TIGA is the network for games developers and digital publishers and the trade association representing the video games industry. This publication provides TIGA members with an update on the UK Government’s approach towards loot boxes.
Loot boxes
There has been recent parliamentary interest in loot boxes. Since October 2017, three Labour MPs have questioned the Government on loot boxes and their association with gambling.
Loot boxes, in brief, are virtual boxes within games that contain random prizes. They can contain items from skins to power-ups that can significantly increase your chances of winning. Loot boxes are in essence a video game monetisation tool. Paid for by the player with real money – either directly or indirectly – loot boxes can be understood to be something akin to digital ‘lucky dip’. Loot boxes are often presented visually as packs foil-wrapped of cards, albeit virtual ones. Players usually ‘open’ those packs in-game to find rewards of varying values to be used in-game, introducing a degree of luck to their delivery. Loot boxes always deliver something; they do not operate like most prize scratch cards where you may not win anything at all. Loot boxes often offer purely cosmetic enhancements to games; perhaps a new ‘paint job’ for an in-game car. Others, however, offer gameplay modifiers; extras that potentially provide a gameplay advantage; perhaps a faster engine for an in-game car.
Loot boxes hit the headlines in the closing months of 2017 after consumer reaction to their use in a beta release of Star Wars: Battlefront II. The game’s loot boxes offered many gameplay modifiers, including access to iconic playable characters like Darth Vader. While many felt that such a character should be included in a game already released with a premium price tag, others pointed out it would take as much as 40 hours of gameplay ‘grind’ to unlock that character without paying. That latter point brought many accusations from players that the game was designed to push the sales of loot boxes. The fact that a player may also have to buy numerous loot boxes to get a character they wanted added to the notion that loot boxes are tantamount to gambling. As a result, there was much petitioning governments around the world seen, as player and consumer groups looked to apply gambling laws to the game, or games using loot boxes more generally.
It should be noted that loot boxes were not in the final full release of Battlefont II, as EA removed them from the game, demonstrating the potential impact of consumer backlash.
The rush of obtaining these items in a game of chance has been likened to gambling.[1] However, under current law, loot boxes do not constitute gambling. Tim Miller, Executive Director of the Gambling Commission, explains:
‘In relation to loot boxes specifically, the key thing here is the loot boxes we’ve seen, none of them contain a facility to be able to cash-out within the game itself, and that’s really the key thing which is preventing them from crossing that line into becoming gambling.’[2]
The ability to ‘cash-out’ items is often enabled by third party websites, which does constitute gambling. The Gambling Commission has helped launch prosecutions against such websites. The first case of this kind was brought against the FutGalaxy website, which concluded in February 2017.[3]
In response to questions by MPs, the Government has cited the following areas of regulation and policy that apply to loot boxes.
Gambling Commission
Third party websites have come under scrutiny from the Gambling Commission. The body was set up under the Gambling Act 2005 to regulate commercial gambling in Great Britain.
In a written answer published 16 October 2017, Tracey Crouch MP, Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport stated:
‘Where items obtained in a computer game can be traded or exchanged outside the game platform they acquire a monetary value, and where facilities for gambling with such items are offered to consumers located in Britain a Gambling Commission licence is required. If no licence is held, the Commission uses a wide range of regulatory powers to take action.’[4]
She added that the ‘Gambling Commission is keeping this matter under review and will continue to monitor developments in the market.’[5]
Consumer Protection from Unfair Trading Regulations 2008
Consumers are protected by the Consumer Protection from Unfair Trading Regulations 2008. This includes a requirement on businesses not to subject anyone to misleading or aggressive marketing practices, or, for example, direct exhortation to buy products, such as games content, including in-game purchases such as loot boxes.
The Government has stated that it is committed to ensuring that consumers are properly protected and that children’s vulnerability and inexperience is not exploited by aggressive commercial practices.[6]
Internet Safety Strategy Green Paper
Published on 11 October 2017, the Internet Safety Green Paper intends to ensure that ‘Britain is the safest place in the world to be online.’[7] Alongside issues such as social media, online radicalization and data protection, the paper also looks at online gaming in terms of child safety.
While the Strategy does not mention loot boxes specifically, it outlines how the government will work with online platforms, game publishers and game developers, and with agencies such as the VSC Rating Board, to continue to improve online safety in games. This includes promoting further awareness and understanding of PEGI age ratings, parental controls and advice on safe gaming.
The paper also outlines the Government’s pledges to work with the video games industry and others on:
- further promoting awareness and understanding of PEGI age ratings, parental controls and advice on safe gaming;
- considering what evidence there is of existing issues and thinking about issues that may emerge, particularly as new types of games (such as Augmented Reality) develop;
- develop an understanding of the various safeguards, techniques and protocols that games companies use to manage their consumers’ online game experience with a view to highlighting best practice;
- sharing guidance and best practice for games businesses to help them ensure their consumers – particularly children – can have a safe and enjoyable online gaming experience; and
- exploring how the principles behind our social media code of practice should apply to the interactive elements of the games industry, particularly in respect to reporting and removing offensive user generated content.
A consultation on the Internet Safety Strategy closed on 7 December. The Government will consider stakeholder opinion and the policy will be developed as part of the Government’s Digital Charter in due course.
Competition and Markets Authority
Developers have important responsibilities and obligations when it comes to app-based or online games. As outlined by the Office for Fair Trading (OfT) in 2014 – now the Competition and Markets Authority – information about the costs associated with a game should be provided clearly, accurately and prominently up-front. This should happen before an individual begins to play, download or sign up to it or agrees to make a purchase.
The OfT also made clear that games should not include practices which may have the potential to unduly influence a child to make a purchase, while payments should not be taken from the payment account holder unless authorised.[8]
Apple’s Action
Since December 2017, Apple has required any App Store game with loot boxes to disclose the odds of receiving items from them prior to purchase.[9] This provides consumers with important information. It will be interesting to see whether other platforms follow Apple’s lead. It will also be interesting to see whether and how MPs and the UK Government respond to Apple’s move.
Next steps
TIGA will continue to monitor developments and engage with policy makers on this subject. Should any members wish to discuss loot boxes or express any views on the subject to TIGA, then please contact Suzi Stephenson at: suzi@tiga.org
[1] The Guardian, 28 December 2017, link
[2] Eurogamer.net, 14 December 2017, link
[3] Eurogamer.net, 7 February 2017, link
[4] Hansard, 16 October 2017, Col 106042 WA link
[5] Hansard, 16 October 2017, Col 106042 WA link
[6] Hansard, 25 October 2017, Col 108321 WA, link
[7] Internet Safety Strategy – Green Paper, Department for Digital, Culture, Media and Sport, 11 October 2017, link
[8] Competition and Markets Authority, 30 January 2014, link
[9] http://www.eurogamer.net/articles/2017-12-21-app-store-now-forces-games-with-loot-boxes-to-disclose-item-odds