EGDF position on loot boxes

EGDF position on loot boxes

There is no single lootbox model 

The term “lootbox” refers to a game design model, where a game developer provides for a player an access to randomised in-game goods through a mystery box. As a business model it originates from physical trading card games like, for example, Pokémon or Magic: The Gathering and has therefore existed in consumer markets for decades already. 

Lootboxes can be implemented in a digital game by a number of different ways: 

  • sometimes they are rewards from successful game play, 
  • sometimes they are given in exchange of watching adverts, 
  • sometimes they are purchased
  • sometimes they are used to help a player to move forward in a game
  • sometimes they are cosmetical
  • sometimes they are used as optional features used to encourage a player to play the game regularly.

Feedback from the vocal and reactive community is  the key way for game industry community to autoregulate itself

EGDF welcomes public debate on business models used in games industry. The success of a game is based on user driven innovation and excellent consumer relationships. For this reason, game developers invest in hearing and understanding their players’ needs. Through public debate information on new business models and their challenges and best practices overcoming the challenges can be effectively mainstreamed among both game developers and players. 

Game industry is a global pathfinder of the business models of the Digital Era. Games are a combination of cutting edge technology, innovative business models and artistic digital content. The success of European games industry is based on being a global forerunner on all these equally important fields. Developing pioneering groundbreaking games requires risk taking and unfortunately this also means occasional failed experiments, even with business models.  As the current debate around lootboxes clearly demonstrates, because of used driven markets, self-correcting market mechanisms work well in the games industry.

Consequently, developing an innovation friendly regulatory framework for the digital single market area should not be based on banning a certain business model. Instead the regulation itself should stay business model neutral. 

However, this does not mean that there would not be lessons to learn from the current discussion around lootbox based business models. Furthermore, instead of drawing different conclusions in each member state and therefore fragmenting the digital single market area in the EU, the lessons learned should be discussed on the European level.

In general, lootboxes are not a gambling issue.

Making a clear difference between gambling and digital games is very important for the European game developer community that wants to keep these two different fields completely separated. EGDF does realize that there are specific games designed specifically for gambling (e.g. virtual poker operating with real cash) and they should be regulated on a similar level as other gambling activities outside of virtual environment.

Over the past two years, following the public debate on the issue gambling authorities all over the globe have investigated lootbox based business models and have carefully evaluated there relation to local gambling regulation. The global consensus on the issue is now emerging and, in general, lootboxes are not considered falling under gambling regulation. 

Even in those few countries, where gambling authorities have concluded that lootboxes fall under the local gambling regulation, usually only those lootbox based business models that allow one way or other players to exchange the in-game content back to money are considered including gambling elements. Consequently, in general, lootboxes are not a gambling issue.

EGDF is ready to co-operate with national gambling authorities to target illegal activities

EGDF is happy to support those gambling authorities that consider some lootbox models to fall under their authority in disseminating their guidelines on the implementation of their national regulation in games among game developer community and is open for further discussion on the issue. 

In particular, EGDF is pleased to note that European gambling authorities are focusing on closing illegal practices such as “skin betting”, where third party sites allow minors to bet and trade virtual items. European game developers and publishers have been struggling to close these services for years and warmly welcome any available help from public authorities. 

Lootboxes require careful implementation from consumer protection perspective 

It is important to remember that safe and transparent market environment requires smooth co-operation by all actors in the global game ecosystem.

EGDF welcomes clear guidance on the implementation of consumer protection rules on business models based on random elements

Random surprise elements are increasingly common part of both traditional retail (e.g. mystery boxes or subscription boxes) and services (e.g. surprise menus in restaurants) and digital content (e.g. loot boxes). When consumer protection authorities are building guidance documents on the implementation of current consumer protection rules on surprise elements, these guidance should address all business models based on random elements in a neutral manner.  

Game developers – strict European standards on data and consumer protection require full transparency

While new business models are developed or introduced in Europe, European game developers are committed in following strict European standards on data and consumer protection and protection of minors while implementing them into their games. EGDF is devoted in supporting European game developers in following changes in European regulation and helps its members to share news about changes on national implementation practices on the European level.  

The ways game developers communicate about the (changes of) business models used in their games is an important consumer protection issue: 

  1. Business model transparency:  It is clear that game developers should pay attention on informing their consumers about the particularities of the business models they are using. Game developers should be particularly careful in providing correct and transparent information when the game uses a new business model or combines number of different existing business models. 
  2. Transparent odds:  Furthermore, when a game developer is offering an opportunity for their players to take transactional decisions in their in-game store that include lootboxes, EGDF advices game developers clearly inform their players about the possible content of the lootbox and the odds that the lootbox contains a particular item. This would secure that their players can make informative decisions. 
  3. No misleading elements: Game developers should avoid design elements potentially misinforming players, for  example by including misleading “near miss” elements in their lootbox models

Platforms – better transparency options and protection of minors tools

EGDF welcomes all recent actions taken by digital distribution platforms to increase transparency towards players 

  1. Transparent drop rates:  In particular, EGDF respects the fact that some platforms are requesting game developers to disclose the odds of getting certain in-game items from lootboxes. Introducing new practices on a platform level is both the most effective way to mainstream them among global game developer community and secure a level playing field among developers coming from different countries.
  2. More transparent application stores: All in all distribution platforms should as well review their content description policies in their digital stores in order to help game developers to better communicate the business models for their audience.

Already now digital distribution platforms have a number of tools & safeguards in place for players, parents and caregivers. EGDF welcomes all measures to improve them:

  1. Clear consumer and data protection age restrictions:  EGDF agrees that age ratings for artistic content (such as USK or PEGI) should not be widened to cover age appropriate data protection and consumer protection requirements, as it could potentially give misleading information about the content of the games. However, EGDF understands that having number of different age classifications for the same game, although transparent, can be also confusing for parents and caregivers. Thus application stores should secure that they make it possible for game developers to clearly indicate, if their game is suitable for children from consumer protection and data protection perspectives in addition to content perspective. 
  2. Clear refund policy for unauthorised purchases made by children: It is currently a standard industry practice in Europe to refund any unauthorized purchase made by minors. EGDF hopes that new platforms entering European markets will follow this practice and make it as easy as possible for parents and caregivers to ask the refund. 
  3. Automatic implementation of parental control-tools: EGDF calls digital distribution platforms to further develop their protection of minors tools in a way that they would automatically communicate to any application on the device that parental control tools have been enabled on the device. This would allow game developers to build their games in a way that when parental control tools are set on, those features that are unsuitable for children are turned off from the game or access to game is blocked all together, if a game develop considers that the game is not suitable for children from data protection, consumer protection or content perspective. See an example below, on implementing a data protection consent requests for minors.

Players, parents and caregivers –  legal guardians play an essential role in protecting minors.

Already now game developers, publishers and digital distribution platforms are doing their best to inform parents about the advanced  protection of minors tools present in devices used for playing games. However, it is equally important that parents and caregivers pay careful attention to them and actually set them on.