Patrick Lucas

Associate Editor

Loyola University Chicago School of Law, JD 2022

Earlier this year, the Entertainment Software Rating Board (“ESRB”) assigned a new disclosure for their video game ratings system: “In-Game Purchases (includes Random Items).” The decision stems from public outcry and FTC concerns about gamers, mostly children, being able to easily spend real money for randomized in-game content. But is it enough?

Industry overview

The video game industry is unique for many reasons. Gamers are often avid fans of their favorite genres, and expectations are high for new releases. As hardware technology advances, stories become more intense and more immersive. It shouldn’t come as a surprise, then, that the industry had a market value of over $120 billion worldwide in 2019.

The industry is unique for another reason in that some of its most critical aspects are self-regulated. In the United States, for example, the ESRB has operated since 1994, rating games and apps based upon age-appropriateness and requiring disclosure of specific types of content depicted. Almost all major publishers and retailers comply with ESRB requirements by printing ratings on game labels, and refusing to sell or market to anyone younger than the game’s recommended rating. The FTC has lauded the ESRB’s regulatory system as having one of the highest enforcement rates among media retailers.

However, as the industry has evolved, so too have the ways in which developers craft the gaming experience. It used to be that the game you bought was the game you got. Today, games offer additional expansions, content, characters, story lines, and gameplay modes for sale as downloadable content (“DLC”). The shelf life of certain titles can span across console generations and even decades.

The rating’s on the wall

In what began as a response to parental concerns over violent, sexually explicit or otherwise adult content, the current focus of ESRB ratings and disclosures involve the more interactive elements in the current era of gaming: online interaction, privacy, and, most recently, in-game purchases called “microtransactions.”

The last decade has seen the ESRB require disclosure of “Interactive Elements,” as well as allowing developers to label their games as “Privacy Certified” via voluntary compliance with  ESRB’s online privacy protocols.

In 2018, ESRB finally addressed a growing trend that had spread from mobile games and apps to  mainstream titles: loot boxes, randomized items, and other in-game purchases being offered as part of the gameplay “experience.” The requirement of the disclosure, “In-Game Purchases,” was its attempt to warn buyers, or parents of buyers, that certain aspects of the game might involve microtransactions.

What’s in the box?

Loot boxes are a particular type of DLC that developers offer via microtransaction. Often, they contain minor, and mostly insignificant, upgrades to players’ abilities or appearances. The appeal is that these upgrades are unique and might help players progress through the story faster. Some games even rank the items within based on their rarity—incentivizing repeat buying to obtain rarer items.

The rising controversy surrounding loot boxes is that developers randomize the items inside, and sometimes their contents might not even be revealed until the player buys them. Some people began likening it to gambling. Others expressed major concern over the pressure placed on younger gamers to spend and the ease with which it can be done.

Enter the FTC

In August 2019, the FTC hosted a workshop, Inside the Game: Unlocking the Consumer Issues Surrounding Loot Boxes, to hear consumer concerns and industry perspectives on the issue.

A major takeaway from the conference focused on odds-disclosure—making sure players actually knew the odds of gaining rare or unique items from these loot boxes. While seen as a start, some have said it’s not enough. The bigger issue seems to be the philosophy of game design itself, and the microtransactions that underpin this new pay-to-win mentality.

Industry Response

In April of this year, the ESRB added an additional disclosure requirement to all games that use loot boxes and other randomized content: “In-Game Purchases (includes Random Items).” The inclusion of the random items disclosure is the attempt to warn that microtransactions, specifically with random content, are an element of the game.

The FTC followed just a few months later, issuing a Staff Perspective on the 2019 workshop, its findings, and its stance on the issue. The Commission acknowledged that the disclosure requirement from the ESRB is the correct place to start.

As of this writing, however, the FTC does not regulate microtransactions or in-game purchases involving loot boxes. As research continues and consumer complaints mount, the FTC claims they will “continue to monitor developments surrounding loot boxes and take appropriate steps to prevent unfair or deceptive practices.”

 

With quarantined gamers logging on in higher numbers, the issue is only bound to get more attention. Beyond disclosure, what is the right move? And who should make that move?