New registered report research published in Royal Society Open Science finds that the most popular iPhone games frequently broke many industry rules intended to protect consumers and children.

This illustration is licensed under the Creative Commons Attribution-Share Alike 4.0 International license by its creators Sameboat and Belbury.

Researchers call on the UK government to stop relying on demonstrably ineffective industry self-regulation, adopt stricter rules, and ensure better enforcement of pre-existing law.

What are loot boxes?

Loot boxes and gacha are gambling-like products inside video games that players buy with real-world money to obtain random rewards. Concerns have been raised about consumers, particularly children, experiencing financial harm and developing gambling problems. The previous Conservative UK government asked the industry, represented by Ukie, to self-regulate, rather than to impose legislation. The government also promised to ‘not hesitate to consider legislative change’ if the self-regulations are not effective.

Why do this research?

Previous research1 has repeatedly found that loot box-related laws and industry self-regulations were not complied with by many popular games: for example, less than 10% of social media ads for video games with loot boxes disclosed the presence of loot boxes as required by UK advertising rules. The public is therefore sceptical as to whether these new Ukie rules can protect players.

The government called for independent academic scrutiny of the implementation of the industry self-regulations to inform future policymaking. We responded directly to that call.

How did you conduct the research?

Following the highest standard of transparency and open science, we conducted the research in the registered report format, meaning that the research method was peer-reviewed, revised, and approved prior to data collection, thus enhancing research quality and reliability. Specifically, we examined the 100 most popular iPhone games and longitudinally assessed whether they complied with specific rules set out in the Ukie industry self-regulation both before and after the self-regulations came into effect in July 2024. All data are publicly shared without any restrictions, meaning that anyone can reproduce the results.

We also pre-registered how we will interpret different results before we collected the data, thus removing any undesirable flexibility in the interpretation of results. We also invited both the UK government and Ukie to pre-register how they will interpret the data to be more transparent and accountable to the public. Both refused.

What are the results?

Our research reveals that the Ukie self-regulations are very poorly complied with and are not enforced at all. Rules were repeatedly broken. None of the 100 highest-grossing iPhone games sought explicit parental consent before enabling loot box purchasing by under-18s. Only 23.5% disclosed the presence of loot boxes in their marketing. Only 8.6% of the games consistently disclosed the probabilities of obtaining different rewards.

Non-compliant games were reported to Ukie and the UK government more than half a year ago, but no enforcement action has been taken. All non-compliant games remain non-compliant but continue to be available for download, potentially harming consumers, even though Ukie promised in July 2023 that non-compliant games would be severely fined and delisted from app stores.

What are the policy recommendations?

This state of widespread non-compliance and non-enforcement fails to adequately protect consumers, particularly children, as originally promised by the UK video game industry and government. These companies are not just breaching industry self-regulation, but also pre-existing advertising regulation and consumer law. Other UK regulators, such as the Advertising Standards Authority, Trading Standards, and the Competition and Markets Authority, should more proactively enforce the law. Stricter regulation of loot boxes must be adopted as the industry self-regulation experiment has failed again.

About the lead author

Leon Y. Xiao is a Presidential Assistant Professor at the School of Creative Media, City University of Hong Kong. His research on video game policy has been frequently referenced in the UK Parliament2, cited by the US Federal Trade Commission and the Belgian court, and relied upon by UK, US, EU, Spanish, Dutch, Swedish, German, Austrian, Australian, and Brazilian policymakers and regulators. Through his actions, companies and industry self-regulators have taken direct compliance and remedial actions.

Disclaimer

For the avoidance of doubt, this study has been conducted independently of another study being conducted by Public Group International Ltd (t/a PUBLIC) on commission from the UK Department for Culture, Media and Sport (DCMS) of the UK government, for which the first author serves as an expert consultant. The results should be read in conjunction.

This illustration is licensed under the Creative Commons Attribution-Share Alike 4.0 International license by its creators Sameboat and Belbury.

Footnotes

1.

2.

Royal Society Open Science is an open access journal that welcomes the submission of all high-quality science. More information about the submission process can be found on our webpage.

Authors

  • Leon Y. Xiao

    Leon Y. Xiao

    Leon Y. Xiao is a Presidential Assistant Professor at the School of Creative Media, City University of Hong Kong.