Is strict regulation for F2P gaming on the way? Should we fear the new rules of the game?
In 2012, Japan declared “kompu gacha” used by many Free to Play games at that time illegal. Last month 2013, the UK Office of Fair Trading released a set of Guidelines ‘rules’ for Free to Play game & app designed, meant to improve transparency for the consumers and prevent companies from targeting children. Now in March, the European Union turning its attention to F2P as well.
A Quick bit of history, what was Gacha? and why was it banned?
Well, Kompu gacha, was a system that strongly incentivizes monetization. Gacha is similar to a prize vending machine at a fair or messe: the player would pay a small amount of cash to receive an item at random. Kompu gacha expanded on this mechanic by offering players an extremely valuable grand prize for completing a set of the smaller gacha prizes. Because the Gacha prizes were awarded at random, it was very hard to win the grand prizes.
Basically, the design is a lottery, and it’s not legal in the US and many other countries worldwide.
Image source: InsideSocialGames
While gacha itself is not being made illegal, kompu gacha compounded the issue because it has a much lower chance of a much higher payout. This made kompu gacha mechanics feel too close to gambling for Japan’s Consumer Affairs Agency, which banned the practice on May 18th. In addition, concerns were raised that the mechanic exposed gambling gameplay to children under the age of 18. There were two extreme, well publicized cases where a middle school boy spent $5,000 in a month, and one younger student spent $1,500 in three days.
This is why kompu gacha was a nasty business practice; it gave consumers an impression which was completely misleading, hiding the mathematical reality of its enormously high odds behind cutesy exhortations to spend.
The Kompu gacha scandal teaches us three key points.
- Players love real-money betting on both virtual and real rewards.
- That social game companies should create a safe, self-regulated environment to prevent excess and restrict players under the age of 18.
- Many social games’ similarities to real-money gambling mean that it should be given the same care and attention that gambling companies give their games.
Points 2 and 3 look like they will be addressed by UK and EU regulation.
The OFT’s insistence on clear communication of costs and proper customer support systems, along with its prohibition on the targeting of children and one-click purchasing, equally deal with unpleasant, misleading abuses of Free to Play mechanics, seen with the now defunct gacha practices.
This could be the best thing for the industry. Could this clean up the Free to play gaming’s bad image?
What are the OFT’s concerns?
In April 2013, the OFT announced the launch of an investigation into the ways in which online and app-based games encourage children to make purchases. They explored whether online and app-based games included commercial practices that may be considered misleading, aggressive or otherwise unfair.
As part of the investigation, the OFT scrutinised commercial practices in 38 web and app-based games that we considered were likely to appeal to children. The games we examined are produced by businesses in the UK, Europe and the rest of the world. They also received around 200 submissions in response to our call for information, approximately 160 of which were from parents, the rest mostly from industry stakeholders.
The concerns they uncovered during the investigation mainly fall into these categories:
- A lack of transparent, accurate and clear up-front information relating, for example, to costs, and other information material to a consumer’s decision about whether to play, download or sign up to a game.
- Misleading commercial practices, including failing to identify the practice’s commercial intent.
- Exploiting children’s inexperience, vulnerability and credulity, including by aggressive commercial practices.
- Including direct exhortations to children to buy advertised products or persuade their parents or other adults to buy advertised products for them.
- Payments taken from account holders without their knowledge, express authorisation or informed consent.
I have posted the proposed Principles in full here. The OFT met with several industry stakeholders – including individual businesses and trade associations to discuss these concerns. 45 industry stakeholders were included in early draft of the proposed principles. The feedback received was used to refine and clarify the principles.
What are the EU’s concerns?
Some of OFT’s regulations are going to be a little troublesome as they demand from game developers and creators principles that are actually outside their control – for example point 5 above, the prohibition of one-click purchases made without the cardholder being present is a problem which needs to be solved within iOS and Android, not at the level of individual pieces of software.
Not much is known about the EU proposals at the moment. However I expect that they will be similar in following the basic principles of concern that were considered by the OFT. If the EU can improve on some of the anomalies in the OFT guidelines, I can see the EU results having more leverage with Google and Apple in making changes to App stores and payment practices.
In reality; the majority of free to play games and apps aren’t doing anything wrong. Those legislators and self regulatory bodies who carefully consider the industry will recognise this.
If a reasonable framework for Free to play games and Apps comes from all of these proposed principles and guidelines surprisingly little will change for developers. However it will result in a much better and safer experience for customers and developers will only benefit from the trust generated over time.