Welcome back everyone. Today's video is a true bombshell for the games industry. This is one of those things that can have true impact. So, let me explain. What just happened is the European Union just rewrote the rules on premium currency in games. Of course, that's the home of Ubisoft, of CD Project, of DICE, of Remedy, and so many other companies. And make no mistake, the new rules that they have just laid out could change gaming utterly. Actually change the games that you play. So, you know those bundles where you've got to buy more currency than the item that you want costs, or perhaps the idea of limited time events, of no refunds and digital purchases. These are all being fought against by legislators. And when the EU takes action, it's a large enough block that it can reverberate around the world. And as evidence, how's that USBC charger on our phone working out? There's a lot to talk about. Strap in. This one could actually honestly be prettying good. Oddly enough, you've got EU legislation to thank for the standardized phone charger situation and for many the ability to um play ROMs on their iPhone. But now we seem to have EU legislation to thank for premium currency being threatened. So here's what went on. In September 2024, the EU proposed the Digital Fairness Act that was targeting all the practices online that make using digital services miserable. And in particular, it called out dark patterns in video games as one of the targets. And that's basically the gross manipulative techniques that trick and strongarm money out of people. Obviously, especially applying to people who are not yet adults. And this is fairly weighty because in the EU alone, games are obviously big business. Revenues have been going up in the EU. online game spending in 2018 represented 74% of uh turnover coming uh from online revenue and 83% by 2022. That's all of those fun dark patterns actually working and getting digital currency money out of people. But those dark patterns target the most vulnerable people the most. And there's no one more vulnerable in the eyes of the law than children. children who spend an average of 31 euro a month on online games according to data from video games Europe. Now that's actually went down from 2023. I guess that's good. Everyone's feeling a little bit of the economic pinch. But it's not stopped the EU from taking action to protect kids basically from predatory premium currency models. And in situations like this, there's often a great offender, right, that is held up as an example of something doing everything wrong. So you might wonder, is it an Activision game? Is it Ultimate Team from the EA football games? Maybe it was Roblox. No. No. Today it's a game about horses. It's called Star Stable. You've probably never heard of it, but if this all does turn out good, we'll have the horse girls to thank. This is StarSt Stable Online. It comes from a Swedish developer called StarStable Entertainment, and it is the game that may have just rewritten rules and monetization in the EU. So, uh, yeah. Thanks, Horse Girls. Now, it turns out that StarStable just uses all of the premium currency tactics in the book, which makes it a pretty awesome example, right? Especially because it is targeted at a younger audience. So, in March 24, the Swedish Consumer Agency filed a complaint with the EUwide Consumer Protection Cooperation Network. That's a mouthful. And that complaint alleged that StarStable Entertainment were targeting children and using harmful commercial practices that breached EU consumer regulations. Now, the findings corroborated much of those allegations. They found that the game made direct appeals to children in their ads, that they were using pressuring techniques like FOMO, which is particularly despicable when it's not, you know, on adults. And there was a lack of transparency on purchases and loads more things. I mean, here's an example of one that's particularly rough. They were responsible for influencers promoting the game to kids without any disclosure of the spending risk. So, in short, it's bloody well damning. StarStable Entertainment now have a month to address complaints and propose solutions with their game. But what matters for our purposes today is the Consumer Protection Cooperation Network. We can just call the CPCN. They have laid out what they want. So, I'll spell it out by an example. This is what should happen in the ideal world. You, dear gamer, want to buy yourself a new horse. You see that your new horse costs 300 star coins. The store tells you that's around £5. So, it just lets you buy 300 coins exactly. You buy exactly what you need for the horse rather than the current bundles that exist of 200 coins or 400 coins, meaning that you always have to buy with some wastage, which just ends up giving the company more money. So, in short, no obfiscation no weird tactics, and worst of all for these companies, this will have them bloody well shaking. You'd have to have a refund policy, both for the coins and the horse. And none of this would be pitched as a limited time event where you have got to get the thing right now. So, that's an example then of how these policies should be applied and each is indeed a massive win for consumers. But that would not matter if this amounted to nothing. You could look at all this and think, "Right, so some Swedish horse game has got a slap on the wrist." No, it's more than that. This seems to have backbone. So here's the big important bit. These solutions are the backbone of what the European Consumer Organization calls key principles for trustworthy gaming environments. And these could cause huge problems for anyone who is using premium currency. When I say this could shake the foundations of the game