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An Introduction to Gamification

April, 2011

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417 © 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

It’s Going to Be Big (Maybe)
 “As Social was the last five years; Gamification will be the next five years.”  By 2015, 50% of companies that manage innovation and research will use gamification to drive innovation and engagement  Jane McGonigal (Reality is Broken) says WOW players have spent 5.93 billion years solving virtual problems. Imagine if you could harness that time and effort solving real problems

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

So What the Heck is Gamification?
 “Gamification” describes the broad trend of using game play mechanics for non-game applications in order to encourage people to adopt applications or engage in desired behaviors.  The technique can encourage people to perform chores that they ordinarily consider boring, such as completing surveys, employee performance, training, remembering to take medicine, shopping or social change.

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Gamification Assumes Status > Cash
 Gabe Zichermann, a Gamification evangelist, asserts that people respond to rewards in the following order:
– Status – Access – Power – Stuff

 Zichermann says that “cash isn't that good of a reward. Status is a fantastic motivator for getting people to do stuff."

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

What Does That Mean?
 In its simplest form, it’s about loyalty and engagement:
– Leaderboards – Badges – Levels – Being Mayor

– Embedding Games
– Progress Bars – Virtual Points/Virtual Currencies

– Loyalty Programs

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

This Isn’t New
 We’ve had this for a long time:
– Frequent Flyer Miles – Frequent Shopper Cards

 We’ve been engaging in it recently without calling it Gamification
– Foursquare and “Check-Ins”

– Wii Fit
– Progress Bars in Social Media Profiles

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Categories of Gamification
 Consumer Engagement (using game mechanics to draw consumer eyeballs and sell more goods and services)  Employee Incentives (using game mechanics for more employee productivity or to encourage employees to go through training, etc.)  Social Change (using game mechanics to work social change.

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Examples of Gamification of Social Change
 U.K.'s Department for Work and Pensions Idea Street  World Bank: http://www.urgentevoke.com/

 U.S. military's "America's Army" video-game recruiting tool

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Idea Street

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Idea Street
 Idea Street is an innovation game created by UK Department of Work and Pensions to decentralize innovation and generate ideas from its 120,000 people across the organization.  Idea Street is a social collaboration platform with the addition of game mechanics, including points, leader boards and a "buzz index."  Within the first 18 months, the project had around four thousand users, generated 1,400 ideas, 63 of which have been implemented within the Department.

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Gamification Advantages
 Accelerated feedback cycles. In the real world, feedback loops are slow (e.g., annual performance appraisals) with long periods between milestones. Gamification increases the velocity of feedback loops to maintain engagement. Clear goals and rules of play. In the real world, where goals are fuzzy and rules selectively applied, gamification provides clear goals and well-defined rules of play to ensure players feel empowered to achieve goals. A compelling narrative. While real-world activities are rarely compelling, gamification builds a narrative that engages players to participate and achieve the goals of the activity. Tasks that are challenging but achievable. While there is no shortage of challenges in the real world, they tend to be large and long-term. Gamification provides many short-term, achievable goals to maintain engagement.

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Risks of Gamification
 Poor execution
– It’s boring, it’s incompatible with your goal, etc. As a result, at best it distracts your user; at worst it damages your brand

 Mismanaging engagement
– In the “social” era, everyone believes that he or she is a part owner of brands and content and they believe they have a vested interest in the direction of the brand or content – And every user engaged through gamification has a free non-legal remedy if the engagement was mismanaged.

 Legal risks
© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Legal Issues
 Ownership  Privacy  Endorsement Guidelines

 Virtual Currency/Gift Card Rules
 False Advertising  Brand Risks  Alternative Reality Games; Viral Marketing Issues

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

IP and Ownership Issues
 Most gamification is handled through consultants and small specialty developers.  Is it established who owns what in the development process?
– Are there work for hire and invention agreements? – Are there ownership arrangements with consultants and other non-employees? – Are you using open source? Creative Commons? Participating in any collaborative community?

 Do the underlying technology and agency agreements give the parties the rights they need?
 Have you thought about reuse of the project? Does the gamification vendor and the social change client have the same goals in mind?

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Virtual Currency/Gift Cards/ Contests and Sweepstakes

 Are the incentives/rewards that you offer convertible into real goods and, therefore, run afoul of virtual currency regulations  Are the incentives/rewards effectively gift cards and, therefore, run afoul of state gift card rules  Are the games structured in a way so that they are a legal contest or sweepstakes?

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

“Engagement” Has to Comply With Advertising Law

 Gamification that focuses on “engagement” with customers needs to comply with the standard advertising rules.
– Can’t be false or misleading – Can’t make unsubstantiated claims – Can’t misrepresent the capabilities of the product

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Be Particularly Careful Of…
 Targeted/behaviorial advertising as part of gamification
– Collecting data based on gamification activity in order to deliver advertising intended to appeal to that individual
– The next wave, but also the area that consumers are squeamish about and regulators are thinking about

– Expect further regulatory and legislative activity

Social media, “word of mouth” and other consumer-based marketing methods
– Regulatory and consumer concern about disclosure of relationships between advertisers and “real people” who promote the products – Applicability of unexpected legal frameworks on gamification projects (e.g. alternative reality games)

The next frontiers
– Location privacy

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

FTC Endorsement and Testimonial Guidelines
 The key here is not to get “cute”; the problem is that a lot of gamification is “cute.” It’s viral, its non-obvious, etc.  FTC is concerned about transparent endorsements  Any blogger or endorser has to reveal any benefits he or she received in exchange for promotional posting, reviews, etc.  Endorsements have to be honest and cannot be deceptive  Both blogger and advertiser can have liability

 Advertiser needs a policy and some minimum enforcement

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Employment Issues
 Gamification strategies with employees may run afoul of employment laws.  Are you monitoring off duty activity and making termination decisions based information obtained through gamification?

 How are you using the information gained through the gamification process
 NLRB Case re firing employee for employee post regarding employer on Facebook (NLRB believes that FB is the new water cooler and that posts are protected comments on “working conditions”)  Does using gamification for hiring decisions create a disparate treatment issue?

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Privacy
 Gamification offer providers an opportunity to collect highly detailed information about their users.  No comprehensive privacy law in the United States  Tradition in the United States is that the data collector, not the data subject owns and controls the data  And with consent, all things are possible…

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

So, What’s the Problem?
 Consumer Backlash; Unpredictable Consumers

 Privacy Policies; Privacy Defaults
 Proper Consents for Sale of Information  FTC Action; Consumer Protection Issues

 Invasion of Privacy Claims
 International Issues (Are you collecting information from nonUS users?)

 Special Issues

– Corporate Issues and Establishing Corporate Policies – Kids – Location Based Services
© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Gamification of Sensitive Data
 Is the game involved in financial services (e.g. encouraging savings), health care (e.g. pill reminders), or education (optimizing classwork)?  If so, you probably have additional privacy burdens because you’re handling sensitive data.

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Data Security
 Gamification may involve broader collection of information from end users that could create security obligations.  Consumers are becoming more sensitized to companies’ handling of their data  Operation – Where are your servers located?

– Do you have a data breach plan?
– Have you audited partners’ security?

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417

Kraig L. Marini Baker kraigbaker@dwt.com 206.757.8007 @bakek

© 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417 © 2011 Davis Wright Tremaine LLP. All rights reserved. 877.398.8417