The North American video games regulator, the Entertainment Software Ratings Board (ESRB), recently announced plans to require game publishers to include a new warning if a game contains loot boxes or any other random paid-for items or content.
The label, reading “In-Game Purchases (Includes Random Items)” is broad and captures a wide range of paid-for products in games (such as downloadable content and other non-random items). The ESRB confirmed that the updated warning would be assigned to games with “loot boxes, item or card packs, prize wheels, treasure chests, and more”.
The Pan-European Game Information board (PEGI) announced a similar classification, worded: “Includes Paid Random Items”. According to PEGI, the concept of paid random items includes “in-game offers to purchase digital goods or premiums where players don’t know exactly what they are getting prior to the purchase (e.g. loot boxes, card packs, prize wheels). Depending on the game, these items may be purely cosmetic or they may have functional value: they can include additional characters, outfits and other appearance upgrades, but also tools or weapons, etc.”. ESRB and PEGI both adopt broad wording, with both regulators clearly intending the notices to cover all paid-for content that involves an element of randomness, luck or chance, regardless of the reward or item ultimately obtained by the player.
These initiatives follow PEGI’s announcement in August 2018 that in-game purchases must be flagged in rating notices. Fewer than 20 per cent of the games licensed by PEGI in 2019 carried this notice, and the warning made no distinction between normal purchasable content (such as identified maps, characters or skins) and loot boxes or other randomly-awarded items.
These decisions may have been influenced by a report published in October 2019 by the children's commissioner for England which highlighted the negative aspects of online gaming for children, including the “positive link between gaming and gambling, and the concurrent risk of addiction”. Echoing proposals made by the UK parliament's Digital, Culture, Media and Sport Committee (DCMS), the report made a number of recommendations, including the reclassification of loot boxes as gambling products as well as the introduction of spending caps, age verification and warning labels. The children’s commissioner called for the industry and its regulators to do more to ensure content is appropriate to the target audience and that monetisation is clearly signposted.
Paid random item warnings are a win for loot box critics and regulators, but some will argue more must be done to curb children’s spending on loot boxes – which are often heavily promoted in-game. Although it is likely that such initiatives will have a limited effect on the ubiquity of this monetisation mechanic, more drastic measures such as the reclassification of loot boxes as gambling products could have far more significant consequences. Publishers will be keen to avoid the significant regulatory powers of national gambling authorities. However, this move by the two major ratings boards is a clear indication of the mounting levels of regulatory scrutiny being placed on loot boxes.
Client Alert 2020-246