industry economy, I absolutely mean it. So these, which I'm going to spell out for you, are the minimum requirements for purchasing and using virtual currencies in the EU. And what's neat is the philosophy behind them. So the CPCN considers these premium currencies as an equivalent to the real money that is used to purchase them. And that for them means that they are just as worthy of legal scrutiny. So you can see how that is in a way a mindset shift that paves the way for actually treating these as they are. So just think about the last game that you played that had a premium currency in it. Whatever that game is, I want you to keep it in mind. And with that in your mind, I'm now going to go through the various different practices that this targets. So prices for premium currency packs that are a little more than the available product. So, you've got to buy extra coins, extra gems, whatever it may be. Obfiscation of how much currency is worth by always pairing currency with other items or multiple currency options. As an example, I think World of Warcraft may actually fall for that because it includes trader tender in one of the new mount bundles. Another one, a complete lack of a refund option for making currency purchases or even for in-game items. So, there would have to be a refund policy. That's something none of us are used to in these games. Also, FOMO practices to encourage buying, those are going to be looked at, so some of those may no longer be allowed. And all of these practices are now something that the EU can hold against developers and publishers. Even more so if the parental controls of sad game are not up to scratch. So, it's less a case of me saying, can you think of any game that falls into those categories? And it's more me saying, can you think of a game that doesn't fall into those criteria? It's fairly humongous, which might indeed be the point here. We know this is something the EU have been thinking about in other circumstances than just Star Stable. As an example, in September 2024, the uh European Consumer Organization published a report on popular online games. And in that report, they targeted Diablo IV, EA Sports FC 24, Minecraft, Fortnite, and a bunch of others. And it was all about how the virtual currencies work. They were not thrilled on what they found in those games, right? because many of them well they they did the same things that you know StarStable did that we do not like and that straight up means we can say that Electronic Arts and Blizzard Entertainment are being directly targeted by this body. That really is something. So it's no wonder that the uh BEu will be holding workshops to help European companies implement these new principles because it seems uh they they may actually have to implement them. everything that they previously thought was acceptable pretty much now isn't. And that here's the shocking thing. That's just that that's not my commentary. That is what the industry response has been. So, we know they are shaking in their boots. It ain't surprising the industry bodies aren't thrilled about this. And a big shout out to one of our Bellot Games members at Neo Nebulosa for directing us to this stuff. So, the European Game Developers Federation and the Video Games Europe or two groups basically, they've published a joint statement that expresses their disappointment with the findings. Let's read their statement. Quote, "We are disappointed by the lack of engagement from the CPC network and creating these principles, which introduce new legal theories and misguided interpretations of EU consumer law that will create confusion and disruption for European customers." Sidebar. Oh no, we're going to be disrupted by by sort of annoying predatory stuff going away. What an awful disruption. Back to the statement. It will also present a challenge to the industry's future growth and could even deprive millions of consumers access to their favorite games. Now, that last bit is the interesting thing. So understandably right, these groups representing the most powerful players in the industry did quite like things the way that they were. Change is dangerous, especially to the bottom line and especially change like this. But in a way, they're not inherently wrong. It is true that audiences do actually understand premium currencies by and large right now. And when implementing currencies, these companies were following, you know, their best legal guidance. And now that guidance has changed, I guess, just like how so many phones had like a bespoke charging cable until the rules just changed in the middle of the game. So now they've got to get used to these new rules. And what'll sting is the impact on their bottom line. They're not wrong about the potential impacts of all of this. Now, big companies like Ubisoft can probably absorb the costs of any legal challenges or damage from rebuilding their premium currency systems. They'll probably spend a whole lot to try and figure out ways around these principles. As for smaller companies, well, they may not find that so easy. But where things will be dramatic is the group's final warning, cuz it's the most threatening one. It's the idea that players in the EU may just be locked out of video games. Uh they'd say with a game like Overwatch, right, that they would simply choose to georestrict access to the game rather than change their monetization model or to just continue the game as normal and risk EU lawsuits. It could just be they look at the EU and think, you know what, we make enough from the states and other countries, we really don't need them. That being said, the EU population is uh kind of huge. Overall GDP is obviously a very very uh flawed metric but as an example right just googling this