Level up level 8 Consumers Rights and Protections

Level up - Level Eight: Consumers – Rights and Protections

Advertising plays a large part in the success of a video game and can be used to either promote the video game itself or as a source of revenue. Indeed, many popular 'free-to-play' titles rely heavily on in-game advertising as part of their monetisation model and even the larger players, including Sony^[1] and Microsoft^[2], have reportedly been considering the introduction of in-game advertisements for their respective 'free-to-play' catalogues.

Advertisements are subject to a number of codes and regulations which are designed to protect consumers by promoting transparency and preventing misleading communications. Both advertisements for games and in-game advertising will need to comply with applicable rules and regulations in the relevant jurisdictions in which the video game is marketed or commercialised to consumers. Further, a number of legislative changes have recently been proposed in the UK and EU via the Online Advertising Programme, Online Safety Bill, the Digital Services Act and more, which will impact the world of online gaming and advertising, particularly in relation to the content presented to minors and vulnerable individuals that form part of the gaming community. Key stakeholders should therefore take advice and perform compliance checks as early as possible to reduce the risk of incurring any sanctions and/or reputational damage.

With the above in mind, we wanted to create an all-in-one guide for those that currently operate in or are considering entering the video games industry with the purpose of providing an overview of the life cycle of a video game – from the early stages of development, past the grind of regulatory compliance, through to the final stages of monetising the product. The result is "Level Up: A Guide to the Video Games Industry".

In Level seven and Level eight (below) of the Guide, we look at the regulatory landscape that exists to protect consumers (including key principles under the advertising and consumer protection regulations) along with recent case studies and the steps that key stakeholders should be taking to comply with the applicable regulations.

To access the full PDF guide, please email talkingtech@cliffordchance.com

Level Eight - Consumers Rights and Protections

End-User License Agreements (EULAs)

A EULA is an agreement between the licensor (e.g., games developer or publisher) and the end-user (e.g., the gamer) setting out the terms and conditions on which the user is able to use the game. The document is often contractual in nature; however, it is possible to license software and disclaim liability without the parties needing to enter into a formal contract. It is commonplace for video games to require the user to read and agree to the terms and conditions of a EULA by ticking a box or clicking “accept” before the game can be played.

In the context of video games, EULAs perform the following functions: a) to set out the basis on which gamers may use the game and any associated materials or content (e.g., source code; object code; IP rights); b) to preserve ownership and safeguard the developer/publisher’s IP and proprietary rights subsisting in the game; c) to manage and limit any potential liabilities of the publisher that might arise from the gamer’s use of the game; and d) to facilitate the developer/publisher’s compliance with applicable consumer protection laws and regulations.

Key considerations for EULAs

There will be a number of factors for the rights-holder to consider when preparing a EULA, including:

the scope of licence;
available online features and/or services;
multiplayer functionality and interactions with other players;
use and availability of DLC;
use of MODs and editing tools; and
ownership of IP (e.g., game content; AI; and UGC).

Legal advice should be obtained well in advance of any release to ensure that the EULA is fit for purpose, taking into account the context and functionality of the game in order to protect the rights-holder’s IP and proprietary rights in the game. In particular, it should be clear what can be streamed by gamers in so-called “let’s play” videos and any restrictions on use of games for esports.

Community Guidelines

With the increase in available online games, there are an increasing number of players that are able to interact with each other using their avatars or characters in an online virtual world. For the most part, these gaming communities often foster positivity and provide a safe space for players from all backgrounds to play, communicate and create new content. However, there are certain toxic players or “trolls” that seek to harm or bully other players online, which can lead to extremely upsetting and often tragic consequences in the real world.

In order to combat “trolls” and encourage positive behaviour on their gaming platforms, publishers will usually have community guidelines in place. In short, these are a set of rules which the publisher requires users to adhere to in order to play the game (e.g., no offensive language; no bullying; no illegal activity; no cheating etc.). The guidelines will often explain the consequences of failing to comply with the rules which, depending on the severity, may include a warning, suspension or full ban from the gaming platform.

Community guidelines will differ between publishers and games depending on the context. Regardless, publishers should ensure that they review and update their guidelines on a regular basis. For instance, well-known publisher, Electronic Arts (EA) recently published a new set of rules called the ‘Positive Play Charter’ which had a stronger emphasis on governing racism within its gaming community in light of the Black Lives Matter movement.^[3]

There is a high risk of reputational damage for the game and key stakeholders if there are reports of toxic online behaviour on a gaming platform. Consequently, publishers will need to ensure that they have reporting mechanisms in place for players to report behaviour in breach of their community guidelines. Moreover, each publisher must have a trained and sufficiently resourced team to monitor online behaviour and enforce its community guidelines as appropriate.

Consumer Protection Laws

In the EU and UK, there are also a number of laws and regulations that are designed to grant consumers certain protections in the context of a commercial transaction. For instance:

References

[1] Sony reportedly considering in-game ads for free titles - Games Insustry Biz

[2] Microsoft considering in-game ads for free-to-play titles - Report - Games Insustry Biz https://www.gamesindustry.biz/articles/2022-04-18-microsoft-considering-in-game-ads-for-free-to-play-titles-report

[3] EA outlines new community guidelines to tackle toxic players - Pocket Gamer https://www.pocketgamer.biz/news/73686/ea-new-community-guidelines/