Navigating the Future: How Global Regulations are Shaping the Gaming Industry

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The global video game industry is estimated to be worth over $300 billion and if that isn't enough, the market is projected to grow substantially, potentially reaching around $720 billion by 2034 at a compounded annual growth rate of over 10%.

Now hopefully we'll see the release of GTA 6 by then.

Well, for the gaming industry to boom, it will have to press the X button and jump.

Global regulatory hurdles.

Now these include the UK's Online Safety Act and the European Union's Digital Markets Act.

Well, joining us this morning to weigh in is Chris Huish, who is president of Excella.

Chris, good morning.

Thank you so much for joining us.

So first and foremost, let's focus on the economic side of the gaming industry with a part of the industry relying upon the app stores.

So how are global tech regulations disrupting game distribution and also monetization?

So global regulations, as you said, are disrupting the entire way, the old playbook of game distribution and monetization, and it is really creating a great opportunity for game developers all over the world.

And that opportunity is most obviously in the shift of where the payments can occur on these platforms with things like the Digital Markets Act and legal rulings in the US forcing gatekeepers to open up to other payment options.

This does mean that game developers can take more control of how they're monetizing their games, which leads to increased margins in the neighborhood of 23, 25% more right out of the gate.

But beyond that, it allows developers to build a direct relationship with their players, which leads to actually increased revenue, not just increased margins.

And Chris, I do want to shift our focus to other markets.

So China is stricter in terms of measures on game content as well as play time for minors.

So what's it like for game developers that have to navigate different frameworks and regulations around the globe?

So when it comes to things like compliance all over the world, there is a patchwork of different regulations and rules.

Every region has their own rules.

There are privacy laws in Europe.

China, as you mentioned, still has a mandate on the time played on games, loot box laws throughout Asia.

So all of this drives up costs and it does potentially slow down launches, which is the challenge.

But for teams that can navigate that and plan properly, there's also great opportunity.

So studios that bake compliance into their design can move faster, build more trust with players and with local regulators, and even unlock.

Revenue through local payment systems like UI in India, which just had a big regulatory change that impacted real money gaming and cleared the deck for regular games to be more discoverable or picks in Brazil.

So while compliance can feel like a burden, if handled properly, it really does become a competitive edge that developers can lean into.

Yeah, and building on what you just said, can you tell us how online safety laws are impacting innovation and also pressuring real-time moderation when it comes to age appropriate design?

So online safety laws, this is a pretty big area now.

Obviously online safety has been a concern for many, many years across many industries, but in the games industry we do have strong laws that have come online for multiplayer and live service games in the UK.

There's the Online Safety Act, which makes companies legally accountable for harmful content and underage exposure, and that does create pressure, and that is something developers have to keep an eye out for.

Fortunately we are at a point of time now where AI moderation is really starting to come to the forefront and is helping quite a bit with this, allowing companies to handle real-time moderation, have real-time filters, even age adaptive interfaces.

So there's a lot of ways to address this in a way.

That is a win-win for everybody.

And at the same time it's also driving innovation.

We're seeing safer, more inclusive communities online and when you do have safer, more inclusive communities, that's better for your business overall, and it helps you continue to grow, reach new markets, increase your revenue per paying user.

And so in the end, you know, Safety is not just a policy.

Companies that think of it just as a policy, they have to navigate again are missing out the same way with other regulations.

But if companies look at this as a real opportunity that they can bake into the further upstream in their development cycle and they can think about how to leverage this properly, it creates a better environment for the players which at the end of the day is a better business for the developers.

Yeah, so a lot of keywords that you mentioned there, including AI, so artificial intelligence and its applications, that is something that we're keeping a close eye on.

But when it comes to the space and innovation, what are we actually looking at here and what does it mean for consumers moving forward?

So I think it really means a more open and fair market for consumers, also for developers, but one of the things that we're really excited about now with all of these regulations and the opening up of the gatekeepers to be more transparent, more open, the safety compliance laws that are in place, is it's really shifting the ability.

I for developers to be able to now develop direct relationships with their players where in the past they had to go through gatekeepers and that relationship was obfuscated.

So now developers have all of the regulations and rules in place to safely engage directly with their players, which creates a better overall experience for everybody.

You get to have a two-way relationship now with your players, understand what it is that they actually value, what they like, how they're actually transacting with your game in much greater detail, and you get a full picture of that player data stack that was not a full picture before.

So at the end of the day, better relationships with players drives better business, and that's a win-win for everybody.

And Chris, we have less than 60 seconds here, so I want to ask you how did clarity and genius acts fit into this discussion.

So these are really exciting.

They start to unlock the ability for Web 2 game companies to be able to safely and properly work with Web 3 with crypto, you know, we think this could be a new boon for that segment.

It could drive a lot of new innovation with people understanding how they can work in a compliant and safe way and potentially bring in new capital into this market that had been on the sideline, unsure how to work with digital assets.

So it's another boon for the industry.

OK, Chris, well, we will have to leave it there, but thank you so much for joining us and thank you so much for sharing all of your insights.

Thank you, Remy.