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The UK’s Committee of Advertising Practice (CAP) which is the self-regulatory agency of the advertising industry in the UK issued new guidelines for in-game spending and purchases through for instance loot boxes.
The UK guidelines on in-game purchases are aimed at ensuring that advertisers and publishers do not mislead consumers about the costs and functionality of in-game purchases and preventing harm or consumer detriment.
The importance of introducing definitions in advertising guidelines
One of the most important merits of the guidelines is the introduction of definitions that provide clarity and set new standards useful also for other European authorities:
- the concept of random-item purchasing is aligned throughout Europe as loot boxes are defined as in-game purchases containing an element of chance, in which the consumer does not know what they will receive until the transaction is completed;
- a virtual currency has been defined as the fictionalized currency used within a game or system, often with a name such as ‘credits’, ‘gold’, or ‘points’, which may or may not be purchasable with real money;
- cosmetic items are differentiated from functional items since the latter are those items that affect more than the look of the game, such as weapons, extra abilities, or power-ups.
Also, odd pricing occurs when increments of two types of related purchases do not match each other. For instance, virtual currency when is available in units of 50 credits, and items when are available in increments of 20 credits. In relation to this, it may happen within video games that players have to purchase more currency than they need to spend on the items. In some instances, according to the UK Committee of Advertising Practice “this can make it difficult for consumers to work out what they will need to spend on virtual currency in order to purchase a specific item, meaning that they may make a transactional decision that they otherwise would not have done, had they had more information.”
Pricing of in-game purchases according to the UK guidelines
The UK’s Committee of Advertising Practice requires that marketing communications do not mislead consumers by omitting material information. It means that where a price is stated for an item, material information includes the price of the item or if this cannot be calculated in advance, the manner in which the price is calculated.
The above is particularly relevant for bundle advertising as limited-time offers. An example of a practice that the companies should avoid is: “You only have __ time left to get this bundle!” Accordingly, where advertisers make comparisons between different bundles, the basis should be clear and not likely to mislead. In particular, claims such as:
- best value should only be in a context that makes clear that this relates to the cost-per-unit price and not the overall cost of a bundle;
- cheapest should relate to the overall price of a bundle, not the price-per-unit.
On a different topic, rules for advertising in-game purchases paid with virtual currency are similar to the approach taken by AGCM (Italian Antitrust Authority in charge of enforcing consumer provisions) since their view is that consumers “should be able to determine easily what the equivalent real-world price is for the item and/or whether they will need to spend money on more virtual currency.”
Marketing messages for in-game purchases
Because some in-game purchasing happens within the gameplay itself, it may happen that consumers suffer from a natural sense of urgency that may accompany decision-making. For advertisements within the gameplay, such as pop-up offers to purchase extra resources to complete or retry a failed level, or to skip waiting times, the UK CAP clarified that operators should avoid “the use of mechanics that may place undue pressure onto players and prevent them from making an informed choice or mislead them as to the nature of the purchase.” Depending on the context of the game and the specific events surrounding the messaging, this may include:
- short countdown timers;
- implications that a purchase will lead to success;
- complex offers; and
- significant sums of money.
On a similar topic, you may find interesting the article “How loot boxes deal with regulations and limitations, and how the gaming industry is reacting?“.
