CONTENTS
- 1. Game Industry | Complex Regulatory Landscape
- - Violations of Law and Punishment
- 2. Game Industry | Detailed Classification by Type
- 3. Game Industry | Risk Prevention Measures Companies Should Take
- - Response Measures When Risks Arise
- 4. Game Industry | Key Summary
- - Daeryun's Strengths
1. Game Industry | Complex Regulatory Landscape
The game industry is expected to undergo industry-wide change as it converges with various technologies such as VR, AR, and AI.
According to the Korea Creative Content Agency, the domestic game industry reached a scale of 19.79 trillion won in 2023, and its growth rate has been recorded as trending downward since 2020.
The game industry is a digital convergence content industry that goes beyond the traditional category of entertainment, a high-value-added industry grounded in cutting-edge intellectual property that combines technological innovation with creativity.
This is not limited to mere software production but forms a complex ecosystem encompassing network infrastructure, platforms, content distribution, and interaction with consumer communities.
Recently, in addition to mobile, console, and PC games, diverse subfields such as cloud-based streaming games, VR and AR games, blockchain-based P2E (Play-to-Earn) games, e-sports, and metaverse-type game services are developing rapidly, and the manner of content consumption is also evolving from one-way consumption to interactive, real-time participatory forms.
This change has positioned the game industry not as a mere entertainment business but as a cultural industry, technology industry, platform industry, and export industry, and it has come to be accompanied by diverse legal issues such as entry into global markets, content localization, intellectual property protection, and the protection of user information and the security of transactions.
In addition, social interest issues such as the age of game users, their consumption patterns, charging structures, and restrictions on play time are continually raised, and game-related laws and systems are frequently revised, so game companies need to continuously monitor industry trends and the regulatory environment and to prepare thoroughly for legal risks.
Violations of Law and Punishment
Under the Game Industry Promotion Act, allowing gambling or speculative acts such as game gambling, or distributing game products with content different from their game rating, is subject to imprisonment or a fine.
In addition, criminal proceeds generated by game products and criminal acts are subject to confiscation, and where confiscation is not possible, the equivalent value is collected, among other additional regulations.
Violation | Penalty |
Allowing or facilitating gambling or speculative acts using game products | Imprisonment for up to 5 years or a fine of up to 50 million won |
Obtaining a game product rating by false or other improper means | Imprisonment for up to 2 years or a fine of up to 20 million won |
Distributing content different from the rated game product | |
Providing a game product in violation of the rating classification | Imprisonment for up to 1 year or a fine of up to 10 million won |
Failing to report or violating requirements regarding measures to prevent game overindulgence | An administrative fine of up to 10 million won |
A corporation's representative or the corporation | Joint penal provisions imposing the fine under the relevant article |
2. Game Industry | Detailed Classification by Type
The main types of the game industry and the legal risks that may arise depending on the type are as follows.
Type | Description |
|---|---|
Game Development | Game creation activities including in-house planning, design, programming, and graphics production |
Game Publishing | Overall management of the distribution and marketing of developed games |
Game Distribution and Platform Services | Provision of platforms for distribution, such as mobile app stores, PC platforms, and console stores |
Game Operation | Maintenance and revenue maximization activities such as patches, events, user management, and customer service after the service launch |
Cloud Gaming / Streaming Games | Provision of games running on cloud servers through streaming |
Game Broadcasting and Creator Platforms | Broadcasting of game content and operation of related platforms |
e-Sports | Operation of professional gaming teams, planning and operation of e-sports leagues, and match broadcasting |
Operation of Game Item Exchanges | Operation of marketplaces for trading in-game items |
Arcades and Internet Cafes | Businesses that allow customers to use game machines in a physical space |
Development of Educational and Social Games | Functional games designed for the purpose of education, therapy, or conveying social messages |
3. Game Industry | Risk Prevention Measures Companies Should Take
The game industry is a rapidly changing and technically complex field in which a variety of legal issues and regulations are intertwined.
Accordingly, game companies are advised to take the following measures to prevent legal risks that may arise.
▶Establishing a Compliance Monitoring System
Establishing procedures for updating and disclosing probability-based item information
▶Documenting Probability-Based Item Policies
Establishing disclosure processes and an internal audit system
▶Operating a Pre-Review System for Displayed Advertisements and Promotions
Aligning advertising policies in advance with outsourced advertising agencies
▶Preparing to Designate a Representative for Foreign Corporations
▶A Compliance System for the Monopoly Regulation and Fair Trade Act
Including fair trade advisory when entering into platform contracts
▶Securing a System for Following Up with Users
Preparing a response system to comply with the E-Commerce Act
Response Measures When Risks Arise
If a risk arises for a company operating in the game industry, the following response measures may be used.
1. When the Korea Fair Trade Commission (KFTC) Commences an Investigation or Sanctions
▶Response Measures
The history of probability changes, internal QA and review records, and the method of calculating item drop rates are organized technically and submitted.
Internal audit reports and records of customer responses can also serve as defense materials.
Implementing voluntary corrective measures
If, before the KFTC commences its investigation or during the investigation, a company voluntarily carries out UI improvements, changes to notice wording, or clarification of refund procedures and proves this, it may qualify for mitigation of a corrective order.
