The video game industry is bracing itself for a wave of European regulations that could limit children’s access to some video games, potentially crimping sales across the globe.
Regulators are concerned that children are getting access to games that are not right for their age. The new restrictions govern what titles and in-game features are appropriate for young people. Many are targeting loot boxes – paid treasure chests that randomly dole out digital items in games – which have long been criticised as an addictive form of gambling.
The regulations impact user access and retention, advertising revenue and in-game sales and could cost the video game industry billions of dollars a year in lost revenue, according to video game economist and designer Catalin Alexandru.
In June, the Pan-European Game Information body, which provides purchasing advice to parents, began rating any video game with loot boxes as inappropriate for children under 16.
Meanwhile, European Union regulators are considering an outright ban on loot boxes in games accessible to minors under legislation called the Digital Fairness Act, which is expected to be passed in 2027.
In Britain, the Online Safety Act, passed in 2023, already requires gamemakers to verify customers’ ages. A recently proposed social media ban for those under the age of 16 may impact platforms like Roblox if it takes effect.
Brazil too is banning the sale of loot boxes to minors in a decision that will impact one of the most active video game markets worldwide.
Loot boxes have been a source of controversy for years.
The 2017 game Star Wars Battlefront II prompted an industry backlash over features that tied player success to random purchases. Publisher Electronic Arts Inc changed the game’s mechanics as a result.
Despite periodic calls for banning that type of game play, the US relies on the industry to self-regulate its use.
Chance-based mechanics like loot boxes generated US$23 billion (S$29.7 billion) for video game companies globally in 2025, according to data from S&P research. They have been a big part of the industry’s growth.
“A lot of the game companies that drove the sharp increase in revenue at the latter part of the previous decade were relying on these in-game purchases,” said Neil Barbour, S&P Global’s video game research analyst, in an interview. “For them to suddenly have to pursue a different avenue to monetise would be a strain.”
In Europe, consumers spend around US$12 billion a year on in-game content – a broader category than loot boxes, according to Video Games Europe, a video game lobbying group.
“Significant regulatory intervention could threaten a large proportion of that revenue,” the group wrote in an October 2025 letter. “Disproportionate legislative measures would disrupt legitimate business models, undermine global competitiveness in the video games sector and affect European consumer choice.”
Video game companies generally make global adjustments to their products, not just region-specific changes, meaning that strict loot box prohibitions could result in a hit to sales internationally.
Governmental pressure is mounting as officials have seen mixed results from self-regulation.
In Britain, none of the top 100 highest-grossing iPhone games sought parental consent before letting minors purchase loot boxes, according to a 2025 paper from Leon Xiao, a professor at the City University of Hong Kong. Less than a quarter disclosed that loot boxes were present in the games.
As of May, Britain’s advertising regulator the Committee of Advertising Practice is “actively monitoring” mobile games’ disclosures.
The mechanics remain popular because they allow video game companies to attract large audiences by offering their products for free, while earning revenue with optional micro-transactions.
Requiring parental approval for young people to play not only decreases the potential audience for those games, but can also make children less likely to play in general.
Roblox shares plunged 18 per cent in May after the children’s gaming platform said a new programme of age checks was crimping user growth. The company lowered its full-year bookings guidance by about US$1 billion.
The game industry sees a risk to innovation, as well as sales.
“If regulation puts its thumb on the scales in favour of one business model or another that can be a worse experience both for consumers and small businesses,” Stan McCoy, the general counsel for US video game lobbying group Entertainment Software Association, said in an interview.
“I think the challenge here is how to build smart guard rails and smart self-regulation without stigmatising this business model that so many consumers really find valuable.” BLOOMBERG
