Regulation of a new gaming "prize boxes" in China

Over the past few weeks, a new legal initiative hailing from China has attracted the attention of the global gaming community: The Ministry of Culture of China has recently published new rules that impose obligations on game publishers to disclose relevant information about in-game prize items that a player can receive or acquire in the game - including Chances of getting certain items in the so-called. prize box ("loot box"). So far, this trend has had a positive response, especially among foreign players, and although speculation has already begun to be held about the global impact of such changes, the real consequences for the online gaming sector remain unclear.

The content of the decision

The official announcement of the new Ordinance is only available in Chinese, however, its unofficial translations in English have already spread to various venues. Judging from these unofficial translations, the resolution, which will come into force in May 2017, imposes the following obligations on online game publishers in China:

2.6 - Online game publishers should promptly report information about the name, properties, content, quantity and probability of receiving all virtual objects and services that can be obtained on the official website of the game or on the corresponding page on the probability of receipt. Information about the likelihood of receipt must be truthful and valid.

2.7 - Online game publishers should publicly announce the results of random user acquisitions in prominent places on the official website or in the game, and keep such records for requests from government agencies. Records must be kept for more than 90 days. When the results of random acquisitions are published, appropriate measures should be taken to protect the personal data of users.

Thus, the ruling includes, in particular, the so-called "prize boxes" and other similar gaming mechanisms.

What are prize boxes?

Prize boxes are virtual containers for sale within online games that contain a set of virtual objects (for example, so-called "skins" for specific game characters or objects). The player cannot see the exact contents of the box until it is acquired, but, of course, it places certain hopes on objects of a certain value and rarity.

Prize boxes are an important monetization mechanism for publishers of mobile and online games. Therefore, prize boxes are already an integral element in many popular games, such as “Overwatch” or “Clash Royale”.

Halloween Terror Loot Box, http://overwatch.wikia.com/wiki/Loot_Box

Potential transparency effect

Of course, whether such an increase in transparency will in fact affect most gamers remains unclear. On the one hand, players may be disappointed with poor chances of receiving objects, and the principle underlying the sale of prize boxes and similar mechanisms may at least partially lose its attractiveness due to disclosure. On the other hand, prize boxes are almost never empty, so the chances of not getting anything in return are zero - unlike, for example, from the same lottery tickets. In addition, most gamers already know that rare items are usually not found in prize boxes - after all, this is their “rarity” and justified.

Potential international effect

If the publisher is obliged to disclose the chances of getting a "rare" item in the prize box for their Chinese users, this information will sooner or later become known to players from any country.

From the point of view of the players, of course, the question arises, to what extent will it be fair to assume that the chances available in China will be the same in all other countries that could give players from all over the world the opportunity to analyze such information before making a decision on the purchase of prize boxes or similar products.

However, we do not see any obligation for publishers to establish identical chances in all countries where the game is distributed. In principle, they are also free to make their games different for different jurisdictions, as they usually do for their greater attractiveness taking into account different tastes and cultural traditions.

Of course, there are limits to this principle. In particular, in some jurisdictions (such as the European Union and the United States) this may look like an unreliable advertisement, if certain favorable chances are advertised the same all over the world, and in fact it turns out that in reality they are different for players from different jurisdictions. Publishers who wish to apply different probability coefficients in different jurisdictions should thereby clearly inform in their messages intended for the Chinese audience that such factors may differ for users from other countries.

We express our gratitude to our researcher Benjamin Dankert for his contribution to this material.