Games and Interactive Entertainment Legal Outlook 2026

In 2026, video gaming companies will continue to face increased antitrust enforcement globally in the form of high-value litigation and new regulatory regimes. Antitrust intervention into M&A activity will continue apace, although there is a growing acceptance that some concerns can be remedied without putting deals in jeopardy. Elsewhere, greater state-backed investment and a tense geopolitical climate mean that cross-border video gaming deals will need to grind through greater scrutiny from FDI regimes. 

Merger control remains a critical focus. Video gaming companies will not be immune to waves of consolidation sweeping across the creative economy as a result of increased generative AI adoption. Regulators are unlikely to take AI-driven consolidation narratives at face value, and mergers between competitors will be scrutinised in detail. On the other hand, regulators have adopted a lighter-touch approach when faced with clear evidence that merging firms are responding to truly existential threats. Regulators will also continue to closely scrutinise vertical integration, especially where they involve “must have” content or new distribution models such as subscriptions and cloud gaming. The European Commission will continue to review mergers with an EU dimension with a strong emphasis on ecosystem effects and innovation risks. However, there are signs that regulators are willing to consider tailored remedies, including long-term licensing commitments, to address their concerns rather than relying on divestments. 

State involvement and geopolitical tensions make FDI more challenging. Governments increasingly recognise that video games and esports can exert cultural influence globally in addition to driving economic growth locally. This has spurred renewed dealmaking interest from state-backed investors and sovereign wealth funds. In turn, these types of deals have deepened concerns within governments that foreign ownership of game studios could be used to shape narratives and influence public perception. Deals involving the gaming industry will encounter FDI reviews in more jurisdictions, with a level of scrutiny on par with other sensitive sectors like news, broadcasting and social media. In addition, deals involving global companies must navigate geopolitical tensions which could impact the outcome of regulatory reviews. Nimble players can still take advantage of geopolitical windows of opportunity such as temporary thaws in the US-China relationship to secure timely clearance for deals that would have otherwise faced uncertainty.

Looking ahead. With new regulatory regimes, increased litigation risk, continued merger scrutiny, and growing geopolitical tensions, video game companies will need to prepare for increased regulatory risk around the world in 2026. In addition to ensuring that business initiatives comply with competition law, video game companies should assess whether they are subject to new regulatory obligations aimed at ensuring transparency and fairness. Dealmakers should be prepared for in-depth regulatory engagement and build in flexibility to accommodate more unpredictable timelines as well as remedies to any substantive concerns identified by regulators. 

The video gaming industry is under unprecedented regulatory scrutiny, driven by concerns about children’s safety online, their data privacy, financial exploitation and the broader impact of gaming ecosystems on young gamers. Regulators worldwide are rolling out stricter rules aimed at preventing online harms, unsafe social interaction online, manipulative monetisation practices and addictive design in gaming. Across all major markets, the focus is shifting from reactive enforcement to proactive protection.

Child‑protection frameworks are expanding rapidly. The UK Online Safety Act requires in-scope service providers to conduct annual risk assessments for illegal content and content that is harmful to children, deploy highly effective age assurance to prevent minors encountering harmful content, and implement safety-by-design measures to mitigate harm to child users, child sexual exploitation and abuse, hate speech, harassment, and other illegal harms – backed by penalties of up to 10% of global turnover. The UK ICO has recently announced a focus on children’s privacy in mobile games and compliance with the once much vaunted Children’s Code and Ofcom is also gathering evidence to support a report on the role app stores play in children encountering harmful content and the effectiveness of age assurance by app store providers (due to be published in January 2027). The EU’s Digital Services Act also adds obligations to protect minors from harmful or manipulative content, while countries such as Singapore will set up a dedicated regulator to protect children against certain online harms, including online harassment, online stalking and image-based child abuse. With growing evidence that criminal groups are exploiting gaming environments to target children, proposed US legislation – such as the Safer GAMING Act and the broader Kids Online Safety Act – would also impose obligations on US platforms to protect minors from grooming, cyberbullying, and harmful content.

