1. The ethical dilemma at stake is that at some point will a child or young adult get their hands on a game that may be “adult” only? The chances of this happening if the game is readily available are very high. If this were to be released in the USA there are strict video game ratings that would be enforced, these are otherwise known as ESRB (Entertainment Software Rating Board). The rating tagged to this game will most likely be an Adult Only rating. This would ensure sale to the appropriate audience.
However in places like Taiwan the rating just allows 18 year olds to purchase video games created this provocatively. Legally this Breakaway project isn’t breaking any laws, but they may be closing the door to a large volume of video game consumers if they stick with the adult only game.

2. Karl has a couple options. He can eliminate the amount of nudity in the game and try to sell it in the U.S. market. This could get Karl some good money in return for a quality product such as the breakaway project. On the other hand Karl could use the Internet Providers and take his game abroad. The product would be a stand-alone adult product. This could mean higher profits because now the game is available to a larger market. From the case it seems Mexico and Taiwan are the countries Karl would like to tap into. Even with these choices Karl still has a few options. In Mexico Karl would have to tone down the games violence. In opposition, the Taiwanese want a more graphic game all around. Now Karl can either make a few versions or something that meets in the middle for both