Beneath the label: unsatisfactory compliance with ESRB, PEGI and IARC industry self-regulation requiring loot box presence warning labels by video game companies
Authors: Xiao Leon Y. 
Published: March 2023

Loot boxes in video games are a form of in-game transactions with randomized elements. Concerns have been raised about loot boxes' similarities with gambling and their potential harms (e.g. overspending). Recognizing players' and parents' concerns, in mid-2020, the Entertainment Software Rating Board (ESRB) and PEGI (Pan-European Game Information) announced that games containing loot boxes or any forms of in-game transactions with randomized elements will be marked by a new label stating ‘In-Game Purchases (Includes Random Items)’. The same label has also been adopted by the International Age Rating Coalition (IARC) and thereby assigned to games available on digital storefronts, e.g. the Google Play Store. The label is intended to provide more information to consumers and allow them to make more informed purchasing decisions. This measure is not legally binding and has been adopted as industry self-regulation or corporate social responsibility. Previous research has suggested that industry self-regulation might not be effectively complied with due to conflicting commercial interests. Compliance with the ESRB's, PEGI's and IARC's loot box presence warning label was assessed in two studies. The first study found that 60.6% of all games labelled by either the ESRB or PEGI (or 16.1% using a more equitable methodology) were not labelled by the other. The majority of the inconsistencies were caused by the ESRB refusing to apply the measure retroactively. Five instances where one age rating organization culpably failed to accurately identify loot box presence were identified (although only two cases were admitted by the relevant organization). Generally, with newly released games, consumers can rely on the PEGI and ESRB labels. PEGI has retroactively labelled many older games, meaning that consumers can expect the labelling to be accurate. However, due to the ESRB's policies (which it has refused to improve), North American consumers cannot rely on the label for many older games containing loot boxes, unlike their European counterparts. The data suggest that the loot box issue is far more pressing on mobile platforms than console/PC platforms. The second study found that 71.0% of popular games containing loot boxes on the Google Play Store (whose age rating system is regulated through IARC) did not display the label and were therefore non-compliant. The IARC's current policy on the Google Play Store is that only games submitted for rating after February 2022 are required to be labelled. This policy (which the IARC has refused to improve) means that most popular and high-grossing games can be, and presently are, marketed without the label, thus significantly reducing the measure's scope and potential benefit. The Apple App Store still does not allow loot box presence to be disclosed. At present, consumers and parents cannot rely on this self-regulatory measure to provide accurate information as to loot box presence for mobile games. Due to their immense scale, the mobile markets pose regulatory and enforcement challenges that PEGI admits are not yet resolved. The mere existence of this measure cannot be used to justify the non-regulation of loot boxes by governments, given the poor compliance and doubtful efficacy (even if when complied with satisfactorily). Improvements to the existing age rating systems are proposed. Preregistered Stage 1 protocol: https://doi.org/10.17605/OSF.IO/E6QBM (date of in-principle acceptance: 12 January 2023).