If you’ve worked in video games law over the past few years, then you probably feel like you’ve heard enough about loot boxes to last a lifetime. The saga continues though and may be about to reach the next stage. It is understood that the UK government is planning to issue its White Paper on gambling regulation in the next few weeks, but The Times reported recently that it is expected to propose less strict rules than many active in the space had feared.
In the meantime, more regulation may on its way elsewhere in Europe and this may be a sign of things to come, as a Norwegian consumer body has issued a report calling for more regulation of loot boxes. According to the Norwegian report’s authors, businesses offering loot boxes in their games allegedly use the following practices:
- Exploiting cognitive biases and vulnerabilities through deceptive design and marketing, such ‘as fear of missing out’
- Using layers of virtual currencies to mask or distort real-world monetary costs (and consumers are rarely able to convert virtual currency back into real world currency)
- Targeting loot boxes and manipulative practices towards minors
It could be fair to say that that the authors of the Norwegian report are not fans of the popular monetisation method.
The report goes on to say that, due to the sheer size of the market and the number of affected consumers, national and EU authorities should prioritise regulatory investigations and interventions. It is also calling for a number of substantive measures, including a ban on deceptive design, extra protections for minors, and transactional transparency.
While the video game industry is the largest entertainment industry in the world, the report says that the video game sector has largely evaded regulatory scrutiny up till now because prevailing business models are technically complex or novel and because video games, according to the article, have been historically considered a niche entertainment market by many authorities.
That is all changing now, as the industry is increasingly subject to outside regulation, including consumer law reform both at UK and EU level (with more to come), ASA guidance on in-game advertising the ICO’s Children’s Code, the Omnibus Directive, the Online Safety Bill and the Digital Services Act. In recent weeks, the EU has indicated that it intends to review the European consumer law directives once again (even though new laws only took effect in late May) and will be considering, among other things, marketing of virtual items and the allegedly addictive use of digital products. If loot boxes do require regulation, it could be argued that using consumer laws to do so may be more appropriate than using gambling laws, but we will see in which direction the various legislators go.
At any rate, it looks like loot boxes may be back on the legal agenda soon in the UK, Norway and the rest of Europe. Games companies who use this monetisation technique will no doubt be watching developments closely.
video games are still considered a niche entertainment market by many authorities