Intensifying regulatory focus on deceptive monetisation and “dark patterns”. Microtransactions, in‑game currencies, and loot boxes – now central to gaming revenue – are in focus where they encourage compulsive spending, unduly prolong engagement or mimic gambling. Regulators are demanding clearer pricing, stronger parental consent, and safeguards for young players. The EU has released non-binding Key Principles on In-game Virtual Currencies requiring clear and prominent disclosure of real‑world prices of in‑game currencies and digital content. The EU is also preparing broader online consumer protection rules, such as the Digital Fairness Act, that may restrict or ban loot boxes and addictive design. The UK’s new DMCCA explicitly identifies harmful online choice architecture, (or “dark patterns” - including, fake scarcity notifications and deliberately complex subscription opt-out mechanisms) as an early enforcement focus. Across Asia regulators are treating manipulative design as a consumer‑protection or competition‑law issue: Japan’s JFTC has flagged common dark patterns as potential antitrust violations; Singapore is signalling enforcement against dark patterns under its consumer‑protection laws; and India is restricting high‑risk monetisation through bans on real‑money gaming. Litigation risk is also rising, particularly in the US, with lawsuits targeting companies for failing to prevent harm to minors (see Section 5 below).

Financial regulation is adding another layer of complexity. As in‑game currencies and virtual assets evolve toward e‑money or crypto‑like systems, particularly in metaverse games, they become exposed to regulatory scrutiny under payments and cryptoasset regulation. Stablecoins used for in‑game purchases or cross‑platform wallets may trigger licensing, AML, and safeguarding obligations under regimes such as the EU’s MiCA or UK FCA rules. In the US the FTC has taken action against the use of multiple virtual currency exchange rates for essentially making the real-world price of loot-boxes harder to determine and confusing to children. Developers must now assess regulatory exposure at the design stage to avoid inadvertently crossing into regulated financial services.

Looking ahead. Gaming companies must adopt proactive, multi‑disciplinary compliance strategies. Investment in age verification solutions, advanced content moderation, fraud preventions, and transparent billing will be essential. And as antitrust remedies reshape app store ecosystems (which lowers fees but increases payment flow complexity), developers must embed strong youth safety controls, including clear pricing, spending caps, and parental consent, across every payment pathway. The regulatory message is clear: protecting young gamers is no longer optional but a fundamental requirement for operating in global markets.

The video gaming industry in 2026 faces significant challenges in data privacy and cybersecurity, driven by rapid advances in AI, regulatory expansion of privacy and cybersecurity laws, and increasingly sophisticated cyber threats. As gaming platforms evolve into complex ecosystems powered by cloud infrastructure, AI-driven personalisation, and immersive technologies, the volume and sensitivity of data collected, from payment credentials to behavioural analytics, has made the sector a prime target for cybercrime and regulatory enforcement.

Increasingly complex and interconnected data privacy requirements. Gaming companies face growing global scrutiny over their use of personal data. A mix of US state laws, the EU and UK GDPR, and emerging data protection regimes across Asia, require high consent requirements, strict safeguards for children’s data, and careful handling of biometric and location information. GDPR remains central, with the potential for large fines and enforcement still increasing as we approach the 8th anniversary of GDPR. Child‑protection rules such as the US COPPA, and the ICO’s renewed focus on mobile gaming together with UK’s Age‑Appropriate Design Code add further pressure, while online safety regimes like the EU Digital Services Act demand rapid removal of illegal content and stronger oversight of user‑ and AI‑generated material (see Section 2 above). 

A dramatically escalated cyber threat environment. Cyberattacks are becoming faster, stealthier, and increasingly automated, with threat actors using AI to industrialise cybercrime through autonomous intrusions, polymorphic malware, and deepfake‑driven social engineering. Ransomware groups now deploy automated extortion bots, while synthetic identities and poisoned AI models blur the boundary between innovation and abuse. Games and interactive entertainment platforms face persistent cyber risk, from account takeovers and in‑game currency and virtual asset fraud to large‑scale data breaches. These can result in multi‑million‑dollar losses and rapid erosion of player trust due to the sector’s scale, live services, and digital economies. Traditional defences no longer suffice as AI‑enabled attackers rapidly exploit compromised credentials, supply‑chain weaknesses, ransomware, phishing, and coordinated campaigns to target major game platforms and esports events.

