Leon Y. Xiao of Beclaws, the author of GameIndustry.biz’s annual Loot Box State of Play feature, gives his opinion on PEGI’s landmark decision over loot boxes, whereby from June onwards, games submitted for classification that contain paid random items will be rated PEGI 16.
Overall, I see this development as positive: giving more information and better warnings to young people and parents about potential risks without actually restricting their ability to play games and spend money cannot be harmful. However, I do think this is a direct response to forthcoming EU regulation (the Digital Fairness Act) and an attempt to dissuade stricter legal regulation through better industry self-regulation.
Firstly, I am most concerned about how this rule will not apply retroactively. I understand why not: it’s difficult and costly to go back and reassess the age ratings of thousands of games. However, we must recognise that games, particularly those that mostly monetise with loot boxes, are long-term services that are designed to operate for many years (arguably permanently; I don’t see Fortnite dying for decades to come).
Today, most people are playing and spending money on ongoing games from six or more years ago. This means that the vast majority of games with loot boxes will continue to generate revenue for at least another decade without being subject to this rule.
Consequently, young people and children will not be better protected in relation to the most popular games, like Brawl Stars or Genshin Impact, because they were all released many years ago, and this new rule does not apply retroactively. However, many children will of course continue to play those games and spend money on them for many years to come. Very few newly released games make it into the highest-grossing lists. This means that in practice, this new rule will apply to very few games that actually matter.
For comparison, the similar Australian rule around loot boxes actually requires previously released games with loot boxes that have since been updated substantially to also have their age ratings updated and increased according to the new rules, so there is precedent for applying the rule retroactively to games that continue to be updated and monetised.
This non-retroactivity also raises anti-competition concerns, as it makes it even harder for newer companies to compete when their games with loot boxes must bear a higher age rating and potentially have fewer players as a result.
I would recommend that PEGI increases the age ratings of the most popular games with loot boxes today, even though they were released many years ago. Doing this would more accurately reflect the current commercial realities of the video game industry. A game’s original release date is irrelevant. Its current popularity is. Loot box regulation should address what is happening now.
“I would recommend that PEGI increases the age ratings of the most popular games with loot boxes today”
Secondly, 16+ for loot boxes is quite strict in comparison to other countries. Germany decided on 12+, Australia decided on 15+, and Apple decided on 9+ (these minimum age ratings are applied just for the presence of loot boxes, irrespective of anything else). This range of values might be confusing to parents whose children play on multiple platforms (e.g., both iPhone and Nintendo Switch), so I think internationally this is sending mixed messages. To be fair, the scientific evidence is not yet in place for us to say where the line should be drawn. PEGI has chosen to be more cautious and stricter than others, but a lower age rating would have been justifiable.
Thirdly, having more rules may improve child and consumer protection; however, for the rule to be truly effective, it needs to be implemented and complied with well. Previously, we have found that PEGI did not always correctly label games with loot boxes. Credit is due to PEGI for quickly fixing those mistakes. But I would recommend monitoring the implementation of this rule, rather than just assuming it will be perfectly complied with.
In particular, I am more concerned about when PEGI age ratings are automatically generated through the International Age Rating Coalition questionnaire that companies fill out before listing their game on digital storefronts like the Google Play Store. Companies might not be truthful or might mistakenly fail to declare the presence of loot boxes. We found that Australia’s similar rule was not implemented well, with many games receiving incorrect age ratings that were too low.
Will there be active monitoring and enforcement by PEGI to ensure that the rule is actually applied? I have reasonable confidence in PEGI given its past performance, but I promise my team will externally audit.
Fourthly, and very importantly, the non-loot-box-related new rules are also notable in recognising wider concerns that parents and policymakers have about in-game purchases. It’s not just loot boxes. Limited-time offers, battle passes, and even daily logins have been highlighted and addressed. I am glad to see this starting an industry-wide debate as to whether and why these mechanics may not be suitable for young children.