year in 2024 the EU's nominal GDP was about uh 17.9 trillion and 16th of global nominal GDP which is quite a lot of money and a hell of a lot of that GDP globally will be in other countries like say China where a lot of these companies will not be able to go in and directly monetize that could actually mean that they will feel the need to change and in a way there are two wolves inside me who are fighting, right? I suppose one of them is the pragmatic wolf. The other one is the almost like the the last vestigages of some sort of libertarian idealism that says uh let the market decide. If the gamers do not like the bad practices, the gamers shall not partake in them and the market will solve the problem. And I wish that was true, but uh I feel there's almost a faux idealism in so much of that because the psychological hooks, the psychological triggers, they do actually work. We're in a world where you can very easily make I think some sound enough uh you know philosophical arguments very much against regulation and all of that and I totally get that. I'm fairly sympathetic towards that in many cases. But the thing is, we've also got to be pragmatic. And a part of that is being a bit humble about the human condition. And the fact of the matter is these practices are not popular. People do not like them. Yet, people's behavior does continue. And these obviously are bad. And as people who enjoy video games, we see that as these types of practices derive uh more and more revenue, they then become what the companies focus on. And that is worse for the actual video games because I suppose in a way how much of game industry revenue comes essentially from psychological manipulation and these various business strategies that are designed to rake in revenue in a way that's not like really tied to the experience of a game that you purchase. We've just seen the share of that increase and increase and increase. And it's no wonder that as that has increased, the rest of us have become less and less satisfied with games. So in a way, if this does hurt the revenue of a bunch of companies and unfortunately lead to a bunch of job losses because these types of practices are um no longer viable, good riddance. Good riddance. Absolutely. Let the companies fail. Let those jobs go down. How we run things should be a dialogue between the private and public sectors. And in a case like this, I think it's an example of the public sector, right? the the people essentially saying we actually do not like this practice. We don't want this to be the rules of the game. We want the rules of the game to change to be more robust and uh yeah the market will once it adapts to that find a solution and if the new rule set is a better rule set then that should be a net good. But of course, none of this will matter if there's no enforcement. Enforcement because one country making a digital consumer policy often will find difficulty in enforcing it because you're just one little guy, Mr. Belgium. Right? That's why even though Belgium has banned loot boxes, so many games simply just ignore that and still operate in the country. Like in World of Warcraft, in the new raid, one of the bosses is basically a slot machine boss. We always have the joke that for the the person in our team that's in Belgium, that boss just can't drop any loot. I don't know. There's an EU firewall or a Belgium firewall. That's a joke. But you get the point. As much as many people have kind of went, "Ah, Belgium, yo, take him down." It hasn't really mattered because it's just Belgium, just one little guy. It's a bit different here, though, and that's cuz the EU is uh, you know, 26 other countries and also Belgium. In 2023, it was worth 25.7 billion euro in game revenues. That's a lot of revenues. And uh we know that their legislators are willing to take on the likes of Apple and Google when their rulings are being defied. They have done that. But more than that, the companies inside the EU are, you know, part of a big global network. And that does mean that whenever USBC cables become standardized in the EU, they then become standardized everywhere because of manufacturing limitations. I'm sure Apple would have loved to have continued just selling people lightning adapters in the states, but ultimately they seem to have saw the way the wind was blowing and made the big change to USBC. No one wanted to have of course a whole factory just making EU only phones. And again thinking about the impact that would have had and the you know the whole ecosystem of manufacturing partners blah blah blah. So you can see how with hardware it does kind of make sense. We can see though software examples where it's not really the same thing. It's not like you can just go and get an emulator for your iPhone in America but you can in the EU. So the question then is, will developers want to risk losing a large slice of that EU derived money or will they simply have to ship a cut down and less exploitative version of their in-game monetization to European countries? If so, it puts them in a fun little dilemma where the American gamer may get a transparently worse deal than say the European gamer. And then you can say, well, compare your store to mine. My one is a bit more respectful, doesn't have as much FOMO, doesn't have as many Trixie bundles and things that basically feel like a scam, and that'll be a bad look. That's the dilemma that these companies face. And in a way, it's all thanks to a game about horses. So, hero of the day, horse girls. I guess that's a thing. Okay, tell you what though, if you want another story, another big grand juicy story, check out this one. It also hits the EU, but it also hits corporate melodrama, which is honestly some of my favorite [Music]