Compliance and governance imperatives. To mitigate these risks, gaming companies must embed “privacy-by-design” and “secure-by-design” principles into product development. This includes robust consent management, encryption, multi-factor authentication, and zero-trust architecture (now considered industry standard for distributed gaming environments). AI governance is critical, as regulators and courts increasingly scrutinise algorithmic decision-making and behavioural profiling for monetisation. Companies are investing heavily in RegTech solutions to automate compliance across jurisdictions, manage breach notifications, and monitor fraud and identity anomalies in real time. 

A strategic approach is needed. Legal exposure in data privacy, cybersecurity as increased by AI is no longer a peripheral risk, it is a core business issue. Non-compliance can result in severe financial penalties from regulatory enforcement and litigation (see Section 5 below) as well as reputational harm, and operational disruption. For gaming companies, proactive and holistic governance, cross-border compliance strategies, and advanced cybersecurity frameworks are essential to maintain trust and competitive advantage in an environment where regulatory expectations and threat sophistication are accelerating in tandem.

Looking ahead. In 2026, the convergence of regulatory focus and AI-driven cybercrime makes data privacy and cybersecurity a defining challenge for the gaming industry. Companies that invest in resilient compliance programs and adaptive security architectures will be best positioned to thrive.

Generative AI is being integrated into game development, powering asset creation, NPC behaviour, dynamic storytelling, and personalised player experiences. Major studios are investing heavily in generative 3D models and narrative‑design systems to accelerate production and unlock new creative possibilities. But this rapid adoption brings significant IP challenges that remain unresolved going into 2026.

Copyright eligibility a core issue. Traditionally copyright protection requires human authorship. Even in jurisdictions such as the UK, Singapore and Hong Kong SAR, which recognise copyright in computer-generated works, the law still attributes authorship to a human – specifically the person who made the relevant arrangements for the work’s creation. In the US, copyright can subsist in AI-assisted works only where a human author exercises sufficient creative control over the work’s expression, and with AI-generated works there is a significant risk that the level of human control will be considered too limited to qualify. Courts have repeatedly confirmed that works generated solely by AI cannot qualify for copyright. For studios that rely heavily on automated pipelines, this means assets produced entirely by AI may not be protectable, and could be freely copied or adapted by competitors without legal recourse. To avoid this vulnerability, developers must maintain meaningful human involvement in the creative process and document that contribution. This will be all the more important in relation to the rise of agentic AI which dramatically amplifies the risk of assets being produced with no human creativity.

Risks associated with training data and outputs. Generative AI models are typically trained on vast datasets that may include copyrighted images, music, or code. Using protected works without authorisation risks infringement claims, a threat underscored by the surge of lawsuits brought in 2025 by artists and media companies challenging unlicensed training practices. The danger for game companies is twofold: liability for using AI tools trained on infringing datasets, and exposure if the model produces infringing outputs. Courts have already signalled that AI‑generated works mimicking well‑known visual styles, characters, or scenes may constitute infringement even if the output appears “new.”

User generated content (UGC). UGC created with or enhanced by AI tools presents increasingly complex intellectual property challenges for video game developers and platforms. Because many AI systems rely on training datasets that may include copyrighted works, players may unintentionally generate infringing in‑game assets. The ownership of AI‑generated UGC and how such content may be lawfully reused, shared, or monetised are also hot topics. In practice, ownership may depend heavily on the terms of platform EULAs and the licensing agreements governing the AI tools that players use, which can vary widely in how rights are allocated. As studios increasingly integrate AI creation tools into games, they must develop robust governance frameworks to manage UGC risks while still encouraging player creativity.

Contracts and licensing key tools. Until legislation evolves, contractual and licensing frameworks are the primary tools for managing AI related IP risks. Studios are increasingly negotiating warranties, indemnities, and assurances with AI vendors to protect against infringement claims. Some technology providers now offer limited IP‑risk coverage, while others shift responsibility to developers through their terms of service. Licensing agreements for training data are emerging as a practical solution, helping ensure lawful data use and compensating rights holders. Meanwhile, transparency expectations are rising: platforms such as Steam now require developers to disclose when AI tools have been used, reflecting growing consumer and regulatory concern over the provenance and ethics of AI‑generated content.

