Have game developers gone too far? A regulatory shakeup may be on the horizon, as game and mobile app developers are told to switch their focus from maximising profit margins, to protecting their audience from online harms.
A government inquiry by the Digital, Culture, Media and Sport Committee ("DCMSC") into immersive and addictive technologies has found a 'lack of honesty and transparency' by developers surrounding the use of loot boxes and micro transactions in mobile applications and video games.
Drawing comparisons to the world of gambling, the Committee explore the concept of 'online harms', i.e. the potential psychological and financial harms that can arise from using social media platforms and mobile and video games which are designed to stimulate users, and reward them for spending as much time on the platforms as possible - the so called "attention economy".
On financial harms - the report considers one of the most prominent features about the potential links between game mechanics and gambling is the use of loot boxes. Loot boxes are "items in video games that may be bought for real-world money, but which provide players with a randomised reward of uncertain value". They are a common feature in free to play games such as Fortnite, and are also regularly included (much to the disappoint and backlash from fans) in premium (paid for) games such as the FIFA and Star Wars Battlefront franchises. The mechanics have already caught the attention of EU regulators, with developers facing fines from the Belgium and Dutch gambling authorities, and in the latter case a ban on the game in question.
Many games, such as these, contain mechanics which are highly similar to gambling products, they leverage reward psychology and utilize gambling ratios of success, with the intended effect being to drive engagement and profits to the benefit of developers.
Whilst the use of these mechanics are integral to the revenues of major games companies, they are also troubling because they are widely played by a younger audience, and by problem gamblers (a 2018 Gambling Commission survey found that 31% of 11–16 year olds have paid money or used in-game items to open loot boxes). In that context the DCMSC has called on developers and gaming companies alike to take responsibility for addictive gaming practices, and to protect younger users from such practices.
They recommend introducing a ban on targeting such games to younger audiences, and call upon the Government to extend the scope of UK Gambling laws to loot boxes. The report is likely to inform future Government Policy, gaming companies and their corporate stakeholders must stay live to such developments, be aware of the threat to future revenue models and monitor regulatory and reputational developments in this area.
“Loot boxes are particularly lucrative for games companies but come at a high cost, particularly for problem gamblers, while exposing children to potential harm. Buying a loot box is playing a game of chance and it is high time the gambling laws caught up. We challenge the Government to explain why loot boxes should be exempt from the Gambling Act."