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Abstract:
Given the rise of the online gaming industry, consumer protection laws have been implemented to restrict excessive gaming on the Internet. This research evaluates one such consumer protection policy and its effectiveness from both marketing and public policy perspectives. Specifically, we investigate the impact of usage restriction in South Korea on both gamers and the industry. Applying a difference-in-differences methodology to individual-level game usage and spending data, we show that although the regulation reduces overall game usage, the effects vary depending on past behaviors. That is, counter to expectations, the negative treatment effect is much smaller among heavy gamers (who display higher rates of online game addiction) than among casual gamers. Further, we find that its revenue impact is negligible at best, suggesting that gamers do not change their spending patterns due to the intervention. Thus, we show that usage restriction laws may deter casual gamers (perhaps potential heavy gamers)from excessive gaming, but do not work well to dissuade heavy gamers. A more nuanced approach (as opposed to a blanket usage restriction law) is recommended. Finally, we discuss the implications of such usage restriction laws as a vehicle to control overconsumption and protect
consumers.
Keywords: Consumer protection, online game, public policy, usage restriction, game spending