The Digital, Culture, Media and Sport Committee (“Committee”) of the House of Commons has published its immersive and addictive technologies report on the potential harms they may have on users.
In particular, the report looks at the psychological harms associated with gaming, the financial harms posed by including gambling-like mechanics (such as “loot boxes”) within games and the role data has on increasing user engagement. In obtaining evidence from video game and social media companies, the Committee was critical of the lack of transparency shown by gaming companies stating that the inquiry “struggled to get clear answers and useful information from companies across the games industry”.
The report discusses the psychological harms immersive technologies have on users – in particular in respect of video games which are estimated to be played by 32 million people across the UK. The Committee found that for a vast majority of people, playing games is “a positive hobby and form of entertainment enjoyed as part of a balanced lifestyle”. However, the Committee is concerned with what the World Health Organisation classifies as “gaming disorder” – defined as a “pattern of persistent or recurrent gaming behaviour”.
The Committee argues that the industry has not “sufficiently accepted responsibility for either understanding or preventing this harm” and as result of the lack of transparency from gaming companies, the report suggests that there should be requirements to share aggregated player data with researchers and contribute financially to independent research on the subject. A levy is suggested to fund an independent body to oversee research into online gaming and to ensure data is available from the industry to enable it to be effective. The report also recommends that the future Online Harms regulator (proposed by the Government’s Online Harms White Paper) should monitor the industry to ensure that the gaming industry does more to safeguard players.
Financial harms & gambling
The report considers the financial harms of immersive technologies and gaming - in particular, the use of micro transactions within games (these are defined in the report as “small payments that players make throughout the process of playing a game, for example to acquire in-game skills or items or to progress more quickly through levels”).
The rising use of micro transactions in gaming is a shift from the past ‘premium’ model in the industry (i.e. requiring an upfront payment for the game with no further monetisation), as seen by the popularity of some online and free to use games. The report confirms that the use of micro transactions can form a large part of some game companies’ revenue (game company Jagex disclosing that about one-third of its revenue is from micro transactions).
The use of loot boxes (a form of micro transaction) within games and their potential as a form of gambling is examined by the report. Loot boxes are defined in the report as “items in video games that may be bought for real-world money, but which provide players with a randomised reward of uncertain value” - the reward being a virtual item within the game. Presently the Gaming Commission does not consider loot boxes to meet the regulatory definition of gambling under the Gambling Act (2005) (Act) as the virtual rewards are not a prize for “money’s worth”. However, the Committee found that real-world trading of these rewards is prevalent, suggesting these rewards are prizes of “money’s worth”.
Drawing from approaches in other jurisdictions (such as Belgium where loot boxes are deemed games of chance) the Committee concludes in the report the Government should bring forward regulations under section 6 of the Act to specify that loot boxes are a game of chance and therefore subject to be regulated under that Act. However, it goes on to say that if the government chooses not to regulate in this way then it should produce a paper stating why loot boxes are not considered to be a game of chance played for money’s worth.
Role of data
The report concludes that both social media and online games are data driven industries that use “asymmetrical information and deliberate design practices to manipulate users into spending more time or money or their platforms”. The notion that engagement with these platforms is purely the user’s free choice is rejected in the report as the amount of data collected by game and social medial companies allows for them to design their products in ways to increase engagement. The report found the use of random reward mechanics to be particularly powerful tools for companies to increase engagement with their products. The report recommends that the Government should outline how it intends to “support independent research into the application, extent and effect of design mechanics used in digital technologies to extend user engagement”. It is then suggested that this research is used to develop a behavioural design code of practice.
The report outlines concerns about a number of already widely known practices in the games and social media industries such as loot boxes and random reward mechanics. The specific recommendation that the use of loot boxes and other gambling-like mechanics be regulated by the Act should be noted by companies in the industry. Similarly, the use of data to design platforms in ways to maximise engagement and the recommendation that the future Online Harms regulator uses independent research to develop a behavioural code of practice is likely to affect what games and social media companies can do with their technologies.
In light of the concerns raised by the Committee, organisations in the gaming and social media industries should take steps to understand their approach to these issues, particularly as further developments in the law appear likely given the recommendations given in the report and the steps already taken in other jurisdictions. A response to the report by Government is awaited, but given the recent political developments surrounding the delay of Brexit and the upcoming general election, a response to this report is unlikely to be a priority for the Government.