sometime." But should they unexpectedly die at the hands of an 18 year-old brainwashed by Rockstar's violent video game? What about the families left behind? Where was Moore's family at the time he played this game? Why were they not monitoring him? Did anyone not see the warning signs? Apparently Moore came from a broken home and suffered from latent violent urges as a result. Did the Grand Theft Auto franchise tips the scales for him to act out his aggression against these police officers? Moore's defense attorneys claimed that it did, presenting evidence of both Grand Theft Auto III and Grand Theft Auto: Vice City to the legal table. The judge was not swayed in absolving Moore of his responsibility for the slayings. For his triple homicides, Moore was convicted of murder and sentenced to death by lethal injection.

Sonya S. Bradley, a University of California, San Francisco post-doctorate fellow in psychiatry conducted a research experiment involving of 100 college males between the ages of 18 to 21 as they played Grand Theft III or The Simpsons: Hit and Run. Brady found that Grand Theft Auto III, the more violent of the two video games, caused increases in blood pressure, more hostile feelings, and more negative emotions in its young male players.

Grand Theft Auto III also led to more permissive attitudes in alcohol and marijuana use. Both alcohol and marijuana are historically gateway drugs into more dangerous substances such as cocaine and heroin. According to Brady, "Video games cannot only influence aggression, but might also influence attitudes toward risk-taking behavior." She found that media violence as depicted in the Grand Theft Auto III game tends to make a player more socially isolated and creates inner and outer tension. This tension can built to a critical level whereby the player snaps and acts out this violence as in the case of Devin Moore.

The video game violence controversy is one that will not go away soon. It came to the forefront with games such as the notorious and exceedingly popular Mortal Kombat franchise. The makers of Mortal Kombat were not deterred in the least from presenting violence; they merely changed the color of the blood at one point from red to green. It seems that Rockstar has taken this violence to more realistic heights. The question is: has Rockstar reached a plateau in Grand Theft Auto: San Andreas or will the company find newer and more deceptive ways to push this video game violence and illicit sexual content down the throats of its young male latently aggressive players?

Finally, will yet another company jump on the video game violence bandwagon with the inevitable emergence of more graphic realism with the advent of Sony's highly anticipated PlayStation 3 system? As game developers, will we be seduced to provide these types of games to players all too eager to engage in them or will we take social responsibility to provide games with sound moral lessons and social values adhered to by a family oriented society? One thing is for sure, if we do not self-police our beloved video game industry, the SEC, FTC, and the Attorney General's Office most certainly will.

* NOTE: "Children's Story" music lyrics in GTA: San Andreas by Slick Rick.

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