Games and Interactive Entertainment Legal Outlook 2025

Asia Pacific is set to remain the top-grossing video game market worldwide. In a global comparison, China is the country projected to generate the most revenue, with US$104.2bn in 2025. VC funding for video games startups in Asia has seen a substantial increase, particularly for those investing in AI. Going in 2025, there are at least 50 VC funds actively investing in video games companies across the region.

Asia is well established as a dominant force in the video gaming industry with considerable differences to western markets. The Asia-Pacific region is home to over half of the world's gamers, with a diverse gaming population spanning all ages, and almost half of all public video games companies. Chinese mobile games like "Genshin Impact" have become global hits while the rise of smartphones in Asia’s emerging markets has significantly boosted the mobile gaming market. 

Asia boasts several mature video gaming markets: countries like Japan and South Korea are well-established in the video games industry, with Japan known for console gaming and South Korea for online video gaming and esports. These markets have both more evolved gaming infrastructure and engaged consumers than in the West. Asia is also hub for innovation, with new trends like cloud gaming, virtual reality, and esports gaining traction. Looking ahead, Japanese video games giants that established themselves on consoles are looking to adapt to mobile gaming and are leading the way in innovative game development, while South Korea's leadership in 5G technology is expected to boost cloud gaming. 

Against this backdrop Asia is experiencing striking growth in esports, particularly in China, which has recognised esports as an official sport since 2003 and included it as a medal sport in the 2023 Asian Games. Southeast Asia – which has one of the youngest populations in the world – is especially receptive to new forms of entertainment and is helping normalise esports as a real sport, with a number of governments providing support through funding, infrastructure development, and policy frameworks. 

Both local and international companies have recognised the potential of the esports market in Southeast Asia. Local companies have partnered with international brands to bring major esports events to Asia, through collaborations with game developers, hardware manufacturers, and media companies to enhance the esports ecosystem. Major tech giants, telecom companies, and traditional sports franchises have invested heavily in the esports market, with companies like Tencent, Alibaba, and Garena providing substantial financial backing to esports tournaments and teams. Several governments in Southeast Asia have embraced esports as a legitimate sport, providing support through funding, infrastructure development, and policy frameworks. 

Esports and competitive video gaming are expected to continue to grow, attracting larger audiences and more investment. This trend will see more professional leagues, tournaments, and sponsorships, making esports a major part of the entertainment industry. However, the industry's rapid development has outpaced the laws designed to regulate it, leading to unique legal challenges to be navigated – including with respect to employment law and dispute resolution.  For businesses in Asia, the absence of a unified regulatory structure and the industry's rapid evolution call for a proactive and informed legal approach to achieve sustainable growth. 

In 2025 global geopolitics are entering into a new phase with an even greater emphasis on national protectionism. There have long been US-China tensions as they compete for dominance in technology – with knock on impacts for the video games sector. And now returning President Trump has proposed tariffs of up to 60% on Chinese exports, which could drive up the cost of video game consoles and components by as much as 40%.

US-China tech rivalry is likely to drive innovation to address increasing competition and nullify trade restrictions. A significant increase in the cost of physical consoles and games might accelerate the industry's shift towards digital and cloud-based gaming and focus on streaming services and digital distribution. However, these geopolitical tensions also have the potential to negatively impact the video gaming sector by disrupting supply chains, creating hardware bottlenecks (particularly in the production of semiconductors and GPUs crucial for gaming consoles and PCs) affecting market access from the US into China and vice versa (read more: From Chips to AI Models: A new global framework in U.S. export controls). Increased nationalism leads to a shift in investment patterns, with both the US and China looking to reduce dependency on each other. This can mean increased investment in local startups and technologies, but it also creates more fragmented markets.

In a retaliatory move to mounting US export controls on China’s semiconductor technology, Chinese industry bodies have warned Chinese companies to buy locally as U.S. chips are "no longer safe".  China’s video game industry is also scaling up to release more triple-A rated titles 2025 after the breakout global success of “Black Myth: Wukong”, leading a shift towards larger budgets and more ambitious titles that can compete internationally. Meanwhile, Japanese gaming stocks are emerging as unlikely winners from Donald Trump’s election, as tech investors seek less exposure to the trade uncertainties impacting chipmaking companies dependent on China.

Both the US and China are increasing regulatory scrutiny on each other's tech companies. For instance, China has recently initiated an antitrust investigation into Nvidia. This kind of scrutiny could also affect the supply chain and availability of critical video game hardware. Video games companies looking to deploy cutting-edge technologies also need to address an increasingly fragmented landscape of developing digital regulation – particularly with respect to AI. This requires businesses to adapt to diverse regulatory frameworks with robust compliance programmes that allow and protect operational efficiency.

