Loot box regulation

October 25, 2022

  • Phil Savage,

The end of unregulated loot boxes?

They have long caused a headache for regulators, now two European jurisdictions, Spain and Netherlands, are attempting to regulate speculative payments, one more successfully than another.

British MPs have called for loot boxes to be covered under gambling law and the German Bundestag has passed an act to increase the visibility of “interaction risks,” but if anything, the headache seems set to grow for regulators.

A 2021 report by Juniper Research forecast that video game loot box revenue will reach US$20 billion by 2025. This is not such a leap when we consider that, during 2020, an estimated US$15 billion was spent in speculative payments albeit at a time when many people had switched their disposable income to home entertainment due to the global pandemic.

Mobile gamers represent the majority of loot box revenues, which is unsurprising, considering this is how most “free-to-play” games on Android and iOS are monetized. However, the research also indicates that battle passes and downloadable content on consoles will be a lucrative market.

The overall rate of increase, forecast at five percent per annum, is partly arrived at by the researchers factoring in market constraints in the form of regulation.

With origins in gacha-style games from Asia, the loot box mechanic is still most popular in Japan and China where regulation continues to allow in-game purchases. The forecasts show the US playing a rapid game of catchup whereas Europe, by contrast, is likely to lead the field in restricting market growth.

That prediction has started to come to fruition in Netherlands, where a long-running court case was settled inconclusively, and in Spain where the first attempt at a loot box bill is going though the legislative process.