Looking ahead. Policymakers in the EU are exploring whether copyright law should be updated to protect AI-assisted works. Even if these frameworks materialise, games companies will still need to navigate a fragmented global environment where enforceable IP protection depends heavily on human creative input, careful selection of AI tools, and robust contractual safeguards. To innovate sustainably, developers must vet training data sources, maintain human oversight, document creative processes, and implement governance practices that reduce infringement risk and strengthen the defensibility of their assets.

Litigation risks for the video‑gaming and interactive entertainment industry are expected to rise in 2026 as games and virtual social worlds are becoming more complex, global and deeply intertwined with data, digital commerce, and user‑generated content. They represent a vast online ecosystem involving millions of daily transactions, behavioural‑influencing features, and increasingly sophisticated technologies. These developments offer growth opportunities, but they also expose companies to the risk of more regulatory enforcement and legal disputes across multiple jurisdictions.

Monetisation risks. One major driver of litigation risk is growing scrutiny of monetisation practices, especially those that are perceived to be manipulative or unclear to players (see in Section 2 above). Loot boxes, reward mechanics, and probability‑based purchases continue to attract consumer complaints and regulatory action. As countries introduce stricter consumer protection rules, companies face greater exposure to claims that certain practices amount to gambling, exploitative design, or misleading commercial practices. In several regions, class actions around “addictive” designs are becoming more common, and we are likely to see further challenges as claimants test the boundaries of these emerging theories of harm.

In-game asset trading. The growth of virtual worlds and digital economies in gaming and interactive entertainment adds another layer of exposure as players buy, trade, and sell virtual items, sometimes with real monetary value (see Section 2 above). Legal disputes are emerging around fraud, loss of digital assets, unfair trading practices, and failures in platform governance. Regulators are increasingly treating these virtual economies as financial systems, potentially bringing them within the scope of consumer finance, anti‑money laundering, and financial services and securities laws. Non‑compliance, even accidental, can lead to costly enforcement action.

Online safety and data protection. As governments also introduce stricter rules around harmful online content, age‑verification, and mandatory systems and processes to improve online safety, gaming platforms that fall short of these online safety duties (see Section 2 above) face heightened litigation exposure. This ranges from regulatory enforcement actions to collective lawsuits alleging inadequate safety‑by‑design or failure to prevent foreseeable harm. As games increasingly rely on personal data, behavioural analytics, location information, biometric signals for VR/AR, and user‑generated content, regulators worldwide are imposing tighter requirements (see Section 3 above). High‑profile data breaches, misuse of player data, or failure to meet transparency obligations can quickly lead to regulatory penalties and mass claims.

User- and AI-generated content. Games and metaverse platforms now host vast amounts of content created by players or through generative AI tools. This raises complex questions about ownership, licensing, copyright infringement (see Section 4 above) as well as defamation, and content moderation. Disputes are growing as creators, platforms, and IP holders challenge the boundaries of permissible use. As AI‑assisted creation becomes more common, games companies must be prepared for claims involving the training data used to generate assets, the originality of output, and the responsibility for unlawful or infringing material produced by users.

Global and systemic risk. Finally, litigation is growing because gaming is often a borderless industry. Games operate across dozens of jurisdictions, with overlapping obligations and divergent standards. Collective redress mechanisms in the US, EU and UK amplify risk, enabling large-scale claims with minimal barriers to entry. When things go wrong, whether through a regulatory breach, unfair practice, or moderation failure, the scale of exposure is global, and claimants can bring actions in multiple markets at once.

Looking ahead. The more the industry grows, the more litigation risk expands – and we have reached an inflection point where it is more aggressive, global, and complex than ever before. Games companies that invest early in responsible design, governance, transparency including clear player disclosures, and proactive compliance, will be best placed to avoid disputes and maintain player trust.