The economic purpose of intellectual property is to incentivize the creation of products that would not otherwise be created. These laws can benefit consumers, but the granting of monopoly rights creates a cost as well. In terms of balancing costs and benefits, the current copyright system is -to be frank- absurd. A look at how excessive copyright is harming back video game consumers makes that clear.
Right now, you can go out and legally buy one of several clones that is capable of playing video games for the original Nintendo Entertainment System (NES). This is because all of the utility patents that protected the functionality of the NES expired after 20 years, and they were issued in the mid 1980s when the system was released. This means you can legally buy NES system clones that play original NES games and are built by companies other than Nintendo. What's good for consumers is that these systems have a lot of functionality that the original NES did not, including wireless controllers and the ability to save game states.
The patent system seems to work pretty well in the case of video game systems. Nintendo paid the upfront costs of developing the NES, and their monopoly rights gave them the exclusive ability to sell the product for 20 years, during which time they sold around 62 million units. Now, with their investment safely recouped, consumers can benefit from ongoing innovation and substitutes created by others who can build on those innovations.
However, NES games are not patented but instead are copyrighted, and copyrights don't expire nearly as fast. In fact, games released in 1980s are only 30 years into their 95 year copyright protection. This means that it is illegal to own and distribute "roms", which are digital copies of video games that can be played on software "emulates" these classic games. However, for less than $200, if you are willing to break the law, you can buy very tiny computers that contain every NES game ever made on board. These systems can be plugged right into your TV, some come with wifi and wireless controllers, and they can be played without the cost and hassle of having to find, buy, and store all of the original bulky gray game consoles. And you never have to worry about them being broken either.
The value of having every NES game on one system is huge. Some rare games cost hundreds of dollars, and the total cost of accumulating this many of the original games would easily be tens of thousands of dollars. A recent lot of 375 games on Ebay was for sale for $3,999, and some individual rare games can sell for thousands by themselves. Importantly, the money from these sales do not go to the copyright owners who created the games.
However, Nintendo has recently managed to cash in on the growing demand for vintage games. You can buy, download, and play digital copies of the games from online stores included their newer systems. They also temporarily released a tiny NES Classic System that came loaded with 30 classic games. This system sold 2.3 million units despite being offering only a fraction of the games you can get preloaded on an emulation system if you are willing to break the law.
So where does this leave the cost benefit analysis of video game copyrights? Copyrights may give the creators economic incentive to improve and continue making copies of their original creations. For example, without copyrights on the individual games, Nintendo may not have put the work into creating the NES Classic. However, what's available legally from the copyright holders -the NES Classic and some digital downloads on newer systems- lags far far behind what is available illegally. So the economic benefits due to the incentives for ongoing innovation do not seem worth the costs.
The other economic benefit is the initial incentive for creation of the product in the first case. However, the possibility of sales of digital copies 30 years after their release seem unlikely to have been much of a consideration for creators of the games in the 1980s and early 1990s, and probably aren't for creators today either.
Let's consider an illustrative and overly generous example. Say the creators of a potential video game believe that if it is a hit it will sell the same number of units every year for the 95 years of copyright, and the price will go up at a 2% rate of inflation. Like I said, a very generous example to copyrights. Given the uncertainty around whether a game will be a hit or not, a 15% discount rate seems appropriate. In this case, 90% of the net present value of the investment comes within the first 20 years. Even if the creators thought they'd be selling units 30 years later, and even at the same annual volume of initial sales and at 2% inflation, this is worth less than 3% of the net present value of the investment.
All in all, today consumers of classic video games are paying a high tax for what at best gives creators a trivial increase in incentive to create, and more likely has no effect. This has not incentivized greater innovation, but compared to illegal markets has clearly held it back. From an economic standpoint, the copyright length for video games seems to be clearly too long.
