Levelling Up: The Video Games Industry’s Journey Through the Ever-Evolving Maze of EU Policy

May 6, 2024

Like a shiny treasure chest drawing attention in an epic quest, the gaming industry has held the gaze of European Union (EU) institutions over the last five years. Various initiatives have underscored the value of video games as cultural products and recognised the industry’s economic impact. Moreover, European developers continue to benefit from increasing EU funding through Creative Europe’s Media programme or under national support schemes.

As the EU builds its programme ahead of the upcoming mandate, the video game industry may find it valuable to reflect on the future of its relationship with European institutions. In particular, we believe that developments in the six policy areas below may have long-term impacts on the industry.

Consumer Protection & Child Safety: As part of the Digital Fairness Fitness Check[1], the European Commission will assess whether the existing consumer protection framework is fit for the digital age. For example, civil society frequently raises the issue of dark patterns not being sufficiently addressed in the current legislation, as well as the use of in-game currencies and ‘lootboxes’ (especially by minors). Interaction with influencer marketing will also be assessed. The Digital Fairness Fitness check is expected in September 2024, with the likely regulatory overhaul starting towards end of year. Child safety more broadly will remain a priority for policymakers, building on the Better Internet for Kids initiative that will be updated through the Code of Conduct (CoC) on Age-Appropriate Design in 2025 or the Guidelines on the protection of minors under the DSA .
Content Moderation & Hate Speech: The updated CoC on Hate Speech will contain more stringent reporting and monitoring requirements on companies. Although this CoC currently only applies to signatories adjacent to the gaming industry (e.g., Twitch), its formal recognition as a CoC under the Digital Services Act will extend its scope to other companies. The industry may also need to address the use of gaming platforms by malevolent actors that flee to such platforms to avoid content moderation on social media. For decentralised gaming platforms, questions on the enforceability of content moderation will become even more complicated.
Copyright and (Generative) AI: Generative AI tools have the potential to streamline game development and increase the personalisation of the experience. However, the protection and ownership of AI generated content is not a given, considering that human intervention is crucial for protection to apply. If AI develops a new script or character with a player’s guidance, the question of rights ownership will arise – what material was used, and who owns the final product? Is it the game developer, the player or the owner of original IP used for AI training? The practical applicability of the EU Copyright framework to AI training using protected works and the interplay with AI legislation will be in focus during the next few years. The gaming industry will need to ensure policymakers grasp the specificities of requiring both IP protection as a right holder and efficient use of AI through practical tools.
Games as Cultural Products: Creative Europe’s Media programme supports the development of European game production, aiming to increase the competitiveness of the sector, for example, by securing IP rights retention and increasing the potential to reach global audiences. A push for strategic autonomy and digital sovereignty may impact the gaming industry, through a wider support for European games for instance, thereby changing the dynamics for international companies in the global market. To pre-empt negative consequences stemming from such policies, non-EU companies need to actively foster collaboration and business engagement with European creators, publishers and developers to ensure a positive on impact the EU and global gaming ecosystem.
Esports: In 2022, the European Parliament adopted a report on esports,[2] calling on the Commission to work with industry to develop a charter promoting European values within esports, establish a harmonised legislative framework for the employment of esports players and expand the regime of Schengen cultural and sports visas to cover esports players. A 2023 Commission report[3] showed that the debate on whether esports falls under entertainment or sports policy remains unresolved, generating significant legal uncertainty as well as risk of regulatory fragmentation – as both policy areas fall under exclusive member state competence, meaning that the EU has no power to legislate in these areas. There is a high chance that policymakers will address this topic in the coming mandate, creating a need for stakeholders from the esports field to be prepared to engage with policymakers on the matter.
Skills & Workforce: The recent study on the gaming sector by the Commission[4] highlighted the need to expand and boost the talent pipeline of the European gaming industry. Better cooperation between industry and educational institutions has been frequently listed as a possible solution. However, the industry also needs to address its weaknesses compared countries like the US or Japan, where salaries tend to be significantly higher and access to private funding easier, in order to slow and ideally reverse the outflow of talent from the EU. The EU made digital skills a high-level priority that is crucial to ensure the EU’s successful and timely digital transition. Large gaming companies will benefit from partnering with EU stakeholders and member states to counteract the digital skills shortage and create a virtuous circle, reinforcing the industry’s competitiveness.

In addition to these areas, video game companies are also at the forefront of the development of immersive technologies and proto-virtual worlds. As these technologies progressively become mainstream, new regulatory threats may arise. For example, how can data protection principles be implemented and privacy ensured when using connected devices monitoring biometric data? What policy safeguards are necessary for minor’s identification while preserving their privacy?

What can companies do to keep up with potential effects of EU policy developments? And where can they turn for guidance? Planning for the near-, medium-, and long-term effects may require companies to reassess current goals and map collaboration opportunities while continuing their quest for growth. Active engagement with the EU policymakers will be critically important in the next five years.

Authors: Sevara Irgacheva, Director & Monty Aal, Consultant in our TMT team in Brussels.

The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.

[1] Digital fairness fitness check

[2] https://www.europarl.europa.eu/doceo/document/A-9-2022-0244_EN.html

[3] https://op.europa.eu/en/publication-detail/-/publication/075b8bbe-6bd5-11ee-9220-01aa75ed71a1/language-en/format-PDF/source-294523138

[4] https://op.europa.eu/en/publication-detail/-/publication/075b8bbe-6bd5-11ee-9220-01aa75ed71a1/language-en/format-PDF/source-294523138