Last week, the UK games industry finally published its long-awaited ‘Industry Principles’ surrounding the use of paid loot boxes in video games following years of debate and scrutiny by the UK government. The guidance was published by Ukie (the largest trade body for the UK games and interactive entertainment industry) with the support of the UK Government; however, the Technical Working Group that devised them was a private industry initiative comprising a variety of members, which was convened by the Department for Digital, Culture, Media & Sport to implement the Government’s 2022 findings.
The last words on UK loot box regulation were heard in July 2022, when the UK government opted against amending the Gambling Act 2005 despite evidence of an “association” between loot boxes and various harms coming to light during the consultation period.
Loot boxes, for those unfamiliar, are a popular monetisation technique used by video games in which a player has the chance to win or purchase a loot box or loot crate in which an unknown virtual item is held. The virtual item prize is only revealed after a player has paid for the loot box, whether using real or virtual currency, and so the player might get the rare football player, weapon, skin or armour desired, but equally might get a common item – perhaps even one already possessed. Naturally, this mechanic has led some to criticise loot boxes for being akin to gambling and some commentators have alleged that loot boxes are addictive or exploitative of players, especially younger players. Nonetheless, under the current state of UK law, loot boxes are legal and not a regulated form of gambling - provided that the virtual items cannot be "cashed out" for real money in any way. Almost invariably in mainstream games, the items remain purely virtual and cannot be "cashed out", so the loot boxes remain legal.
Rather than regulating loot boxes in law as part of the current reforms to the Gambling Act 2005 that are underway, the Government instead opted for an industry-led approach: perhaps for the final time before legislating. In particular, the 2022 review had two main recommendations:
- Children or young people should not be able to purchase loot boxes without the consent of a parent or guardian.
- All players should have access to spending controls and transparent information in the name of safe gameplay.
The results of this industry-led approach have now been published. In a statement from Ukie, its Co-CEO, Daniel Wood, said:
“Publishing these shared Principles for how the industry approaches loot boxes is a UK first and provides us with a clear direction moving forwards. The Principles will improve protections for all players and underlines the industry’s commitment to safe and responsible play. We look forward to working collaboratively across industry and with others to implement them over the coming months.”
The new Principles
The Industry Principles can be read in full at the link here, but they can be summarised as follows:
- Make available parental controls to prevent under 18s from acquiring loot boxes without permission.
- A targeted public information campaign about those parental controls.
- Form an expert industry panel on age assurance.
- Disclose the presence of loot boxes to players before they buy a game.
- Give clear probability disclosures to players on the likelihood of obtaining items or categories of items in the loot box (also known as 'drop rates’). If player data is used to influence loot boxes, this must also be disclosed.
- Design and present loot boxes in a manner that is easily understandable to players.
- Support the implementation of the Video Games Research Framework.
- Continue to tackle the unauthorised external sale of items acquired from loot boxes for real money (e.g., on unauthorised websites).
- Commit to lenient refund policies on loot boxes where spending has occurred without parental consent.
- Advance protections for all players in relation to spending management.
- Work with UK Government to measure the effectiveness of these principles after 12 months.
To kick off the initiative, Ukie has pledged £1 million towards a three-year public information campaign aimed at parents. The start of the campaign has been consciously aligned with the start of the summer holidays, aiming to provide parents with more information on the mechanics and implications on in-game purchases, including loot boxes.
It appears that there will be a 12-month period, following which the success of these Principles will be assessed.
The Industry Principles have laudable aims insofar as the protection of players, especially children, are concerned. While some may think regulation of loot boxes is unnecessary and the industry should be free to monetise games however it wishes, the UK government has made clear that it considers changes are required. Moreover, if there is a change of government next year, it is difficult to see any change in this position. Other governments and trade bodies around the world are also steadily bringing in further restrictions on loot boxes, so the UK is not an outlier in this respect. If you agree that players do need more protection, it is difficult to criticise or disagree with any of the Principles outlined.
Nonetheless, the Principles are something of a paper tiger and it remains to be seen how much difference they will make in practice:
- First, they do not include hard-and-fast rules, such as banning loot boxes for under 18s altogether or introducing hard spending caps and so on, which will make it difficult to determine if an individual game publisher is complying or not.
- Secondly, and perhaps more importantly, they are a voluntary code. So far as we can tell, there is no meaningful sanction for individual companies that do not comply. Ukie is not a regulator and the Government has not appointed another regulator or given these Principles the force of law.
Accordingly, the implementation of the guidance remains, as noted by the Government, dependent on the games industry’s collaboration with “players, parents, academics, consumer groups and government bodies”. Games companies who use loot boxes heavily will be pleased by the continued lack of meaningful regulation or sanctions for continued use of loot boxes with UK players. Moreover, aside from establishing the baseline for best practice on in-game transparency and controls, the onus has been placed largely on players and their parents to actually effect the oversight required to keep children and young people safe.
While individual sanction will not follow for the next 12 months at least, doubtless the Government will review video games companies’ response to and implementation of the Principles. It is probably fair to say that the industry is on its last life and, if there is not a collective response to adhere to these Principles at the end of that period, the Government is likely to legislate against loot boxes.