BIG
DEALS
•Basketball in China
•Strawberry Shortcake in
the Cookie Jar
GIGAMEDIA LIMITED AND
ELECTRONIC ARTS
If you missed the memo from the Beijing Olympics that basketball is white-hot in China, a deal between GigaMedia Limited and Electronic Arts
Inc. should drive the point straight
into the hoop. In July, Giga, a Taipei, Taiwan–based online gaming firm
that already operates broadly in Asia,
scored an exclusive license to offer
EA’s NBA Street Online in the Chinese market for the next three years.
The game is a real-time, multiplayer
online version of EA’s phenomenally
popular NBA games series. Set against
the background of street basketball,
the game features play with current
NBA superstars.
After the United States, China represents the largest NBA market in
the world. The NBA estimates 300
million Chinese play basketball, and
uncounted more millions are fans.
“NBA” consistently ranks as the top
sports term on Baidu.com, China’s
leading search engine.
The deal follows a partnership
announced in November 2007 between
EA and Giga to operate in Taiwan,
Hong Kong, and Macau. According to
Roxanne Christ, the partner at Latham
& Watkins who led Giga’s deal team,
the parties “were determined to get
the deal done” before two events:
ChinaJoy, a major gaming trade show,
and the start of the 2008 Olympics the
following month. They succeeded. The
Chinese version of NBA Street Online
is expected in the last quarter of 2008.
EA is relying on Giga to handle the key
task of garnering the necessary government approvals.
On the legal side, one notable difference between Chinese video games
and U.S. video games is the way
they’re distributed. In the U.S., there’s
an emphasis on physical distribution,
with game software loaded on disks or
cartridges (think Wii, Xbox or PS2).
In contrast, a smaller percentage of
China’s population owns a computer
or console, so the distribution and play
occur online, often at Internet cafés. In
fact, the business is moving primarily
to a micro-transaction model, where
playing the basic version of the game
is free, but players must ante up for
richer features or the ability to do
particular things while playing. The
legal consequence: for the NBA Street
Online deal, the parties spent much
more energy on hacking risks and
security breaches than on piracy issues,
Christ says.
In fact, Christ says, both sides were
more concerned with getting the deal
done than fighting over the last penny.
“They see this as the beginning of
a long-term relationship,” she points
out. It was a bit refreshing and certainly a contrast, she says, to deals she
negotiates with U.S.–based companies.
Christ, who teaches the law of video
games and virtual worlds at Loyola
Law School, was introduced to Arthur
Wang, the CEO of Giga, through gaming legal contacts.
Christ says that for her, the site of
the closing dinner said it all: “There
we were, at a restaurant on the river
in Shanghai celebrating the closing of
a very profitable deal, in the middle
of one of the densest financial centers
in China, and could see two beautiful Communist flags waving across
the river.” She continues, “It was very
moving—not to sound corny, but it
was such a metaphor for China and
what can happen if we embrace its
possibilities.”
For GigaMedia Limited (Taipei,
Taiwan)
Latham & Watkins (Los Angeles):
Roxanne Christ and associates Jeanne
Berges, Nirosha Nimalasuriya, and
Ghaith Mahmood.
For Electronic Arts Inc. (Redwood
City, California)
In-house: Peter Tseng, general counsel,
Asia.
COOKIE JAR, DIC, AND AMERICAN
GREETINGS
Sickly sweet to some tastes, “
Strawberry Shortcake” characters seem incapable of engendering passion—until
the summer of 2008, that is, when
Cookie Jar Group hotly pursued the
rights to both Strawberry Shortcake
and the Care Bears, through a deal, a
lawsuit, and another deal before finally
Roxanne Christ
Latham & Watkins
David Sands
Sheppard Mullin
Linda Michaelson
Sheppard Mullin
Sean Monroe
O’Melveny
David Zagore
Squire Sanders
Thomas Kilbane
Squire Sanders
