Is Revealing Item Drop Rates a Trade Secret?…Game Industry Caught in Contradiction [Buaeri's Game Dictionary]

[Asia Economy Reporter Buaeri] The debate over 'loot boxes'?probability-based items that are a major revenue source for large domestic game companies?is heating up. Probability-based items such as NCSoft's Lineage's Execution Sword, Nexon's The Kingdom of the Winds: Yeon’s Spirit Summoning, and Netmarble's Monster Taming have continuously faced controversies over gambling addiction. Recently, as the government and ruling party have taken a hard stance against loot boxes, the gaming industry has pushed back, leading to a tense standoff between the two sides.

According to the National Assembly's Culture, Sports and Tourism Committee on the 20th, the "Game Industry Promotion Act Amendment Bill" proposed by Lee Sang-heon of the Democratic Party will be submitted to the plenary session on the 24th.

According to Article 59 of the amendment, game developers or distributors must display the game's rating, game content information, types of loot boxes, and the supply probability information for each type when distributing or providing the game to users. Violations will be punishable by imprisonment of up to two years or a fine of up to 20 million KRW.

In response to the legislative move, the gaming industry unusually issued a strong statement opposing the bill. However, some argue that the industry has fallen into a logical contradiction while opposing the amendment. The gaming industry's stance on loot boxes is mainly twofold: one, that they have been properly disclosing probabilities through the Korea Game Policy Self-Regulation Organization (GSOK); and two, that probability disclosure is equivalent to the government demanding the disclosure of trade secrets.

The Korea Game Industry Association, which includes Nexon, NCSoft, and Netmarble, stated in its review opinion on the 15th that "many games have hundreds of items, and these items must be balanced. Balancing, such as limiting high-spec items to below a certain ratio, is a representative trade secret," and argued that "disclosing all types of loot boxes and their supply probabilities restricts property rights as 'trade secrets,' so legislation should be approached with caution."

However, if the industry's claim is true, they have been voluntarily disclosing probabilities that are considered trade secrets. The gaming industry regulates the types and probabilities of loot boxes through GSOK. GSOK has been selecting and announcing games that do not disclose loot box probabilities every month. Because of this, major domestic game companies like the 3N (Nexon, NCSoft, Netmarble) disclose loot box probabilities on their websites.

There was even an incident where the association revised its statement after mentioning "variable probabilities," which sparked controversy. In its initial review, the association wrote, "Each game operates loot boxes in vastly different ways and has a 'variable probability' structure, so probabilities always fluctuate depending on the user's game progress, and developers sometimes do not know the exact figures," adding, "For game operators, it is often impossible to calculate the exact supply probability of a specific loot box," which drew public outrage.

Among users, criticism grew that "if even the creators do not know the probabilities, then the probabilities disclosed so far by game companies cannot be trusted." Subsequently, the association deleted the entire sentence and revised it to state that "some overseas games have a variable probability structure." However, the revised content became somewhat difficult to understand, as it appeared the association was expressing concern for overseas game companies.

Moreover, if the industry has indeed complied well with the "probability disclosure obligation," even legal regulation is unlikely to significantly affect their business.

Experts also criticized the gaming industry's attitude. Professor Wi Jeong-hyun of Chung-Ang University, president of the Korea Game Society, said, "If game companies have sincerely disclosed probabilities so far, they will not face legal penalties," adding, "Before the controversy escalates, game companies need to have the issues regarding loot boxes externally verified (through the government, etc.). Resolving this will help foster a healthy ecosystem and industrial development in the gaming industry."

Lee, the lawmaker who proposed the bill, also rebutted, saying, "This is merely codifying into law the item acquisition probabilities that are already disclosed through self-regulation, and probability disclosure is the minimum right to know that users want," and added, "If the self-regulation compliance rate is 80-90% as the association claims, there is no reason to oppose the amendment."

Editor's Note
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This content was produced with the assistance of AI translation services.