Monetisation

Monetisation – is the means by which revenue can be generated from a game product or associated or derivative products. This includes revenue generated for the game producer in respect of the game itself through methods such as subscriptions, downloadable-content (DLC), microtransactions, loot boxes, and season passes. Monetisation can also refer to monetisation of content by creators of game [user generated content] through methods such as advertising revenue generation on online platform partner programmes, sponsorships, fan donations, or in-built token systems (e.g., Twitch bits). Monetisation strategies are closely linked to business models employed by game producers, such as e.g., free-to-play, and may influence the choice of platforms adopted by creators of user generated content.

Legal regulation

Competition law

Increasingly, revenue sharing agreements between online platforms and game producers have gained attention from competition regulators (see e.g., the Digital Markets Act in the EU),[1] particularly in relation to mobile and cloud gaming. Due to the limited number of operators in the this market, competition regulators have investigated platforms which have harmful monopoly characteristics or behaviours that have unduly restricted the development and availability of certain games or technologies that employ microtransaction monetisation models.[2] This issue has been subject to ongoing litigation between Apple and Epic Games due to Apple’s obligatory 30% revenue cut for microtransactions within apps on their App Store.[3]

Gambling law

Some loot boxes and microtransactions have chance-based mechanisms which implicate gambling laws and regulation. Globally, restrictions on these monetisation mechanisms, or requirements for transparency on probability of in-game objects, have been implemented to varying degrees. For example, jurisdictions such as the UK[4] and US[5] have declined to include loot boxes within the scope of gambling laws, whereas China[6] and Japan[7] have ongoing, strict restrictions. Additional protections may be extended to children in jurisdictions including Australia[8] and Brazil.[9]

Intellectual property law

Copyright law typically includes restrictions on how creators of [user generated content] can monetise their work due to restrictions on commercialisation (which is defined broadly as any activity being done for the purposes of profit).[10] This may lead to restrictions on [user generated content] creators’ ability to e.g., sell fan art at conventions or to generate advertising revenue from game streams uploaded on YouTube.

However, many game producers permit monetisation of certain types of [user generated content] in the terms of their [end user licensing agreements].[11] These permissions vary by game title and producer policy, but typically are permissive of monetisation of content via passive income mechanisms (e.g., advertising revenue) whilst prohibiting services which charge other users at the point of access to the content (e.g., Patreon). Some types of user generated content are regulated by strong non-commercial norms outwith the intellectual property system – particularly game mods, where previous high-profile attempts at monetisation have failed.[12]

Other

Monetisation may have implications for other areas of law, including (but not limited to): data protection law in respect of data gathering mechanics employed in microtransactions, and; consumer protection law where the value of game products or in-game objects have been misrepresented.

[1] Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act) [2022] OJ L 265/1.

[2] Gov.uk ‘Mobile browsers and cloud gaming’ (2022) <https://www.gov.uk/cma-cases/mobile-browsers-and-cloud-gaming> accessed 27 March 2024.

[3] Epic Games Inc v Apple Inc, No.21-16506 (9th Cir 2023).

[4] Gov.uk ‘Loot boxes in video games: update on improvements to industry led protections’ (2023) <https://www.gov.uk/guidance/loot-boxes-in-video-games-update-on-improvements-to-industry-led-protections> accessed 27 March 2024.

[5] Coffee v Google Inc, No 5:2020cv03901.

[6] Ye J ‘China announces rules to reduce spending on video games’ (2023) <https://www.reuters.com/world/china/china-issues-draft-rules-online-game-management-2023-12-22/> accessed 27 March 2024.

[7] Killham E ‘Japan’s Consumer Affairs Agency declares “complete gacha” illegal’ (2012) <https://venturebeat.com/games/complete-gacha-illegal/> accessed 27 March 2024.

[8] Rodriguez N ‘Australia Introducing New Rules for Video Games With Loot Boxes’ (2023) <https://gamerant.com/australia-loot-boxes-rules-gambling/> accessed 27 March 2024.

[9] Dealessandri M ‘Brazil launches inquiry to ban loot boxes’ (2021) <https://www.gamesindustry.biz/brazil-launches-inquiry-to-ban-loot-boxes> accessed 27 March 2024.

[10] Creative Commons ‘Defining noncommercial’ (2014) <https://creativecommons.org/2009/09/14/defining-noncommercial-report-published/> accessed 27 March 2024.

[11] You Can Play (2021) <https://www.copyrightevidence.org/ycp/overview> accessed 27 March 2024.

[12] See e.g., Bethesda ‘Game Studios Creations’ <https://creations.bethesda.net/en/creators/bethesdagamestudios> accessed 27 March 2024.