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Pay-to-Win

Pay-to-winAn economic model for the monetization of “free-to-play” video games.  Pay-to-win games are based on a system aiming at encouraging players to pay to obtain competitive advantages over other players.  This system induces players to proceed with in-game microtransactions by purchasing items enabling a faster and easier game progression.

Pay-to-win games are a category of free-to-play games which are downloadable at no cost to players.  Even though access to a pay-to-win game is free, access to some specific contents of said game is subject to microtransactions made by the players either directly with real-world money or via an in-game currency.

Alongside cosmetic in-game purchases (e.g., skins for characters) which do not have any impact on the outcome of the game – and that also may be available in free-to-play games –, they are two kinds of in-game purchases that can lead to consider a game as a pay-to-win game.

On the one hand, it exists in-game purchases where players know in advance what the paid content is.  Indeed, such games-as-a-service offer the players, through an economic investment called a “paywall”, to obtain new items, such as downloadable content (“DLC”), avatars, accessories, or new updates, such as new levels unlocked, easier means to progress in the game or to even skip some levels[1].

On the other hand, there are also in-game purchases based on a chance mechanism and an issuance of randomized items.  Practically speaking, players do not know in advance what they will get before accessing their purchase.  Such in-game purchases are more commonly known as “loot boxes[2].  Loot boxes contain either items or game advantages aiming at progressing faster in the game and improving the player’s situation in the game.  

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For instance, as far as the video game Star Wars Battlefront 2 was concerned, Electronics Arts had offered players to purchase loot boxes for an amount of USD 2,100 to get access to the full game, instead of playing for circa. 4528 hours[3].  However, although players believe that loot boxes are only the result of chance, loot boxes might be in some cases based on well-documented behavioral biases (i.e., systematic pitfalls in behavior) set up by publishers and aiming at playing on the feelings of frustration and rewards of the players[4].

In addition, it has to be pointed out that the free version of some video games is sometimes deliberately incomplete in order to boost players to spend money and to have access to the full game.  This “freemium” system fosters publishers to harden the gameplay for players so that it is hard, not impossible, to win against other players or to progress in the game without purchasing in-game items[5].  

From a legal perspective, in-game purchases in pay-to-win games, apart from loot boxes, are regarded as simple purchases made by the player. Under European consumer law, the player is a consumer who accepts the terms and conditions of use of the game and who must be accordingly protected from unfair terms. Furthermore, since 2020, PEGI has rendered it mandatory for the publishers to display to European consumers an informative notice on physical packaging and on digital storefronts when in-game purchases, including random items, are included in the video game[6].

Pay-to-win games may be risky for players insofar as they can create a risk of addiction, especially for minors or for those who are most vulnerable, through unwanted or uncontrolled spending (some illegal “dark patterns” may especially be used by publishers in order to trick gamers into making unwanted purchases[7]). 

Players may indeed face a financial risk in cases where excessive amounts of money (resulting from multiple and successive microtransactions) are spent but without knowledge for players of the exact amount they have paid in total[8] – such risk is increased by involuntary transactions[9].  In particular, once players have bought virtual currency (e.g., coins or diamonds) with real-world money, they are less reticent to spend the in-game currency.  In this respect, loot boxes might be regarded as unlawful gambling games under certain circumstances in some countries.  The Netherlands and Belgium have notably prohibited them[10].

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[1] See “In-Game Purchases”, PEGI, (https://pegi.info/page/game-purchases).

[2] See “European Parliament resolution of 10 November 2022 on esports and video games”, November 22, 2022 (https://www.europarl.europa.eu/doceo/document/TA-9-2022-0388_EN.html).

[3] See “’Star Wars Battlefront II’: Comment EA a tenté de faire payer 2.100 dollars pour son jeu complet”, 20 Minutes, November 17, 2017 (https://www.20minutes.fr/culture/2170827-20171117-star-wars-battlefront-ii-comment-ea-tente-faire-payer-2100-dollars-jeu-complet).

[4] See “Loot boxes in online games and their effect on consumers, in particular young consumers”, Annette Cerulli-Harms et al., July 16, 2020(https://www.europarl.europa.eu/thinktank/en/document/IPOL_STU(2020)652727).

[5] For instance, in the video game Star Wars Battlefront 2, when a player is killed by another one, the defeated player can review the equipment of the winner one in order to know what to buy next game and, therefore, to expect to be more competitive.

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[6] See “PEGI Introduces Notice To Inform About Presence of Paid Random Items”, PEGI, April 13, 2020(https://pegi.info/news/pegi-introduces-feature-notice).

[7] The risk associated with minors has generated some concerned about the game Fortnite. In 2023, the US Federal Trade Commission (aka “FTC”) fined twice the publisher Epic Games for a total amount of circa. of half a billion dollars (See https://www.ftc.gov/news-events/news/press-releases/2022/12/fortnite-video-game-maker-epic-games-pay-more-half-billion-dollars-over-ftc-allegations ).

[8] See the “Synthesis of the works carried on by GREF eGambling Working Group with regard to the implementation of the Declaration of gambling regulators on their concerns related to the blurring of lines between gambling and gaming published”, GREF, May 2019.

[9] In 2017, according to the French Agency for Video Games, the publisher Activision Blizzard would have generated revenues of circa. USD 4 billion through microtransactions, for a total amount of revenues of circa. USD 7,16 billion. SeeLe modèle économique des loot boxes et des microtransactions dans le jeu vidéo – Partie III”, FAVG, February 11, 2019 (https://afjv.com/news/9519_l-economie-des-microtransactions-dans-le-jeu-video-part-3.htm).

[10] See “Loot boxes in online games and their effect on consumers, in particular young consumers” (https://www.europarl.europa.eu/thinktank/en/document/IPOL_STU(2020)652727).

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Author

  • Étienne Nicolet

    Étienne Nicolet is a French attorney at law admitted to the Paris Bar in 2017. He advises and represents French and foreign companies in matters related to intellectual property (trademark and design law as well as copyright law and patent law) and unfair competition, as well as new technology and data protection matters. Étienne Nicolet also focuses on matters related to entertainment law and gambling regulation. He handles matters both as an advisor and a litigator. Étienne Nicolet is member of the French association APRAM (Association des Praticiens du Droit des Marques et des Modèles) dedicated to supporting trademarks and related intellectual property.

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