Updated CAP guidance on when in-game purchases are considered 'advertising'

The question

When and how does the CAP Code apply to the advertising of in-game purchases such as "loot boxes" in apps and video games?

The key takeaway

New CAP guidance confirms that in-game storefronts and inducements to purchase items are considered advertising if the virtual in-game currency can only be purchased via a real-world transaction. 

The background

The Committee of Advertising Practice (CAP) first published guidance on the advertising of in-game purchases in September 2021. This guidance set out how in-game purchases such as "storefronts" and "loot boxes" should be advertised with the aim of ensuring that that advertisers act responsibly, and consumers are not misled. The context for the publication of this guidance was the widespread public concern and regulatory scrutiny towards "loot boxes" and their potential links with gambling, particularly in relation to young gamers. For advertisers, the guidance details how the CAP and BCAP Codes (the Codes), which regulate broadcast and non-broadcast ads, apply to the advertising of in-game purchases.  

The development

The gaming industry has grown substantially since the publication of CAP's 2021 guidance. Indeed, UK Interactive Entertainment, a trade association for the UK games and interactive entertainment sector valued the UK gaming industry at £7.82bn in 2023¹, up from £7.16bn in 2021². Due to the growth of the sector, CAP undertook a comprehensive review of the guidance to ensure it continues to satisfy its objective to protect consumers. On 24 May 2024, CAP announced they had completed their review of the guidance and confirmed it had been updated in certain areas to remain current and provide further clarity. The most significant development is that CAP confirmed that the guidance remains an accurate and appropriate resource for applying the Codes to the advertising of in-game purchases.  

The key aspects of the updated guidance are as follows: 

• a storefront and any inducement to purchase items with in-game currency will be considered advertising under the Codes if the in-game currency is purchased by a player in a real-word currency transaction;
• the cost of buying virtual currency for in-game purchases must be clear and not likely to mislead the consumer. The guidance makes particular reference to currency "bundles" in this respect;
• consumers should be able to determine the equivalent real-world value of an item bought in-game;  
• consumers should be given sufficient information about "odd pricing". Odd pricing is when increments of virtual currency bundles in-game do not match the increments of the virtual currency price for items, meaning that players are required to purchase more currency than they need to buy a specific item;
• the context of when in-game purchases are advertised is considered by the guidance, particularly in relation to time pressure and chance, which may make players more vulnerable to being misled in a gameplay context;
• when marketing a game itself, it should be made clear by advertisers that the game includes in-game purchases. Similarly, ads should not imply that content which is only available when purchased is available for free in the game.

Why is this important?

Since the publication of the CAP guidance in 2021, the Advertising Standards Authority (ASA) has received and upheld a number of complaints regarding the advertising of in-game purchases. This may suggest that certain advertisers remain unaware of the applicability of the Codes to the marketing of in-game purchases. In light of the updated guidance, now is a good opportunity for advertisers to review their ads for in-game purchases alongside the Codes to ensure compliance. 

Any practical tips?

Gaming companies should ensure they understand when and how advertising in-game purchases is subject to the CAP Code. This is both in terms of the in-game purchases themselves and also ensuring that the existence of in-game purchases – including loot boxes in particular (because of the gambling-risks associated with loot boxes) is made clear when advertising for the game itself.  And of course, using the PEGI content description labels should not be forgotten too.

¹ https://ukie.org.uk/news/2024/04/2023VideoGameIndustryValuation
² https://ukie.org.uk/consumer-games-market-valuation-2021

Autumn 2024