Europe’s New Rules Target Loot Boxes and Kids’ Gaming
Europe is coming for loot boxes, and the games industry is bracing.
A wave of European rules is targeting how games are sold to children, with loot boxes as the primary focus. Due to game developers often adapting their products globally, this crackdown could significantly impact sales beyond Europe.
The Loot Box Problem
Loot boxes are paid digital treasure chests that dispense random in-game items. Critics have long expressed concerns about their addictive nature and described them as a form of gambling. Last year, chance-based mechanics generated approximately $23 billion for game companies worldwide, according to S&P research.
In June, the Pan-European Game Information (PEGI) body began rating games containing loot boxes as unsuitable for individuals under 16 years old. The European Union is considering going further by proposing an outright ban on loot boxes in games accessible to children. This initiative is part of the Digital Fairness Act, expected to pass next year.
Global Pressure Mounts
The pressure isn’t limited to Brussels. In the UK, the Online Safety Act already requires game developers to verify the age of their users. A proposed social media ban for under-16s could impact platforms like Roblox. Brazil, a significant gaming market, has also banned the sale of loot boxes to minors.
These actions align with a broader online age shift across Europe, where countries are successively raising the age requirements for digital services.
Industry Concerns and Possible Impact
The primary concern for the industry is financial. Loot boxes played a significant role in fueling the sector’s growth over the past decade. Eliminating them would necessitate a strategic revenue shift, which could be challenging. According to Neil Barbour, an analyst at S&P Global, "Switching approach ‘would be a strain.’" In Europe, players spend approximately $12 billion annually on in-game content.
Roblox serves as a case study. When new age checks were implemented, its shares dropped by 18% in May, leading to a $1 billion reduction in yearly bookings guidance.
In contrast, the United States allows self-regulation of the industry, as seen after the 2017 "Star Wars Battlefront II" controversy. However, American lawmakers have proposed an anti-loot-box bill.
Darius Popa crafted this story.