The regulatory landscape within Asia is evolving, with China having implemented stricter regulations on game content and playtime for minors (see theme 3). This regulatory crackdown is encouraging Chinese game makers like Tencent (which is on the US Department of Defense list of Chinese military companies) and NetEase towards international expansion. This is crucial for their growth but could be stifled by escalating US-China tensions. 

Video gaming companies are facing higher costs due to GDPR in Europe and similar regimes in Asia such as China's Personal Information Protection Law. The need to localise data storage and processing can mean having to set up local data centres or use regional cloud services, which can be costly and technically challenging. Geopolitical tensions also complicate international data transfers of personal data with increased regulatory scrutiny. Restrictions on data transfers impact game development and player experience, as insights from player data are crucial for creating engaging content. 

Companies must balance compliance with seamless gameplay and data-driven personalisation, with the increasing threat of follow on private litigation and class actions for data protection breaches, which is also on the rise (see theme 5).

Consumer protection law and regulation in video gaming is a hot topic as pressure comes to bear to ensure traditional rules are made fit for the digital age. The EU has a particular focus on ensuring “digital fairness” and strengthening consumer protection in the digital environment, which includes ensuring video game consumers are treated fairly and transparently. There are many elements of the EU’s new digital regulation package (including the Digital Markets Act, Digital Services Act, AI Act, Data Act) that address various aspects of “dark patterns” that can be common in video games (see theme 4). Further regulatory developments focused on consumer protection with impacts for video gaming are expected both within the EU (like the Digital Fairness Act), and beyond.

Given the high number of young gamers, there is an increasing consumer focus on the potential risks associated with online video games for children – from exposure to inappropriate content, data privacy concerns and potential economic exploitation (see theme 4). Regulators are responding with an even stronger emphasis on platforms taking measures to improve child safety online generally: in Australia has led to an incoming ban on social media for under 16s. We are also seeing efforts to raise awareness of safety issues specific to video gaming among children and parents, such as the EU’s AdWiseOnline campaign.

The introduction of the landmark online safety legislation under the EU’s DSA and the UK's Online Safety Act has placed greater responsibility on online video games service providers to ensure user safety (e.g. by implementing age verification and more robust parental controls) and to enhance their content moderation practices to prevent online harassment, grooming and exposure to inappropriate content. In China, children are restricted by monthly and daily video gaming time limits, with boarder regulations on children’s screen times across various apps and devices. In the US, the proposed Kids Online Safety Act aims to establish a duty of care for online platforms requiring them to take reasonable measures to provide and mitigate various sources of harm to minors. Meanwhile, many states have their own responsible video game regulations (such as requirements for employee training, public awareness efforts, and self-exclusion programs). 

Data protection regulation will also have an impact for video games companies’ interactions with children. In the EU and UK, the GDPR requires companies to implement measures to protect children’s personal data generally. In the UK, the Information Commissioner’s Office (ICO) guidance for game developers aims to ensure games are not detrimental to children’s health and well-being. This includes identifying if players are under 18 and discouraging false age declarations. In China, the Provisions on the Cyber Protection of Children’s Personal Information regulation specifically protect children's personal information when using video gaming products.  In the US, a proposed COPPA 2.0 aims to require the video gaming industry to adopt stronger privacy protections and more transparent practices in safeguarding children's data.

In addressing the challenges of content moderation in video games, the use of AI for detecting and mitigating harmful content in real time, such as voice chats, is becoming more common (for example in Call of Duty). Many game studios are also now investing more broadly in trust and safety teams, with companies like Niantic, Epic Games, and Riot Games expanding their efforts to create safer gaming environments.  Looking ahead the industry is likely to come under increasing pressure to balance effective moderation, data privacy and child safety online with the commercial imperative to constantly innovate to improve the user experience.

The video gaming industry is undergoing material changes in monetisation strategies with free-to-play games and in game purchases/microtransactions continuing to be a major revenue stream. In 2024, in-game spending accounted for the majority of global games revenue. Subscription services like Xbox Game Pass and PlayStation Now are becoming more popular and offering players cost effective access to a wide range of games, while providing a steady income stream for the providers.