Joint response by the legal team and outside professionals
Because matters such as whether to use the KFTC's consent decree system and the submission of arguments on unfairness in a form that meets the formal requirements are important, retaining an attorney and submitting a written opinion are necessary.
The fact that the company cooperated with the trade association and complied with industry-wide common guidelines, and that it conformed to industry standards, can serve as grounds in disputes over intent or negligence.
2. When the Game Rating and Administration Committee (GRAC) Notifies of Sanctions or Reclassification of a Rating
▶Response Measures
After correcting the content for the points raised (for example, removing provocative expressions), the patch notes and update logs proving this are organized and reported.
Objection to rating reclassification
If there is insufficient basis for the existing rating decision, a request for reconsideration may be made through the objection procedure under the rating review regulations.
Using the rating simplification system
In the case of a series with the same structure that has already been classified, disadvantages can be minimized by using the prior consultation system or the criteria for automatic rating assignment.
Establishing a prior external advisory process. Before releasing content, it is necessary to establish a pre-review process by an external advisory group (those with experience in legal affairs, GRAC, etc.) to strengthen risk defense.
3. When Criminal Punishment or an Investigation by an Investigative Agency Commences
▶Response Measures
Functions carrying criminal risk (for example, game currency convertible into cash) should be immediately suspended and transparently announced to users, which becomes a factor in lenient treatment based on ‘early response.’
Designating a representative or responsible person and reporting immediately
For example, in cases such as failure to designate a youth protection officer or violation of reporting obligations, promptly completing the designation and proving the fact of reporting can lead to mitigation of administrative dispositions and administrative fines.
Cooperating with investigative agencies
Faithful cooperation with requests for voluntary submission of materials reduces the likelihood of a warrant request, and where a defense counsel's written opinion is submitted before the determination of suspicion, there is also a possibility of suspension of indictment or not booking the case.
Preserving records and documenting materials for legal response
Keeping relevant emails, notices, and internal meeting minutes as records from the early response stage is advantageous as grounds for defense in later disputes and litigation.
4. When the Korea Communications Standards Commission or Information Protection Authorities Take Action
▶Response Measures
If a displayed image or phrase is at issue, it is immediately deleted and reposted after correction, and submitting a report on compliance with the measures is key.
Voluntary notification in the event of a violation of the Personal Information Protection Act
If the possibility of a leak is confirmed, voluntarily carrying out the procedures for reporting to the relevant agency and notifying the victims is a prerequisite for mitigation of administrative dispositions and fines.
Compliance with the requirements for designating an internal responsible person such as a CISO. It is necessary to review basic compliance items such as designating a Chief Information Security Officer (CISO), disclosing security policies, and managing entrustees, in order to distribute responsibility and create room for mitigation.
Submitting penetration testing and security audit materials
Proving the history of prior inspections and response protocols at the time of an incident can avoid a finding of intent or gross negligence.
5. When Responding to Civil Litigation or Class Actions
▶Response Measures
Because the terms of service, refund policy, and notice screens entered into with users serve as the standard for determining liability for damages, securing a record of proper notice and consent is key.
Reorganizing and announcing the refund policy
To prevent backlash from the user community or the spread of issues, preparing and announcing a voluntary compensation plan within the scope of minimizing harm can also be considered strategically.
Retaining QA records at a level prepared for product liability (PL)
When harm is alleged due to content errors or defects, materials on prior QA and review procedures and the history of responses to bug reports serve as grounds for defense.
Establishing litigation response manuals for each type of risk
For groups at risk of class actions (charges by minors, refunds for probability-based items, etc.), it is necessary to assign dedicated legal personnel and prepare internal manuals.
4. Game Industry | Key Summary
Category | Type of Risk | Main Content | Preventive Measures |
|---|---|---|---|
Content Rating | GRAC non-registration or errors in changes | Mandatory rating classification for release and changes | Team to carry out rating filing procedures |
Advertising Regulation | False, exaggerated, or undisclosed advertising | Prohibition of advertising that manipulates age or probability | Advertising pre-review system |
Probability-Based Items | Failure to disclose probabilities or manipulation | Non-disclosure of information → penalty surcharge | Procedures for documenting and disclosing probabilities |
Overseas Operators | Violation when a representative is not designated | Strengthened obligation to designate a representative | Preparing local designation and legal advisory |
Gambling-Type Content | Criminal disposition when operating speculative games | Prohibition of unlicensed gambling games | Prior review of gambling elements |
Fair Trade | Unfair transaction terms and self-preferencing | Penalty surcharge and corrective order | Review of fairness in platform contracts |
Daeryun's Strengths
Daeryun Law Firm responds not only to the various legal issues that come with operating a game company, but also to copyright matters and legal disputes with users in online games, addressing the wide range of cases that can arise given the nature of the game industry.
After consultation, entertainment attorneys with experience in matters such as the use of a global game developer's brand, trademark disputes involving major game companies, and management control disputes at major game companies work with field-specific professionals such as patent attorneys, tax accountants, and certified public accountants to establish a response strategy.
In addition, working with labor attorneys, administrative agents, and others, we handle criminal law matters such as personal information leakage issues, as well as administrative tasks such as applications for game product ratings, rating classification, and objection procedures.
If you anticipate a legal dispute related to the game industry, please feel free to entrust your case at any time through 🔗Entertainment Attorney Legal Consultation Booking.
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