Europe’s crackdown on loot boxes could change gaming for millions of children

KUALA LUMPUR, July 5 — Europe’s tightening rules on children’s access to video games could cost the global gaming industry billions of dollars, with regulators targeting features such as loot boxes that critics say resemble gambling, according to Bloomberg.

The report said regulators are increasingly concerned that minors are being exposed to games and in-game features deemed unsuitable for their age, with loot boxes — paid digital treasure chests offering random rewards — coming under particular scrutiny.

In June, the Pan-European Game Information (PEGI) body began classifying games containing loot boxes as unsuitable for players under 16.

The European Union is also considering banning loot boxes in games accessible to minors under proposed legislation known as the Digital Fairness Act, which is expected to be passed next year.

Bloomberg reported that the UK has already introduced age verification requirements for video game companies under its Online Safety Act, while Brazil has moved to ban the sale of loot boxes to minors.

Video game economist and designer Catalin Alexandru told Bloomberg the regulations could reduce user numbers, advertising revenue and in-game spending, potentially costing the industry billions of dollars annually.

Chance-based mechanics such as loot boxes generated about US$23 billion (RM93.6 billion) globally last year, according to S&P Global research cited by Bloomberg.

The report noted that many game developers make product changes globally rather than by region, meaning stricter European rules could affect players and revenues worldwide.

Bloomberg also reported that government scrutiny has intensified after studies found many games failed to properly disclose the presence of loot boxes or obtain parental consent before allowing minors to make purchases.

Gaming companies argue that optional in-game purchases help keep many games free to play, while industry groups have warned that excessive regulation could hurt innovation, consumer choice and the competitiveness of the sector.

Recent signs of the impact have already emerged.

Bloomberg noted that gaming platform Roblox saw its shares fall sharply in May after introducing stricter age verification measures, saying the changes had slowed user growth and prompted it to lower its annual bookings forecast.