Subscription-based gaming is increasingly being bundled with other media services, such as streaming platforms or merchandise discounts, providing added value and access to a wider customer base. And with the rise of cross-platform play and cloud gaming, developers are finding new ways to monetise through subscription services and in-game purchases that are accessible across multiple devices. Meanwhile games like Axie Infinity and The Sandbox are pioneering developments in blockchain gaming, allowing players to earn cryptocurrencies through gameplay. This is the start of an ambition to create decentralised, player-driven gaming economies, where digital assets hold real-world value.

However, there is growing concern from consumers over what they consider to be manipulative and/or predatory practices, particularly regarding “dark patterns” related to in-game spending. These include loot boxes, the use of in-game currencies and auto-renewing subscriptions which are perceived as taking advantage of children and vulnerable gamers who are not financially literate. Consumer concern is driving increased regulatory scrutiny from a consumer protection perspective, especially following the high profile BEUC consumer complaint in Europe which focused on in-game purchase features. 

Subscription models are also generally coming under scrutiny from a consumer law perspective and carry greater legal risk - notably in the UK where the consequences of non-compliance under the Digital Markets, Competition and Consumers Act, the consumer law elements of which come into force in April 2025, include penalties of up to 10% global turnover. Whilst common themes emerge, businesses need to navigate a multiplicity of specific rules on disclosures and consumer notices as new rules begin to bite. (Read more: Subscriptions wrapped – consumer contracts come under scrutiny).

Video games companies also need to be aware that in-game currencies may be regulated as providing services under the e-money/ payments regulation and the emerging matrix of crypto-specific regulation. In the US, the Consumer Financial Protection Bureau has proposed to make clear that cryptocurrency and video game transactions are covered under existing rules codifying consumers' rights in situations of fraudulent transfers, hacks and stolen funds. Given the risk of crossing the perimeter into regulated financial services, regulatory advice should be taken at structuring stage of development of in-game currencies, tokens and payment flows. (Read more: US consumer digital payments under the spotlight: Key CFPB initiatives to target crypto, video games and more).

Video games companies and developers must also assess whether their in-game payment mechanics and currencies are designed fairly from a broader consumer protection perspective. Best practices for avoiding regulatory infringement in relation to in-game spending include: providing clear information for gamers, presenting key terms upfront, obtaining assertive and informed consent with more robust and flexible parental controls, and enabling customers to easily unsubscribe/cancel subscription or purchases. Higher attention should always be paid in relation to minors. 

Gaming companies are now increasingly at risk of large-scale litigation in the UK and the EU due to growing regulatory scrutiny and strong political and legislative support for litigation funding and class actions.  With more financial backing available, there has been an uptick in legal actions within the video game sector in the form of private litigation (and class actions) as a follow on to regulatory investigation under antitrust and data protection laws and regulations – with more expected with respect to consumer protection (particularly related to dark patterns (see themes 3 and 4)) and online safety laws and regulation. While litigation funding allows smaller developers and companies to challenge larger corporations, arguably levelling the playing field, it also increases the complexity and cost of doing business in the video games sector. 

In the US, consumer protection law on deceptive practices has been the basis of class actions to protect consumers from misleading advertising and failure to disclose potential risks associated with gaming. Lawsuits related to data privacy, where gaming companies are accused of mishandling user data or failing to protect it adequately, are also on the rise. In the absence of specific online safety regulation. there has been an increase in lawsuits related to video game addiction, particularly involving minors, alleging that game developers intentionally design games to be addictive, leading to mental health issues such as anxiety, depression, and social isolation. Private litigation has also targeted the use of loot boxes and microtransactions, especially towards younger players, with comparisons been made to gambling and attracting significant scrutiny.

In Asia, diversity across different legal frameworks and consumer protection laws can make class action lawsuits more challenging to pursue. For example, countries like Japan and South Korea have stricter regulations on how class actions can be filed. While there have been fewer class action lawsuits in Asia, there are instances where individual lawsuits have been filed against video games companies for issues like addiction and privacy violations. And while class action litigation in the video gaming sector is not as prevalent in Asia, the landscape is evolving, and more such cases could arise as consumer rights and regulatory frameworks continue to develop.

Video games companies and developers need to develop greater vigilance for regulatory and legal compliance to avoid costly lawsuits. This includes adhering to data privacy laws, content moderation standards, and consumer rights. With the rise of new technologies and content, disputes over IP rights have also become more common, making IP protection strategies a priority. Increased litigation risk can also complicate mergers and acquisitions, as companies must navigate potential legal challenges and ensure thorough due diligence. The need to manage increasing litigation risks is driving both technological advancements in legal tech and innovations in how companies approach legal strategies.