Clifford Chance

On 18 January 2023, the European Parliament has adopted a resolution concerning online video games. In the Resolution, the European Parliament (Parliament) emphasised the need to protect players from potential harmful impacts of video games, such as addictive behaviour, isolation and cyber-harassment. The Resolution highlights the vast potential of the gaming sector but also the need for the strong enforcement of consumer protection rules and stricter regulation in some key areas.

The gaming industry has made important contributions to the European Union's economy, with the creation of many jobs and technological developments, which the Parliament recognises in its Resolution. However, the Parliament has identified numerous growing concerns over the negative impacts of video games, and has therefore called on the European Commission (Commission) to address these concerns via appropriate action, including putting forward dedicated legislative initiatives if necessary. The Resolution also calls for strong and coordinated national approaches within EU Members States towards the video game industry. In this article, we will take a quick look at the key considerations of the Resolution as well as its potential impact on EU legislation.

Key considerations of the Resolution

Consumer protection, manipulative designs and mental health issues

The Parliament emphasised that consumer protection is essential to ensure a safe and trustworthy online environment for video games and gamers, and argued that consumer protection aspects in the video game industry could be further improved in the EU. It therefore invited the EC to take into account consumer protection issues in online video games as part of its ongoing fitness check on EU consumer law.

Particular areas of concern include manipulative or deceptive game designs that can lead to, among others, gaming addiction, isolation and cyber-harassment. This includes manipulative and exploitative game designs related to in-game purchases, as such designs can use aggressive commercial practices that significantly impair the players' freedom of choice and motivate them to make financial decisions that they would not have taken otherwise.

However, manipulative game designs concern not just monetisation; they can also include so called 'dark patterns' that can distort consumer behaviour and could have negative psychological consequences, for example inducing players to spend as much time as possible on the game, with the risk of such excessive playtime resulting in addictive behaviour or stress-induced physiological illness. These concerns are especially prevalent among children and vulnerable people, and the Parliament urges game developers to take their players' ages, rights and vulnerabilities into account when designing online video games directed towards minors and vulnerable people.

The Parliament found the above concerns to be particularly relevant in light of the fact that half of all Europeans between the ages of 6 and 64 play video games, among which 73% of children aged 6-10 and 84% of those aged 11-14 are considered gamers. To emphasise their concerns, they also referred to the recent decision of the World Health Organization (WHO) which recognised gaming addiction as a new disease in its International Classification of Diseases.

Protection of minors and age ratings

The Parliament praises initiatives such as the Pan-European Game Information (PEGI) system, which is a self-regulatory content rating system introduced by the Interactive Software Federation of Europe across 38 countries and used on the basis of a Code of Conduct. It considered that systems like PEGI could be particularly beneficial in providing content descriptors (e.g. violence; swearing; nudity etc.) and information on the recommended age for playing a game, which helps parents to select appropriate games for their children. Therefore, the Parliament calls on the Commission to assess whether the PEGI system can be enshrined in EU law in order to make it the harmonised, mandatory age-rating system applicable to all video game developers, app stores and online platforms in the EU.

Loot boxes

Another area specifically addressed in the Resolution is the issue of so-called 'loot boxes'. Loot boxes are bundles of randomized virtual items incorporated into video games, which can either be redeemed by the player as a reward using virtual currency or purchased using real-world money. A unique element of loot boxes is that their contents are not known before purchasing/redeeming. This element of uncertainty is what makes loot boxes different from other in-game transactions. Although loot boxes have been around in the video game industry for some time now, they have only become more prevalent in the past couple of years (mostly because of developers significantly expanding the use of loot boxes in 'blockbuster' games such as FIFA, Call of Duty or Overwatch).

Loot boxes have attracted increased regulatory and industry scrutiny in recent years particularly around the argument that loot boxes might qualify as a form of gambling. At this stage, loot boxes are not considered gambling from a legal perspective in most European countries, however, Belgium and the Netherlands have taken the first step towards mandating video game developers to remove loot boxes from their games distributed in these jurisdictions. For more information on the regulatory concerns around loot boxes, please see our article: The ultimate loot drop: the Netherlands is planning to ban loot boxes in video games.

It is important to note that the European Union has no competence when it comes to gambling regulation, as this power is reserved for the individual EU Member States. However, the EU can address the issue of loot boxes from the angle of consumer protection. The Resolution has therefore called on the EC to take necessary steps to bring about a common European approach to loot boxes to ensure adequate protection of consumers, and to assess during its upcoming fitness check of EU consumer law whether the current consumer law framework is sufficient to address all the consumer law issues around loot boxes and in-game purchases. Should EU consumer law not be adequate, the Parliament has called on the Commission to present a legislative proposal to adapt the current EU consumer law framework for online video games or to present a stand-alone legislative proposal on online video gaming.

Gold farming

The practice of 'gold farming', i.e. when players sell in-game items or currency for real-world money, is also addressed in the Resolution. This practice may be linked to money laundering as well as forced labour in developing countries. The Resolution has called on the EC to assess the practices of gold farming in connection with financial crimes and human rights abuses and to present appropriate initiatives if necessary.

Praise for the gaming sector

The Resolution acknowledges the value and potential of the video game industry, pointing out that the European video game sector is the fastest growing cultural and creative sector in Europe, with an estimated European market size of EUR 23,3 billion in 2020, and that it was the only cultural and creative industry to have experienced turnover growth during the COVID-19 crisis. The Parliament also recognises that video games are a highly innovative digital sector in the EU responsible for more than 90 000 direct jobs in Europe, with video games making up over 50% of the added value of the overall EU market for audiovisual content.

The Parliament therefore emphasised that the calls for action put forward in the Resolution should be adopted with a view to unlock the economic, social, educational, cultural and innovative potential of the EU gaming sector to enable it to become a leader in the global video game market, and stresses the need for a dedicated and harmonised European Video Game Strategy. It also proposed the creation of a new annual European online video game award to further promote the European video game industry.

Next steps

It is important to note that the Resolution is not a binding proposal on EU Institutions, therefore, it will not automatically lead to the introduction of legislative or regulatory proposals or actions. However, with this Resolution the Parliament is sending a strong signal to the Commission and to the European Council, expressing a pressing need for enhanced scrutiny in the gaming industry. The Parliament does not have powers to adopt laws individually, but it does form part of the EU's legislative branch and participates in the adoption of EU laws. In light of this, and also considering that the Resolution secured 577 votes in favour (with only 56 against and 15 abstentions), this Resolution will put political pressure on the Commission to address the concerns explored in the Resolution via appropriate actions.

The video games industry is advised to closely follow the response and developments following this Resolution from both the European Commission and the different EU Member States.

For more information on the video games industry generally, please take a look at our video games guide: Level Up: A Guide to the Video Games Industry.