Video Game Stocks Move Higher After Supreme Court Ruling (ATVI, TTWO, ERTS)

Publishers of video games breathed a sigh of relief on Monday after the United States Supreme Court, in a 7-2 ruling, declared that a California law that banned the sale of video games containing violent content to children was unconstitutional. Referring to California, the Supreme Court ruling said that "the State wishes to create a wholly new category of content-based regulation that is permissible only for speech directed at children. That is unprecedented and mistaken. This country has no tradition of specially restricting children's access to depictions of violence." Members of the video game industry argued that the law was unnecessary because the industry already has a rating systems in place that most video game publishers and retailers voluntarily adhere to. The Supreme Court acknowledged the video game industry's efforts when it said that "California also cannot show that the Act's restrictions meet the alleged substantial need of parents who wish to restrict their children's access to violent videos. The video-game industry's voluntary rating system already accomplishes that to a large extent." The rating system that's currently in place is age-based and lets parents know the age at which a video game is considered appropriate for play. However, the California law would have gone much further, making the sale to minors of video games with violent content illegal and retailers would have faced steep fines for breaking the law. The Supreme Court decision dismissed the merits of the law, saying that "California's argument would fare better if there were a longstanding tradition in this country of specially restricting children's access to depictions of violence, but there is none. Certainly the books we give children to read—or read to them when they are younger—contain no shortage of gore." While video game publishers Activision Blizzard, Inc ATVI and Take-Two Interactive Software, TTWO have climbed 1.4% and 2.1% higher respectively, Electronic Arts Inc. ERTS is down nearly 0.2% during morning trading.