Video games are taking heat following the recent mass shootings in Dayton and El Paso, adding political risk to the trade risk hanging over stocks like Activision Blizzard (ATVI) , Take Two (TTWO) , and Electronic Arts (EA) .
Despite a comeback on Tuesday morning for the stocks, major politicians and the president have chosen the old line about media inciting violence, which puts the makers of games like "Call of Duty" and "Grand Theft Auto" in a precarious spot.
"We must stop the glorification of violence in our society. This includes the gruesome and grisly video games that are now commonplace," President Donald Trump said in prepared remarks on Monday, after the weekend's twin mass killings in Ohio and Texas. "It is too easy today for troubled youth to surround themselves with a culture that celebrates violence. We must stop or substantially reduce this and it has to begin immediately."
His calls for a crackdown were echoed by prominent GOP figures, including Texas Lt. Gov. Dan Patrick, who lambasted the industry on Fox News earlier this week.
Completely beyond parody: on Fox & Friends, Texas Lt Gov @DanPatrick blames video games, not guns or racism, for mass shooting in El Paso: "How long are we going to ignore on federal level the video game industry?...I see a video game industry that teaches young people to kill." pic.twitter.com/psxgV2cdLn— Aaron Rupar (@atrupar) August 4, 2019
Examining the Evidence
With the vocal criticism crossing the airwaves, the real question becomes: Is there any evidence for the correlation these politicians are promoting?
The answer is not as simple as a yes or no. It becomes an argument about degrees of correlation and whether or not the relation can rightly be called causal.
"Studies provide converging evidence that exposure to media violence is a significant risk factor for aggressive and violent behavior," Dr. Craig Anderson, director of Iowa State's psychology department wrote in a detailed study of the subject. "Violent video games are significantly associated with: increased aggressive behavior, thoughts, and affect; increased physiological arousal; and decreased prosocial (helping) behavior."
His findings have been endorsed by the American Academy of Pediatrics, which has called for intervention into the consumption of violent video games by minors.
"Although there is broad scientific consensus that virtual violence increases aggressive thoughts, feelings, and behaviors, there has been little public action to help mitigate children's exposure to it," a 2016 policy statement reads. "In fact, the single broadest legislative action taken by the state of California, which made it illegal to sell video games labeled for mature audiences to minors, was struck down by the US Supreme Court. It is important to note, however, that the ruling was not based on the absence of data linking media violence to aggression. Rather than rule on scientific merit, the Court invoked first-amendment protection for the games insofar as the Court construed their primary purpose to be to confer ideas and social messages."
The policy paper argues that this was a mistake and some action must be taken to curtail the gameplay of realistically violent games by children.
Correlation Is Not Causation
Despite the correlation in behavior cited by the science journals, the ubiquity of video game violence globally and the relatively quarantined status of mass killings to U.S. soil leaves many unconvinced of any causal link.
"We're just sickened and saddened by these senseless tragedies. That said, blaming entertainment is irresponsible," Take Two CEO Strauss Zelnick said when questioned on the issue on Monday. "Moreover, it is highly disrespectful to the victims and their families. The fact is entertainment is consumed world-wide ... but gun violence is uniquely American. So we need to address the real issues."
Indeed, countries like Japan with larger populations of violent video game players are bereft of such shocking violence, especially with the use of firearms.
I lived in Japan for 5 yrs as @CNN's Tokyo correspondent and covered ZERO mass shooting. ZERO shootings AT ALL. Japan is a video game culture unlike almost any other country. What's extremely, extremely rare in Japan-guns. https://t.co/COF7rEgw8y— Kyung Lah (@KyungLahCNN) August 4, 2019
Even in the U.S., video game consumption, with may games focused on violence, has clearly been on a steep ramp upward, as has the realism found in games. Yet, according to the Psychiatric Times, youth violence has fallen steadily.
Additionally, many scholars find the analysis of only one cause in a multivariate situation as the psychology of violent offenders as lacking in rigor.
For example, violence in the home or innately violent tendencies are likely to have a much larger effect than any violence in media. Yet, in studies like the aforementioned Anderson report, these types of variables are not controlled for.
As such, the studies can speak no further than a degree of correlation rather than causation.
In fact, Dr. Christopher Ferguson, Department Chair of Psychology at Stetson University, found in a later study once exposure to family violence was controlled, direct exposure to violent video games did not hold any causal effect on commission of violent crimes.
Instead, he found that evidence of aggressive personality was a prerequisite for any direct effect, indicating the issue is not so black and white.
"School shootings, such as the infamous Columbine massacre, invariably tempt laypersons and scientists alike to draw conclusions between exposure to violent video games and violent crimes," Ferguson wrote in the discussion of his study. "Yet if violent-video-game exposure is fairly common, drawing such a link may be spurious without clear, consistent evidence to support such a link."
"It is possible that, at times, science itself may be caught in a 'moral panic,' wherein it is tempting to conclude that a difficult problem is caused by an easily remedied issue," he added. "The influence of the arts on the immoral actions of individuals (whether violent, sexual, political, or religious) has likely always inflamed public opinion. Yet one generation's violent media becomes the next generation's literature, and our fundamental biology, innately aggressive as it sometimes may be, continues."
Indeed, violence has been prevalent in media for quite some time. A Bradbury-esque ban on new media platforms without proper, rigorous causal links would seem a tragedy and many academics and commentators have quickly come to the defense of the industry in response to the calls for restrictions.
The main risk related to video game stocks is either a crackdown on regulation of video game ratings, or outright bans of overly violent video games. In this context, serious money makers like "Grand Theft Auto" could be at risk.
Fortunately for investors, judging by Take Two's Zelnick's comments, this is not a fight the industry will retreat on.
Additionally, the recent scholarly evidence as well as the First Amendment remain on the industry's side.
As such, don't have your nerves frayed too much on the political risk related to video game stocks.