August 8, 2019

The developments outlined in this note raise many potential issues for the industry. The nature and scale of the potential significance will of course vary from company to company. However, there are some fairly clear takeaways that are relevant to almost every company involved in the development, publishing and distribution of games. In particular:

• Keep informed and engage: These developments cannot be ignored and they are not simply an issue for platforms. Companies need to keep informed of developments and engage and support the trade associations who seek to represent the collective interests of the industry. In the past the games industry has sometimes been slow to react, for example in implementing age ratings. The industry cannot afford to be reactive, nor will be sufficient to adopt a purely defensive posture. It needs to engage in a constructive and positive way, otherwise it may find that regulators impose unhelpful and unworkable ‘solutions’.
• Implement relevant learning points: The reports and hearings referred to in this note contain a number of express points and significant clues about the kind of action that is likely to be required. For example, there are several reminders of the need for terms of service and EULAs to be clear and easy to understand. (The House of Lords Select Committee on Communications report goes further, saying that: “Where children are permitted to access or use a service, age-appropriate terms and conditions must be provided… written in language clearly understandable to children of the minimum age allowed on the platform.“[1])
• Learn from the online gambling industry: The games industry generally (and understandably) distances itself from the online gambling industry. However, the games industry can learn a lot from trends and developments in the online gambling industry which is (by necessity) much more advanced in addressing issues such as identifying players with potentially problematic levels of spending.
• Keep privacy compliance under careful review: Having recently been through an extensive process to meet the implementation of the GDPR, most game companies probably feel that they are on top of privacy issues. However, it is clear that some still have a lot more work to do. The Information Commissioner alluded to this when she appeared at one the hearings in connection with the DCMS Committee inquiry into immersive and addictive technologies, saying: “We feel that the industry, e-gaming, has some maturation to do in understanding what their obligations are in data protection law.“
• Anticipate and prepare: Companies need to start to think now about the potential impact of future changes in relation to product design and development, and even strategic direction. For some companies this may involve a fundamental rethink. We had a taste of this In January 2014, when the UK consumer law regulator published its Principles for online and app-based games. The publication of this document was preceded by lengthy consultation period, and yet some companies developing and publishing games for young children were slow to appreciate the material impact it would have on their business models.

Many industries operate in highly regulated environments, such as utilities, financial services and gambling. Doing business in this kind of industry requires various licences and involves navigating applicable law and regulation carefully. A failure to do so can result in fines and sometimes even the loss of the ability to operate. For companies in these industries, compliance is therefore a significant consideration and often a board level discussion topic. The games industry is moving in that direction.

We monitor regulatory developments in the games industry closely, both in Europe and beyond. Let us know if you have any queries or need any additional information.

[1] Paragraph 110.