Officials needed a scarecrow for the people, but they couldn't make it out of Hollywood and musicians.
Rockstar Games co-founder Dan Houser, in an interview with Chris Evans on The Chris Evans Breakfast Show, recounted how the triumph of Grand Theft Auto III and subsequent games in the series led to the studio being persecuted by US authorities, who used the games as a "scapegoat" for social problems.
He brought the US government down on us. They decided we were the only ones on the entire internet distributing pornography — utter nonsense. We were almost shut down, fined a huge amount. It severely undermined the company, some members of my team quit, it was very difficult.
Houser was likely referring to the Hot Coffee scandal in GTA: San Andreas, when modders unearthed hidden code for a mini-game with explicit scenes of intercourse.
Although the content was not accessible in the regular build of the game, the ESRB changed the rating from "Mature" (17+) to "Adults Only" (18+), which led to copies being withdrawn from stores. The Federal Trade Commission conducted an investigation, and Take-Two paid approximately $20–50 million in legal fees, compensation (up to $35 per buyer), and re-release of the game. The company lost millions of dollars and suffered a major blow to its reputation.
According to Houser, the pressure came mainly from "centrist Democrats" looking for a "media scarecrow": Hollywood brought in too much money, rap had racial undertones, so video games became an easy target.
