On February 27, 2023, the National Assembly passed the proposed amendments to the Game Industry Promotion Act (the “GIPA”) that require game providers to disclose certain information on probabilities of loot boxes in order to protect game users from recurring issues around loot boxes, such as failure to disclose probability information or providing false probability information. Subsequently, on November 13, 2023, the Ministry of Culture, Sports and Tourism (“MCST”) issued a legislative notice on the proposed amendments to the Enforcement Decree of the GIPA (the “Proposed Amendments”) detailing the probability disclosure requirements under the amended GIPA.
The Proposed Amendments are scheduled to take effect on March 22, 2024 after soliciting opinions from various industry stakeholders during a notice-and-comment period from November 13, 2023 to December 13, 2023. Key details of the Proposed Amendments are as follows:
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1. |
Types of Loot Boxes and Scope of Information Subject to Disclosure Requirements (Article 19 (1) of the Proposed Amendments) |
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(1) |
Types of Loot Boxes The Proposed Amendments seek to categorize loot boxes into (i) “capsule type” (a type of loot box from which items are obtained by chance), (ii) “upgradable type” (a type of loot box from which the effects, performance, options, etc. of game items are changed based by chance), and (iii) “combinable type” (a type of loot box, including complete gacha,1 from which items may be obtained by chance by combining game items). |
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(2) |
Scope of Information Subject to Disclosure Requirements For each of the foregoing types of loot boxes, the Proposed Amendments require the following information to be disclosed: (i) for the capsule type, “the types, ratings, and probabilities of all game items provided through a loot box;” (ii) for the upgradable type, “the outcome and probabilities of changing the effects, performance, options, etc. of game items provided through a loot box;” and (iii) for the combinable type, “the outcome and probabilities of combining game items provided through a loot box.” In addition to the basic disclosure requirements set forth above, the Proposed Amendments stipulate that the following information must be disclosed, irrespective of the type of loot box: (i) in case there is a limitation on the number of loot boxes and/or time period during which the loot boxes will be provided, information on the relevant number and/or time period; (ii) in case the outcomes of certain loot boxes are affected by the outcome of other loot boxes, information on how certain outcomes may affect others; (iii) in case loot boxes are supplied based on a ceiling system (i.e., a game mechanic that guarantees the player to acquire game items depending on the number of times that a loot box has been used, such as the number of purchase, unboxing, upgrades and combination), information on the relevant system of loot boxes; and (iv) other information determined and publicly notified by the Minister of Culture, Sports and Tourism, where a failure to disclose such information is likely to have a material impact on the user’s decision to use loot boxes or prevent the user from making a reasonable decision. |
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2. |
Scope of Games Subject to Disclosure Requirements (Article 19 (3) of the Proposed Amendments) |
Under the Proposed Amendments, only those games that provide loot boxes and are distributed or serviced through an information and communications network for the use by the public would be subject to the disclosure requirements. However, the Proposed Amendments allow for exceptions depending on the type of business and business entity, and the following sets forth examples of games that are exempted from the disclosure requirements:
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Exempted Games |
Details |
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Arcade games |
Games that are provided in youth game providing businesses and general game providing businesses |
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Games that are exempt from rating requirements |
Games for competition or exhibition purposes; games for educational, learning, religious purposes or for public relations activities intended for public interests; or games for testing purposes |
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Games by small gaming companies |
Games produced, distributed or provided by small and medium enterprises in the video producing business, broadcasting and communications business or information service business, whose average annual sales for the recent three years is not more than KRW 100 million |
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3. |
Methods of Disclosing Probabilities (Article 19 (4) of the Proposed Amendments) |
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(1) |
General Principles on Disclosure According to the Proposed Amendments, information subject to the disclosure requirements must be disclosed in a manner that is easily recognizable by game users. In principle, the probability of supplying loot boxes should be indicated as a percentage, but it may also be indicated as a fraction, function or text if there are other ways to help game users’ intuitive understanding. In case of any change to information related to a loot box, the game provider must inform game users of such change in advance. However, if any change is made without prior notice due to technical urgency during the operation of game services, the game provider must, without delay and at the time of such change, inform game users of the purpose and details of the change through the relevant game and its website. |
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(2) |
Disclosure Method by Media The Proposed Amendments stipulate the methods of disclosing loot box information separately for different media such as games, websites, and advertising or promotional materials. The disclosure methods are as follows: |
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Media |
Disclosure Methods |
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Games |
Principle: Disclose loot box information on the purchase screen or game screen (i.e., the screen in the game, on which loot box information is displayed) so that it is easily recognizable by game users. |
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Exception: May disclose loot box information on the website of the relevant game by using a hyperlink if it is difficult to disclose such information on the purchase screen or game screen. |
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Websites |
Principle: Provide loot box information in a manner that allows game users to view such information directly on the website of the relevant game, or in a manner that game users can search loot box information with a serial number, etc. |
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Exception: May not disclose loot box information on the website if such information changes in real time pursuant to game users’ play of the relevant game, and if such information is disclosed on the purchase screen or game screen. |
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Advertising or promotional materials |
Principle: As for advertising or promotional materials, use signs, letters, voices, sounds, images or videos, or hyperlinks that redirect game users to the website of the relevant game, in order to disclose that loot box information is contained in the relevant game. |
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Exception: May not disclose that loot box information is contained in the relevant game if such disclosure is difficult due to the size, form, and characteristics of advertising or promotional materials (e.g., banner advertisements on webpages). |
Before the Proposed Amendments come into force, the MCST plans to monitor game providers to check any failures to disclose the probability information or provision of false information on probabilities. If the probability information disclosed by game providers is allegedly false, the MCST will conduct inspections pursuant to Article 31 (2) of the GIPA. The MCST also announced that it would actively cooperate with the Korea Fair Trade Commission (“KFTC”) in the inspection process as the KFTC has been making efforts to investigate loot box cases. In order to provide clear guidelines on the methods of disclosing probability information, the MCST will release a guidebook on disclosure of loot box information.
In addition to the Proposed Amendments, detailed and practical policies are being prepared to ensure that the regulations on loot box information disclosure will be well-established. Further, since the MCST announced its plan for active cooperation with the KFTC, game providers are likely to be subject to strict enforcement of applicable laws and regulations. Therefore, it is advisable for game providers to keep an eye on the developments and implications of the Proposed Amendments and internally inspect compliance status to prevent non-compliance with the disclosure requirements.
1 Complete gacha: A game mechanic whereby the player must collect/complete a set of game items in order to obtain the item.
