Karl was getting pressure from his boss, parents, and wife about the marketing campaign for Bounce Corporation's new web browser-based game called "Breakaway." He had been working for Bounce for about two years, and the Breakaway game was his first big project. After Karl and his wife, Lisa, graduated from college, they decided to go back to their hometown of Austin, Texas. Karl's father knew the president of Bounce, which enabled Karl to get a job in the company's marketing department. Bounce is a medium-sized company with about 1,000 employees, making it one of the main employers in Austin. Bounce develops browser-based social networking games. Within the social networking game industry, competition is fierce. Games typically have a short life cycle before the "next big thing" arrives. One of the key strategies in the industry is providing unique, visually stimulating games using simple story lines, fast action, and participant interaction. The target market for Bounce's social networking game products are adults between the ages of 18 and 44. Males constitute 75 percent of the market. When Karl first started with Bounce, his task was to conduct market research on the types of games that players wanted. His research showed that the market was looking for more action (violence), distinct character roles, multiple levels of difficulty, and in-game rewards. Further research showed that certain tasks and scenarios were more pleasing than others. As part of his research, Karl observed people in online role-playing games; he found that many players became hypnotized by a game and would buy credits via credit card or PayPal to advance more quickly. Research suggested that many target consumers exhibited the same symptoms as compulsive gamblers. Karl's research results were well received by the company, which developed several new games based on it. These new games were instant hits with the market. In his continuing research, Karl found that the consumer's level of intensity increased as the game's intensity level increased. Several reports later, Karl suggested that target consumers might be willing, at strategic periods, to purchase credits for more energy or stamina to complete tasks in the game. For example, a player who wanted to quickly move through the tasks required to complete a level would have to buy credits; to finish the "boss" levels within the game, credits were almost a necessity. When the idea was tested, Karl found that it did increase game productivity. Karl also noticed that social networking games that gave positive reinforcements to the consumer, such as encouraging messages after a completed task, were played much more frequently than others. He reported his findings to Will, Bounce's president, who asked Karl to apply that information to the development of new games. Karl suggested having the games reward game players with special discounts on in-game items when specific goals were achieved. Players could then use the discounts to buy items at strategic points to increase their chances of advancing to the next level. By inserting the opportunity to buy certain items at a discount, these games generated more credit input than output, and game productivity increased dramatically. These innovations were quite successful, giving Bounce a larger share of the market and Karl a promotion to product manager. Karl's newest assignment was the Breakaway game, a fast-paced scenario in which the goal was to destroy the enemy before being destroyed. Karl expanded the game's appeal with two notable additions. First, the game employed 3-D technology, which gave players the ability to connect their computers to HDTV sets to play the game. Second, keeping in mind that most of the consumers were male, Karl incorporated a female character who, at each level, removed a piece of her clothing and taunted the player. A win at the highest level left her nude. Test market results suggested that the two additions increased profitability per game dramatically. Several weeks later, Will asked about the Breakaway project. "I think we've got a real problem, Will," Karl told him. "Maybe the nudity is a 5455bad idea. Some people will be really upset about it." Will was displeased with Karl's response. Word got around fast that the Breakaway project had stalled. During dinner with his parents, Karl mentioned the Breakaway project, and his dad said something that affected Karl. "You know, son, the Breakaway project will bring in a great deal of revenue for Bounce, and jobs are at stake. Some of your coworkers are upset about your stand on this project. I'm not telling you what to do, but there's more at stake here than just a computer game." The next day Karl had a meeting with Will about Breakaway. "Well," Will asked, "what have you decided?" Karl answered, "I don't think we should go with the nudity idea." Will answered, "You know, Karl, you're right. The U.S. market just isn't ready to see full nudity in a social networking game played within a web browser. That's why I've contacted an Internet provider who will take our game and sell it on the Internet as a stand-alone adult product. I've also checked out the foreign markets and found that we can sell the game to the Mexican market if we tone down the violence. The Taiwanese joint venture group has approved the version we have now, but they would like you to develop something that is more graphic in both areas. You see, they already have similar versions of this type of game now, and their market is ready to go to the next level. I see the Internet market as secondary because we can't package the 3-D capabilities into the stand-alone Internet product. Maybe soon we'll be able to tap into it at that level, but not now. So, Karl, do you understand what you need to be doing on Breakaway?" 1. What are the ethical and legal issues at stake in this scenario? 2. What are Karl's options? 3. Discuss the acceptability and commercial use of sex, violence, and gambling in the United States. 4. Is marketing sex, violence, and gambling acceptable in other countries if these things do not conflict with local cultures?