The video-game industry is bracing for a wave of European rules. They could limit what children play, and cost the sector billions in lost sales.

A cluster of European regulations is taking aim at how games are sold to minors. Loot boxes are the main target. The shift could crimp sales worldwide, Bloomberg reported. Regulators worry that children keep reaching games that are not made for their age.

The loot box problem

Loot boxes are paid treasure chests that hand out random digital items. Critics have long called them an addictive form of gambling. They are also big money. Chance-based mechanics earned game companies about $23bn worldwide last year, according to S&P research.

Now the rules are tightening. In June, the Pan-European Game Information body (PEGI) began rating any game with loot boxes as unsuitable for under-16s. The EU wants to go further. Lawmakers are weighing an outright ban on loot boxes in games children can reach. The Digital Fairness Act, which carries it, is expected to pass next year.

Not just Brussels

The pressure is spreading. In the UK, the Online Safety Act already forces gamemakers to check the age of their customers. A proposed social media ban for under-16s could catch platforms such as Roblox. Brazil, one of the world’s busiest gaming markets, is banning the sale of loot boxes to minors.

These moves rhyme with a broader European age shift online. One country after another is raising the age at which children can sign up to digital services.

Why the industry is worried

The fear is money. Loot boxes helped drive the sector’s growth for a decade. Losing them would force a scramble for new revenue. Switching approach “would be a strain,” said Neil Barbour, an analyst at S&P Global. In Europe, players spend around $12bn a year on in-game content.

Video Games Europe, a lobby group, warned in October that heavy rules could threaten a large slice of that revenue. Companies tend to change their games globally, not region by region. So strict European limits could dent sales far beyond the continent.

A warning sign already

Roblox offers a preview. Its shares fell 18 per cent in May after new age checks slowed user growth. The company cut its yearly bookings guidance by about $1bn.

The US, by contrast, still leaves the industry to police itself. It did the same after the 2017 “Star Wars Battlefront II” backlash. American lawmakers have floated an anti-loot-box bill, but self-regulation remains the norm. Stan McCoy is general counsel of the Entertainment Software Association.

He argues for “smart guardrails” that do not stigmatise a model many players enjoy. Europe looks less patient. For once, the rules may move faster than the games.