Leon Y. Xiao

Leon Y. Xiao is a Lord Denning Scholar at The Honourable Society of Lincoln’s Inn studying to become a barrister at The City Law School, City, University of London. Leon is a first class LLB graduate from Durham Law School, Durham University. Leon was employed as an in-house legal counsel intern by Cheetah Mobile (NYSE:CMCM) from July to August 2019 and advised on video game-related legal issues. Leon researches the regulation of randomised monetisation methods (loot boxes) in video games and ethical game design which improve consumer protection using legal and ludology (game studies) perspectives.

PhD Symposium: ‘Industry, git gud with making probability disclosures; it ain’t hard’: Suboptimal compliance with loot box self-regulation

Paid loot boxes are monetisation methods in video games that offer randomised rewards of varying value. These quasi-gambling mechanics are prevalently implemented in video games, including those deemed suitable for children. Sixteen published studies using ‘Western’ samples found that loot box expenditure is positively correlated with problem gambling severity. Disclosing the probabilities of obtaining potential randomised rewards has been recognised as a consumer protection measure that may reduce loot box harms, e.g., overspending. This measure has been adopted as law only in the People’s Republic of China (PRC), leading to a compliance rate of 95.6%. The video game industry has adopted this measure as self-regulation in most other countries, e.g., the UK. The present study found that 77.0% of the 100 highest grossing UK iPhone games and 76.3% of those games deemed suitable for children aged 12+ contained loot boxes: higher than previously suggested. Only 64.0% of 75 games containing first-party implemented loot boxes disclosed probabilities as required by Apple’s self-regulation. This UK compliance rate is statistically significantly lower than the PRC rate, meaning that legal regulation is more effective. Policymakers and regulators should therefore consider adopting this measure as law, even in countries where industry self-regulation is already in force, to ensure that consumers are more effectively protected. Most game that did disclose probabilities did so using suboptimal methods that are difficult for players to access and understand. Companies should make, and industry self-regulators should require, uniform and prominent disclosures to maximise the consumer protection benefits of this measure.
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